RAPTOR RESOURCES HOLDINGS INC. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - RAPTOR RESOURCES HOLDINGS INC.	Financial_Report.xls
EX-32 - EXHIBIT 32 - RAPTOR RESOURCES HOLDINGS INC.	v240151_ex32.htm
EX-31 - EXHIBIT 31 - RAPTOR RESOURCES HOLDINGS INC.	v240151_ex31.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

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 0-53585

LANTIS LASER INC.

(Exact Name Of Registrant As Specified In Its Charter)

Nevada	65-0813656
(State of Incorporation)	(I.R.S. Employer Identification No.)

41 Howe Lane, Freehold, NJ	07728
(Address of Principal Executive Offices)	(ZIP Code)

Registrant's Telephone Number, Including Area Code: (732) 252-5146

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 x 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

(the registrant is not yet required to submit Interactive Data)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer o

Accelerated filer o

Non-Accelerated filer o

Smaller reporting company x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: On November 10, 2011, the registrant had 365,659,029 shares of common stock issued and outstanding.

TABLE OF CONTENTS

Item	Description	Page
	PART I - FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS.	3
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION.	3
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	6
ITEM 4.	CONTROLS AND PROCEDURES.	6

	PART II - OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS.	7
ITEM 1A.	RISK FACTORS	7
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	7
ITEM 3.	DEFAULT UPON SENIOR SECURITIES.	7
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.	7
ITEM 5.	OTHER INFORMATION.	7
ITEM 6.	EXHIBITS.	8

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The registrant's unaudited interim financial statements are attached hereto.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION

Forward-Looking Statements; Market Data

As used in this Quarterly Report, the terms "we", "us", "our", "Registrant" and the "Company" means Lantis Laser, Inc., a Nevada corporation, and its wholly-owned subsidiary, Lantis Laser, Inc., a New Jersey corporation. To the extent that we make any forward-looking statements in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report, we emphasize that forward-looking statements involve risks and uncertainties and our actual results may differ materially from those expressed or implied by our forward-looking statements. Our forward-looking statements in this Quarterly Report reflect our current views about future events and are based on assumptions and are subject to risks and uncertainties. Generally, forward-looking statements include phrases with words such as "expect", "anticipate", "intend", "plan", "believe", "seek", "estimate" and similar expressions to identify forward-looking statements.

Overview

The Company was incorporated under the laws of the State of Nevada in February 1998 under the name Beekman Enterprises, Inc. In November 2004, we acquired Lantis Laser, Inc., a New Jersey corporation formed in January 1998 (“Lantis New Jersey”), in a reverse-triangular merger and succeeded to its business as our sole line of business. In connection with the merger, we changed our name to “Lantis Laser Inc.”

We were developing our Optical Coherence Tomography ("OCT") Dental Imaging System as our first product but have suspended further development until we receive further funding to continue development of our light based imaging modalities. We were formed to commercialize the application of novel technologies in the dental industry. We have the exclusive rights to OCT for applications in the dental field under a license agreement with Lawrence Livermore National Laboratories and an exclusive license for dental applications of near-infrared transillumination (patent application pending) from the Regents of the University of California. Our products are subject to obtaining FDA marketing clearance before being sold to the dental market.

On April 22, 2011, we entered into an Agreement and Plan of Merger (the "Merger Agreement") to acquire TAG Minerals Inc. ("TAG"). We consummated the merger on May 23, 2011 and issued to the shareholders of TAG 165,000,000 shares of our common stock which represented 50% of our total issued and outstanding shares at the time of the merger in exchange for 100% of their shares in TAG. As a result of the merger TAG is now a wholly-owned subsidiary of Lantis Laser.

TAG is a U.S. based mineral resource acquisition, exploration and development company, with operations conducted through its operating affiliated company, TAG Minerals Zimbabwe (Private) Limited (“TAG-Z”). The company’s business is managed by its directors and officers who have mineral extraction and commercial experience. TAG’s strategy is to identify, acquire and exploit mineral properties that have potential. TAG is augmented by independent financial, geological, and mining professionals who advise the company on its mining and exploration projects throughout Zimbabwe, Africa.

We will now conduct our gold mining business through TAG and the dental technology business through our other wholly-owned subsidiary, Lantis Laser, Inc. Concurrent with the Merger Agreement, our former Chief Executive Officer and Executive Vice President Clinical Affairs and a former Director of our Company resigned on May 6, 2011. We retained the former executives to continue to head up our dental technology subsidiary. These two executives received employment contracts dated May 23, 2011.

The President and Chief Executive Officer of TAG were named the new President and Chief Executive Officer of our Company. In addition, the remaining two shareholders of TAG became directors in our Company. In July 2011, TAG-Z, acquired 100% of the capital stock of Ontage Resources (Private) Limited (“Ontage”). Ontage holds a 10% stake in an existing operating gold mining producer, Slashwood Mining (Private) Limited (“Slashwood Mining”). Slashwood Mining is a registered percentage owner of 8 custom gold milling centers across various locations in Zimbabwe, along with ownership of 30 mining claims encompassing approximately 2,000 acres. All of the gold milling centers and mining claims are completely outfitted with mining equipment; to include gold-ore crushers, excavators, generators and dump trucks. Slashwood Mining has 200 employees and is forging a path of expansion into mining projects.

Results of Operations

Three Months Ended September 30, 2011 Compared to Three Months Ended September 30, 2010.

The following is derived from, and should be read in conjunction with, our condensed consolidated financial statements, and related notes for the three months ended September 30, 2011 and 2010.

Operating revenues. We are a development stage company. To date, we have not generated any operating revenues, nor have we generated operating revenues since our inception in February 1998. Development of our OCT and NIR dental imaging products by our wholly owned subsidiary , Lantis Laser, Inc., can only recommence upon adequate funding being found to complete development and after receiving FDA clearance to market. Our other wholly subsidiary, TAG Minerals Inc. has not yet commenced its mining activities and it has not yet received any revenue from its 10% acquisition of Ontage Resources Inc.

Net loss from operations. For the three months ended September 30, 2011, our net loss was $145,602 compared to $97,805 for the same period in the prior year, representing an increase of $48,097 or 49%. The increase in our loss from operations was mainly due to the increase in wage and wage related expenses in the period to $75,000 from $0 in the same period in 2010. Professional, consulting and marketing fees increased to $22,127 in the three months ended September 30, 2011 as compared to $2,815 in the same period last year while other general and administrative expenses increased to $29,409 in the three months ended September 30, 2011 from $7,338 in the same period in 2010.

Total other expenses. Other expenses were $10,322 for the three months ended September 30, 2011, compared to $82,032 for the three months ended September 30, 2010. This was due to the decrease in interest expense to $10,332 for the three months ended September 30, 2011 from $78,115 in the comparable period in 2010 as almost 90% of the 5% Senior Convertible Note notes had been converted to equity by the end of the period. Interest expense debt discount decreased to $0 in the three months ended September 30, 2011 compared to $3,917 in the same period in 2010 as a result of the discount being fully amortized.

Net loss. We had a net loss applicable to common shares of $145,602, or $0.00 per share, for the three months ended September 30, 2011, compared to a net loss applicable to common shares of $97,805 or $0.00 per share, for the same period in the prior year. The increase in net loss was principally due to the increase wage and wage related expenses, professional, consulting and marketing fees, other general and administrative expenses offset by a reduction in interest income.

Nine Months Ended September 30, 2011 Compared to Nine Months Ended September 30, 2010.

The following is derived from, and should be read in conjunction with, our condensed consolidated financial statements, and related notes for the nine months ended September 30, 2011 and 2010.

Operating revenues. We are a development stage company. To date, we have not generated any operating revenues, nor have we generated operating revenues since its inception in February 1998. We have had to delay any sales of our OCT and NIR dental imaging products, which are being developed by Lantis Laser, Inc., one of our wholly owned subsidiaries, until we receive adequate funding. We also require financing to seek FDA clearance to market our OCT System.. Our other wholly subsidiary, TAG Minerals Inc. has not yet commenced its mining activities and it has not yet received any revenue from its 10% acquisition of Ontage Resources Inc.

Net loss from operations. For the nine months ended September 30, 2011, our net loss was $327,378 compared to $465,606 for the same period in the prior year, representing a decrease of $138,228 or 30%. The decrease in our loss from operations was mainly due to the increase in wage and wage related expenses in the period to $107,055 from $0 in the same period in 2010. Professional, consulting and marketing fees increased to $72,080 in the nine months ended September 30, 2011 as compared to $40,534 in the same period last year while other general and administrative expenses increased to $57,260 in the nine months ended September 30, 2011 from $33,601 in the same period in 2010.

Total other expenses. Other expenses were $70,998 for the nine months ended September 30, 2011, compared to $374,610 for the nine months ended September 30, 2010. This was due to the decrease in amortization of debt issuance costs to $0 compared to $30,618 in the same period in the previous year; the reduction to $0 of interest expense debt discount from $113,823 in the period to September 30, 2010 as a result of the discount being fully amortized. Interest expense to $71,522 for the nine months ended September 30, 2011 from $230,169 in the comparable period in 2010 as almost ninety percent of the 5% Senior Convertible Note notes had been converted to equity by the end of the period.

Net loss. We had a net loss applicable to common shares of $327,378, or $0.00 per share, for the nine months ended September 30, 2011, compared to a net loss applicable to common shares of $465,606 or $0.00 per share, for the same period in the prior year. The decrease in net loss was principally due to the increase wage and wage related expenses, professional, consulting and marketing fees, other general and administrative expenses, offset by a reduction in amortization of debt issuance costs, interest income debt discount and interest income.

Liquidity and Capital Resources

Total assets. On September 30, 2011, we had total assets of $397,987, compared to $33,972 on December 31, 2010. Included in current assets is an investment of $150,000 representing the acquisition of 10% of Ontage. We had cash and cash equivalents of $225,106 on September 30, 2011 compared to $9,382 at December 31, 2010. There were prepaid expenses and other current assets amounting to $6,000 as at September 30, 2011 compared to $0 as at December 31, 2010. Our fixed assets, which did not change significantly, were $16,881 on September 30, 2011, compared to $24,950 on December 31, 2010.

Total liabilities. We had total liabilities of $1,457,765 on September 30, 2011 composed principally of notes for management’s accrued loans to the company amounting to $150,000, current accounts payable and accrued expenses of $513,568 and convertible notes payable, net of discount and beneficial conversion features of $409,500. Accrued interest due on the convertible notes payable amounted to $168,197 at September 30, as compared to $157,875 as at December 31, 2010. There was a liability of $216,250 as at September 30, 2011 for stock to be issued for funds invested in the Company. On September 30, 2011 we had no long-term liabilities. At September 30, 2011, we had a negative working capital of $1,076,659 compared to a negative working capital of $2,174,372 on December 31, 2010. There is no guarantee that we will be able to raise enough capital or generate revenues to sustain our operations. These conditions raise substantial doubt about our ability to continue as a going concern within the next 12 months.

Cash flow from operations. During the nine month period ended September 30, 2011, we had a negative cash flow from operations of $136,600 compared to negative cash flow from operations of $101,496 during the same period in the prior year. Our higher negative cash flow from operations was mainly due to the decrease in the net operating loss from $465,606 in the same period in 2010 to $327,378 for the nine months ended September 30, 2011, being offset by the reduction of amortization of debt issuance costs from $30,618 to $0 and the reduction of interest expense debt discount from $55,391 to $0 as these were fully amortized. Interest expense beneficial conversion feature was reduced to $20,382 in the period as compared to $58,432 the same period to September 30, 2010. Accounts payable and accrued expenses increased to $141,446 in the nine month period ended September 30, 2011 compared to a decrease of $39,023 in the same period in 2010. Accrued interest on the unconverted portions of the 5% Convertible Note was reduced from $189,615 in the nine months ended September 30, 2010 compared to $33,299 in the same period this year.

Cash flow from investing activities. We had investing activities in equipment during the nine-month period ended September 30, 2011 amounting to $9,276, compared to $0 during the nine months ended September 30, 20110.

Cash flow from financing activities. During the nine months ended September 30, 2011, we received $80,000 from the proceeds of notes payable compared to $0 in the same period in 2010. Proceeds from a private placement amounting to $276,250, net of fees, were received in the nine months ending September 30, 2011 compared to $0 received in the same period in 2010. Proceeds from related parties amounted to $5,350 for the period ended September 30, 2011 compared to $70,467 in the same period in 2010.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and our Chief Financial Officer (currently the same person), after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this quarterly report, have concluded that our disclosure controls and procedures are not effective based on their evaluation of these controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15 on the basis that we have not been funded sufficiently for us to employ an additional person to serve as our Chief Financial Officer.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls. Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES Back to Table of Contents

In March, April and May 2007, the Company issued 5% Senior Convertible 3 Year Notes to investors in the amount of $2,526,500, which equaled the gross proceeds raised by the Company (the “Convertible Notes”). The Convertible Notes are convertible to shares of the Company’s common stock anytime in the three-year period at a fixed conversion price of $.15. In May 2009, convertible notes of $125,000 were converted, at a fixed conversion rate of $.15 per share, into 833,334 shares of common stock. This conversion reduced the outstanding principal to a balance of $2,401,500. In an effort to reduce the liabilities of the Company, on July 1, 2010, the Company offered the Noteholders the opportunity to convert their Notes to common stock at a price of $0.05 (originally a $0.15 conversion price), including any and all outstanding interest. In addition, the Company offered to reset the exercise price of the warrants attached to the Notes to $0.075 from $0.15, and to extend the warrants for a further three years from the original date for all warrant holders. Approximately 90% of noteholders have agreed to accept the terms of the conversion. Through September 30, 2010, convertible notes of $2,117,000, including $404,413 of accrued interest was converted to 42,340,000 shares of common stock. This conversion reduced the outstanding principal balance of the notes to $409,500.

The Notes were issued in four closings in 2007: $1,722,500 on March 30; $407,000 on April 20; 315,000 on April 30, and $82,000 on May 17. The Company is in default on the redemption of all these Notes which were due to be redeemed three years after the date of issue, and payment of interest, due to lack of sufficient cash resources.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.

Exhibit No.		Description
31		Certification of CEO and CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of 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 date indicated.

Date: November 14, 2011

		/s/ Al Pietrangelo
		Al Pietrangelo, CEO and CFO

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Page(s)

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		2

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2011 (UNAUDITED) AND DECEMBER 31, 2010,		3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 (UNAUDITED) WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION)		4

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 (UNAUDITED) WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION)		5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 (UNAUDITED) WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION)		6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)		7-30

F-2

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2011 (UNAUDITED) AND DECEMBER 31, 2010

	(UNAUDITED)
	SEPTEMBER 30,			DECEMBER 31,
	2011			2010
ASSETS
Current Assets:
Cash and cash equivalents	$	225,106		$	9,382
Prepaid expenses and other current assets		6,000			-
Investment		150,000			-
Total Current Assets		381,106			9,382
Fixed assets, net of depreciation		16,881			24,590
TOTAL ASSETS	$	397,987		$	33,972

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES
Current Liabilities:
Accrued interest - convertible notes	$	168,197		$	155,148
Accounts payable and accrued expenses		513,568			438,946
Related party payable		250			1,100,542
Liability for stock to be issued		216,250			-
Convertible promissory note - related parties		150,000			-
Convertible notes payable, net of discount and beneficial conversion feature		409,500			489,118
Total Current Liabilities		1,457,765			2,183,754
Total Liabilities		1,457,765			2,183,754

STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, $.001 Par Value; 10,000,000 shares authorized and 0 shares issued and outstanding		-			-

Common stock, $.001 Par Value; 990,000,000 shares authorized and 353,996,015 and 139,874,905 shares issued and outstanding		353,996			139,874
Additional paid-in capital		8,052,267			6,949,807
Additional paid-in capital - warrants		1,268,787			1,167,987
Deficits accumulated during the development stage		(10,734,828	)		(10,407,450	)

Total Stockholders’ Equity (Deficit)		(1,059,778	)		(2,149,782	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	397,987		$	33,972

The accompanying notes are an integral part of the consolidated financial statements

F-3

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION)

							CUMULATIVE
							TOTALS SINCE
	NINE MONTHS ENDED						INCEPTION
	SEPTEMBER 30,						JANUARY 14,
	2011			2010			1998
OPERATING REVENUES
Sales	$	-		$	-		$	-

OPERATING EXPENSES
Research and development		-			-			2,129,906
Exploration costs		3,000						3,000
Wages and wage related expenses		107,055			-			1,087,036
Professional, consulting and marketing fees		72,080			40,534			4,506,017
Other general and administrative expenses		57,260			33,601			634,934
Depreciation		16,985			16,861			130,714
Total Operating Expenses		256,380			90,996			8,491,607

LOSS BEFORE OTHER INCOME (EXPENSE)		(256,380	)		(90,996	)		(8,491,607	)
Amortization of debt issuance costs		-			(30,618	)		(287,571	)
Loss in investment under equity method		-			-			(167,664	)
Gain on conversion of interest		524			-			524
Interest expense - debt discount		-			(113,823	)		(1,017,246	)
Interest income (expense), net		(71,522	)		(230,169	)		(771,264	)
Total Other Income (expense)		(70,998	)		(374,610	)		(2,243,221	)

NET LOSS BEFORE PROVISION FOR INCOME TAXES		(327,378	)		(465,606	)		(10,734,828	)
Provision for Income Taxes		-			-			-

NET LOSS APPLICABLE TO COMMON SHARES	$	(327,378	)	$	(465,606	)	$	(10,734,828	)

NET LOSS PER BASIC AND DILUTED SHARES		(0.00	)		(0.00	)		(0.20	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		252,394,175			100,787,653			53,008,874

F-4

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION)

							CUMULATIVE
							TOTALS SINCE
	THREE MONTHS ENDED						INCEPTION
	SEPTEMBER 30,						JANUARY 14,
	2011			2010			1998
OPERATING REVENUES
Sales	$	-		$	-		$	-

OPERATING EXPENSES

Research and development		-			-			2,129,906
Exploration costs		3,000			-			3,000
Wages and wage related expenses		75,000			-			1,087,036
Professional, consulting and marketing fees		22,127			2,815			4,506,017
Other general and administrative expenses		29,409			7,338			634,934
Depreciation		5,744			5,620			130,714
Total Operating Expenses		135,280			15,773			8,491,607

LOSS BEFORE OTHER INCOME (EXPENSE)		(135,280	)		(15,773	)		(8,491,607	)

Amortization of debt issuance costs		-			-			(287,571	)
Loss in investment under equity method		-			-			(167,664	)
Gain on conversion of interest		-			-			524
Interest expense - debt discount		-			(3,917	)		(1,017,246	)
Interest income (expense), net		(10,322	)		(78,115	)		(771,264	)
Total Other Income (expense)		(10,322	)		(82,032	)		(2,243,221	)

NET LOSS BEFORE PROVISION FOR INCOME TAXES		(145,602	)		(97,805	)		(10,734,828	)
Provision for Income Taxes		-			-			-

NET LOSS APPLICABLE TO COMMON SHARES	$	(145,602	)	$	(97,805	)	$	(10,734,828	)

NET LOSS PER BASIC AND DILUTED SHARES		(0.00	)		(0.00	)		(0.20	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		352,645,550			101,484,184			53,008,874

The accompanying notes are an integral part of the consolidated financial statements

F-5

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION)

							CUMULATIVE
	NINE MONTHS ENDED						TOTALS SINCE
	SEPTEMBER 30,						INCEPTION
	2011			2010			JANUARY 14, 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(327,378	)	$	(465,606	)	$	(10,734,828	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		16,985			16,861			130,714
Amortization of debt issuance costs		-			30,618			287,571
Interest expense - debt discount		-			55,391			504,606
Interest expense - beneficial conversion feature		20,382			58,432			533,023
Gain on conversion of interest		(524	)		-			(524	)
Loss on investment under equity method		-			-			167,664
License fees payable for research and development		-			-			605,000
Warrants issued to former noteholders and consultants		-			-			469,897
Common stock issued for consulting services		20,468			20,000			899,518
Cash flow effect of reverse merger		(35,278	)		-			(35,278	)

Changes in assets and liabilities
Decrease (increase) in prepaid expenses		(6,000	)		32,216			2,199,000
Increase (decrease) in accounts payable and and accrued expenses		141,446			(39,023	)		1,706,228
Accrued interest on convertible notes		33,299			189,615			499,088
Total adjustments		190,778			364,110			7,966,507

Net cash used in operating activities		(136,600	)		(101,496	)		(2,768,321	)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of fixed assets		(9,276	)		-			(147,595	)
Investment under equity method		-			-			(167,664	)

Net cash used in investing activities		(9,276	)		-			(315,259	)

CASH FLOWS FROM FINANCING ACTIVITES
Proceeds from notes payable		80,000			-			277,000
Proceeds from exercise of warrants		-			-			34,984
Increase (decrease) in bank overdraft		-			(3,866	)		-
Proceeds from convertible notes and warrants, net of debt issuance costs		-			50,000			2,284,310
Payments of license fee payable		-			-			(225,000	)
Proceeds from private placement, net of fees (including cash received for shares to be issued)		276,250			-			797,750
Proceeds (payments) from related parties		5,350			70,467			139,642

Net cash provided by financing activities		361,600			116,601			3,308,686

NET INCREASE IN CASH AND CASH EQUIVALENTS		215,724			15,105			225,106

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		9,382			-			-

CASH AND CASH EQUIVALENTS - END OF PERIOD	$	225,106		$	15,105		$	225,106

CASH PAID DURING THE YEAR FOR:
Income taxes	$	-		$	-		$	-
Interest expense	$	-		$	-		$	93,517

SUPPLEMENTAL NONCASH INFORMATION:

Conversion of notes and interest for common stock, net of discounts and issuance costs	$	199,726		$	476,438		$	2,936,031
Conversion of license fee payable into capital	$	-		$	-		$	380,000
Common stock issued for consulting services	$	20,468		$	20,000		$	899,518
Warrants issued to former noteholders and consultants	$	-		$	-		$	469,897
Common stock issued for acquistion	$	150,000		$	-		$	150,000
Common stock issued for prepaid expenses	$	-		$	-		$	2,205,000
Conversion of accrued expenses for note payable-related parties	$	-		$	-		$	960,000
Conversion of note payable-related parties and accrued interest to warrants	$	1,022,466		$	-		$	1,022,466

Effect of reverse merger with TAG Minerals, Inc.
Cash	$	24,772		$	-		$	24,772
Accounts payable and accrued expenses		(50	)		-			(50	)
Effect on retained earnings		(60,000	)		-			(60,000	)
Cash flow effect from reverse merger	$	(35,278	)	$	-		$	(35,278	)

The accompanying notes are an integral part of the consolidated financial statements

F-6

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 1 -

ORGANIZATION AND BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company’s annual consolidated financial statements and notes thereto. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the December 31, 2010 audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed consolidated financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

These condensed consolidated unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the consolidated operations and cash flows for the periods presented.

Lantis Laser, Inc. (the “Company”) was incorporated in the State of New Jersey on January 14, 1998. On November 3, 2004, the Company was acquired by Hypervelocity, Inc., a Nevada corporation.

In the transaction, the Company exchanged 100% of their stock in exchange for 127,718,500 shares of common stock of Hypervelocity, Inc. The transaction was treated for accounting purposes as a reverse merger with Lantis Laser, Inc. being the accounting acquirer. Included in the 127,718,500 shares issued to the shareholders of Lantis Laser, Inc. in the transaction, 6,422,500 shares were issued in conversion of convertible notes payable the Company had entered into in 2001 and 2003. The shares represent the conversion of the original notes, the interest accrued on those notes as well as warrants that were offered and paid for by the note holders. The value of the convertible notes, interest and warrants were $259,529.

On December 9, 2004, Hypervelocity, Inc. changed its name to Lantis Laser Inc. which is domiciled in Nevada.

On June 16, 2006, the Company authorized a 1 for 2 reverse stock split for all issued shares. All shares reflected herein have been retroactively adjusted to account for the reverse stock split.

F-7

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 1 -

ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

The Company was formed to commercialize the application of novel technologies in the dental industry. The criteria for selected products include competitive edge, exclusivity and large market potential. The Company was developing its Optical Coherence Tomography ("OCT") "Dental Imaging" as its first product but has suspended further development until it receives the funding to do so. The Company has licensed the exclusive rights for the dental field for the OCT patented technology from Lawrence Livermore National Laboratories. OCT was invented in the early 1990’s at Massachusetts Institute of Technology and it is currently being commercialized in ophthalmology and cardiovascular imaging.

On May 31, 2007, the Company entered into an exclusive licensing agreement for the field of dentistry with The University of Florida Research Foundation for technology relevant to the imaging probe of its Dental Imaging System; the Agreement carries a $1,000 initial licensing fee.

On July 9, 2008, the Company entered into an exclusive license agreement for the field of dentistry for a patent pending technology known as Near Infrared Transillumination Imaging (NIR). The Company paid the initial licensing fee of $10,000. This technology is synergistic with the OCT technology and the Company intends to sell it in a combination OCT/NIR platform and also as a standalone product.

Management of the Company has extensive experience in the dental industry, including technology, development, marketing and distribution, clinical and research dentistry.

OCT is a diagnostic imaging technology that is based on advanced photonics and fiber optics. It enables the capture of cross-sectional images of tissue with an axial resolution of up to ten times that of x-ray, providing tissue characterization and images that cannot be obtained by any other means, including x-ray. Information is captured by shining a near- infrared light through a single optical fiber only .006” diameter deep into the internal structures of the subject tissue.

When the light becomes scattered in the dense biological tissue, a certain component of the reflected light remains unscattered and thus contains good quantitative and structural image information. The OCT technology maps the changing intensities of reflections from the tissue to form an image of the subject area. This image, displayed on a monitor in real time, has an unprecedented amount of diagnostic information and can be manipulated, printed out and stored in a digital format.

On April 22, 2011, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Lantis Acquisition Corp., a Wyoming corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and TAG Minerals Inc., a Wyoming corporation (“TAG”), pursuant to which the Merger Sub was to be merged into TAG (the “Merger”). As a result of the Merger TAG became a wholly-owned subsidiary of the Company. The transaction was completed on May 23, 2011 and the Company issued to the shareholders of TAG 165,000,000 shares of common stock which represented 50% of the total issued and outstanding shares at the time of the Merger in exchange for 100% of their shares in TAG. The Company accounted for this transaction as an acquisition, and Lantis was the surviving company.

F-8

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 1 -

ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

TAG is a U.S. based mineral resource acquisition, exploration and development company, with operations conducted through its operating affiliate, TAG Minerals Zimbabwe (Private) Limited (“TAG - Z”). The company’s business is managed by its directors and officers who have mineral extraction and commercial experience. TAG’s strategy is to identify, acquire and exploit mineral properties that have potential. TAG is augmented by independent financial, geological, and mining professionals who advise the company on its mining and exploration projects throughout Zimbabwe, Africa.

The Company is now conducting the gold mining business of TAG and the dental technology business of Lantis Laser, Inc., another wholly-owned subsidiary.

Concurrent with the Merger Agreement, the Company’s former Chief Executive Officer and Executive Vice President Clinical Affairs and a Director of the Company resigned on May 6, 2011. The Company retained these former executives to continue to head up the dental technology subsidiary of the Company. These two executives received employment contracts dated May 23, 2011.

The President and Chief Executive Officer of TAG were named the new President and Chief Executive Officer of the Company. In addition, the remaining two shareholders of TAG became Directors in the Company.

At the time of the Merger, the Board of Directors approved the conversion of an outstanding note for each officer totaling $960,000 plus accrued interest of $62,466 into 14,400,000 cashless warrants. The warrants have a term of five-years, with an exercise price of $0.075. The Company performed a black-scholes calculation to determine the value of the warrants, and they were determined to have a value of $100,800. The gain on the conversion of the related party debt to warrants of $921,666 is reflected in additional paid-in capital in accordance with ASC 850.

The other related party debt of $150,000 at the time of the Merger was converted to a convertible note. The notes will be repaid at the rate of 5% of any funding, whether debt or equity, received by the Company or its subsidiaries, or 5% of net revenues of the Company until repaid in full. The noteholders have the right to convert any amounts outstanding and due to them at $0.075 per share at their sole discretion.

In July 2011, TAG-Z, acquired 100% of the capital stock of Ontage Resources (Private) Limited (“Ontage”). Ontage holds a 10% stake in an existing operating gold mining producer, Slashwood Mining (Private) Limited (“Slashwood Mining”). Slashwood Mining is a registered percentage owner of 8 custom gold milling centers across various locations in Zimbabwe, along with ownership of 30 mining claims encompassing approximately 2,000 acres. All of the gold milling centers and mining claims are completely outfitted with mining equipment; to include gold-ore crushers, excavators, generators and dump trucks. Slashwood Mining has 200 employees and is forging a path of expansion into mining projects.

Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB

F-9

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 1 -

ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Positions or Emerging Issue Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the basis for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.

Going Concern

As shown in the accompanying consolidated financial statements the Company has incurred recurring losses of $327,378 and $465,606 for the nine months ended September 30, 2011 and 2010 respectively, and has incurred a cumulative loss of $10,734,828 since inception (January 14, 1998). The Company has a working capital deficit in the amount of $1,076,659 as of September 30, 2011. The Company is currently in the development stage and has recently merged the gold mining business of TAG into their Company in addition to the OCT and NIR technology for which they currently hold exclusive licenses for dental applications.

With high gold prices and the contacts for mining rights that the principals of the Company maintain in Zimbabwe, the Company remains positive about the future.

There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period. Management believes that the Company’s capital requirements will depend on many factors. These factors include finding potential acquisition targets for TAG, how these targets can be acquired, i.e. cash, debt or common stock, and generating cash flow either through operations or through private placements to complete the final phase of development, product implementation and distribution first nationally, then internationally, of the Company's dental technology. Additionally, the Company continues to convert its debt into equity, and as a result has reduced its working capital deficit.

The Company’s ability to continue as a going concern for a reasonable period is dependent upon management’s ability to raise additional interim capital and, ultimately, achieve profitable operations. There can be no assurance that management will be able to raise sufficient capital, under terms satisfactory to the Company, if at all.

The consolidated financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.

F-10

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Development Stage Company

The Company is considered to be in the development stage as defined in ASC 915. The Company has devoted substantially all of its efforts to the development of their OCT technology. Additionally, the Company has allocated a substantial portion of its time and investment in bringing their services to the market, and the raising of capital.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company has adopted the provisions of ASC 810-10-5, “Consolidation of VIEs”. ASC 810-10-5 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIEs residual returns.

TAG Minerals Inc. on January 4, 2011, then amended on April 2, 2011 acquired a 49% interest in TAG – Z for a 33% interest in TAG. The remaining 51% ownership in TAG – Z is held by a Director of the Company, a Zimbabwe resident, Tapiwa Gurupira. TAG – Z will be the operating arm of TAG, initially, -, with the Company being the primary beneficiary of all the activities of its subsidiary, TAG, and their associated company TAG – Z.

As a result of this investment by TAG, TAG – Z has been identified by the Company as a VIE.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to derivative liabilities, bad debts, income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash equivalents. Any amounts of cash in financial institutions over FDIC insured limits, exposes the Company to cash concentration risk.

F-11

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments (other than Derivative Financial Instruments)

The carrying amounts reported in the consolidated balance sheet for cash and cash equivalents, and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. For the notes payable, the carrying amount reported is based upon the incremental borrowing rates otherwise available to the Company for similar borrowings.

Research and Development

The Company annually incurs costs on activities that relate to research and development of new technology and products. Research and development costs are expensed as incurred. Certain of these costs would be reduced by government grants and investment tax credits where applicable. The Company has expensed its payments in connection with the license agreement as research and development costs. There has been very little costs related to research and development in the past few years as funding for this has been minimal.

Revenue Recognition

The Company has not recognized revenues to date. The Company anticipates recognizing revenue in accordance with the contracts it enters into for the distribution of the products that are currently in development for the dental technology, and the contracts they enter into for their gold mining business.

Income Taxes

Under ASC 740 the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Uncertainty in Income Taxes

Under ASC 740-10-25 recognition and measurement of uncertain income tax positions is required using a “more-likely-than-not” approach. Management evaluates their tax positions on an annual basis and has determined that as of June 30, 2011 no additional accrual for income taxes is necessary.

Advertising Costs

The Company expenses the costs associated with advertising as incurred. Advertising expenses for the nine months ended September 30, 2011 and 2010 are included in professional, consulting and marketing fees in the consolidated statements of operations.

F-12

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fixed Assets

Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets; computer and medical equipment – 3-5 years, and furniture and fixtures - 5 years.

When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized. Deduction is made for retirements resulting from renewals or betterments.

Impairment of Long-Lived Assets

Long-lived assets, primarily fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. The Company does not perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value.

Subsequent Events

In accordance with ASC 855 “Subsequent Events”, the Company is required to disclose the date through which subsequent events have been evaluated and whether that date is the date the financial statements were issued or the date the financial statements were available to be issued.

Segment Information

The Company follows the provisions of ASC 280-10, "Disclosures about Segments of an Enterprise and Related Information”. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. The Company, effective May 23, 2011, operates in two reporting segments. The segments are dental technology and mining activities.

F-13

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(Loss) Per Share of Common Stock

Basic net (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share ("EPS") include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share on the consolidated statement of operations due to the fact that the Company reported a net loss and to do so would be anti-dilutive for the periods presented.

The following is a reconciliation of the computation for basic and diluted EPS:

							Cumulative
							Totals since
	September 30,			September 30,			January 14, 1998
	2011			2010			(Inception)
Net loss	$	(327,378	)	$	(465,606	)	$	(10,734,828	)

Weighted-average common shares
Outstanding (Basic)		252,394,175			100,787,653			53,008,874
Weighted-average common stock Equivalents
Convertible Notes		10,190,000			41,030,000			10,190,000
Stock options		-			-			-
Warrants		28,886,066			14,486,066			28,886,066

Weighted-average commons shares Outstanding (Diluted)		291,470,241			156,303,719			92,084,940

F-14

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-Based Compensation

In 2006, the Company adopted the provisions of ASC 718-10 “Share Based Payments”. The adoption of this principle had no effect on the Company’s operations.

ASC 718-10 requires recognition of stock-based compensation expense for all share-based payments based on fair value. Prior to January 1, 2006, the Company measured compensation expense for all of its share-based compensation using the intrinsic value method.

The Company has elected to use the modified-prospective approach method. Under that transition method, the calculated expense in 2006 is equivalent to compensation expense for all awards granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair values. Stock-based compensation expense for all awards granted after January 1, 2006 is based on the grant-date fair values. The Company recognizes these compensation costs, net of an estimated forfeiture rate, on a pro rata basis over the requisite service period of each vesting tranche of each award. The Company considers voluntary termination behavior as well as trends of actual option forfeitures when estimating the forfeiture rate.

The Company measures compensation expense for its non-employee stock-based compensation under ASC 505-50, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services". The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete.

The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital. For common stock issuances to non-employees that are fully vested and are for future periods, the Company classifies these issuances as prepaid expenses and expenses the prepaid expenses over the service period.

Debt Issuance Costs

Debt issuance costs relate to the fees paid in connection with the Convertible Notes. These fees are being amortized over the life of the Convertible Notes which is three years. Should the notes be converted prior to the maturity date of three years, then the debt issuance costs will be amortized sooner. The Company amortized $0 and $30,618 for the nine months ended September 30, 2011 and 2010, respectively.

F-15

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Beneficial Conversion Features

ASC 470-20 applies to convertible securities with beneficial conversion features that must be settled in stock and to those that give the issuer a choice in settling the obligation in either stock or cash. ASC 470-20 requires that the beneficial conversion feature should be valued at the commitment date as the difference between the conversion price and the fair market value of the common stock into which the security is convertible, multiplied by the number of shares into which the security is convertible. ASC 470-20 further limits this amount to the proceeds allocated to the convertible instrument.

Recent Accounting Pronouncements

In December 2007, the Company adopted ASC 805, Business Combinations (“ASC 805”). ASC 805 retains the fundamental requirements that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. ASC 805 defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. ASC 805 will require an entity to record separately from the business combination the direct costs, where previously these costs were included in the total allocated cost of the acquisition.

ASC 805 will require an entity to recognize the assets acquired, liabilities assumed, and any non-controlling interest in the acquired at the acquisition date, at their fair values as of that date.

ASC 805 will require an entity to recognize as an asset or liability at fair value for certain contingencies, either contractual or non-contractual, if certain criteria are met. Finally, ASC 805 will require an entity to recognize contingent consideration at the date of acquisition, based on the fair value at that date. This will be effective for business combinations completed on or after the first annual reporting period beginning on or after December 15, 2008. Early adoption is not permitted and the ASC is to be applied prospectively only. Upon adoption of this ASC, there would be no impact to the Company’s results of operations and financial condition for acquisitions previously completed. The adoption of ASC 805 did not have a material effect on the Company’s financial position, results of operations or cash flows.

In March 2008, ASC issued ASC 815, Disclosures about Derivative Instruments and Hedging Activities”, (“ASC 815”). ASC 815 requires enhanced disclosures about an entity’s derivative and hedging activities. These enhanced disclosures will discuss: how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for and its related interpretations; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. ASC 815 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. ASC 815 did not have a material impact on the results of operations or financial position.

F-16

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

In April 2008, ASC issued ASC 350, “Determination of the Useful Life of Intangible Assets”. This amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under ASC 350. The guidance is used for determining the useful life of a recognized intangible asset shall be applied prospectively to intangible assets acquired after adoption, and the disclosure requirements shall be applied prospectively to all intangible assets recognized as of, and subsequent to, adoption. ASC 350 did not have a material impact on the financial position, results of operations or cash flows.

ASC 470-20, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“ASC 470-20”) requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. ASC 470-20 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis. The adoption of ASC 470-20 did not have a material effect on the financial position, results of operations or cash flows.

ASC 815-40, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock” (“ASC 815-40”), provides guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock and it applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative., ASC 815-40 also applies to any freestanding financial instrument that is potentially settled in an entity’s own stock. ASC 815-40 did not have a material impact on the financial position, results of operations and cash flows.

ASC 470-20-65, “Transition Guidance for Conforming Changes to, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios” (“ASC 470-20-65”). ASC 470-20-65 is effective for years ending after December 15, 2008. The overall objective of ASC 470-20-65 is to provide for consistency in application of the standard. The Company has computed and recorded a beneficial conversion feature in connection with certain of their prior financing arrangements and 470-20-65 did not have a material effect on that accounting.

F-17

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

Effective July 1, 2009, the Company adopted FASB ASU No. 2009-05, Fair Value Measurement and Disclosures (Topic 820) (“ASU 2009-05”). ASU 2009-05 provided amendments to ASC 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities. ASU 2009-05 provides clarification that in circumstances in which a quoted market price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using certain techniques. ASU 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of a liability. ASU 2009-05 also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required for Level 1 fair value measurements. Adoption of ASU 2009-05 did not have a material impact on the Company’s results of operations or financial condition.

In December, the Company adopted FASB ASU No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities” (Topic 810”). (“ASU 2009-17”). ASU 2009-17 provides clarification on determination of entities included in financial statements as VIEs. Adoption of ASU 2009-17 did not have a material impact on the Company’s results of operations or financial condition.

In January 2010, the Company adopted FASB ASU No. 2010-06, Fair Value Measurement and Disclosures (Topic 820)- Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). These standards require new disclosures on the amount and reason for transfers in and out of Level 1 and 2 fair value measurements. The standards also require new disclosures of activities, including purchases, sales, issuances, and settlements within the Level 3 fair value measurements. The standard also clarifies existing disclosure requirements on levels of disaggregation and disclosures about inputs and valuation techniques. These new disclosures are effective beginning with the first interim filing in 2010. The disclosures about the rollforward of information in Level 3 are required for the Company with its first interim filing in 2011. ASU 2010-06 did not have a material impact on the financial statements.

Other ASU’s that have been issued or proposed by the FASB ASC that do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption.

F-18

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 3 -

FIXED ASSETS

Fixed assets as of September 30, 2011 (unaudited) and December 31, 2010 were as follows:

	Estimated		(unaudited)
	Useful Lives		September 30,			December 31
	(Years)		2011			2010
Computer and medical equipment		3-5	$	128,795		$	126,319
Machinery		5		6,800			-
Software		3		12,000			12,000
				147,595			138,319
Less: accumulated depreciation				(130,714	)		(113,729	)
Fixed assets, net			$	16,881		$	24,590

There was $16,985 and $16,861 charged to operations for depreciation expense for the nine months ended September 30, 2011 and 2010, respectively.

NOTE 4 -

CONVERTIBLE NOTES

Original Noteholders

In April and May 2007, the Company issued 5% Senior Convertible 3 Year Notes to investors in the amount of $2,526,500, which equaled the gross proceeds raised by the Company (the “Convertible Notes”). The Convertible Notes are convertible to shares of the Company’s common stock anytime in the three-year period at a fixed conversion price of $.15. The Convertible Notes will convert into 16,843,333 shares of the Company’s common stock. In May 2009, convertible notes of $125,000 were converted, at a fixed conversion rate of $.15 per share, into 833,334 shares of common stock. This conversion reduced the outstanding principal to a balance of $2,401,500. In an effort to reduce the liabilities of the Company, on July 1, 2010 the Company offered noteholders the opportunity to convert their Notes to common stock at $0.05 per share including any and all outstanding interest that has been accrued from the original $0.15 conversion price.

In addition, the Company offered to reset the exercise price of the warrants that were issued with the Notes to $0.075 from $0.15 and $0.25 and extend the warrants for a further three years from the original date of issue for all warrant holders.

Approximately 90% of noteholders have agreed to accept the terms of the conversion. Through June 30, 2010, convertible notes of $2,117,000, including $404,413 of accrued interest was converted to 42,340,000 shares of common stock. This conversion reduced the outstanding principal balance to a balance of $409,500. The Company determined that there was no material modification to the debt instrument under ASC 47-50-40, as the embedded conversion option immediately before and after the modification of the debt instrument was under the 10% threshold.

F-19

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 4 -

CONVERTIBLE NOTES (CONTINUED)

Original Noteholders (Continued)

The convertible noteholders received 6,737,333 detachable warrants with their notes. The warrants were exercisable for 5 years at an exercise price of $.25. The Placement Agent received 2,947,583 exercisable at $.25 for 5 years. The Company separately valued the warrants at $513,132, and recorded a debt discount in that amount which is being amortized to interest expense over the three-year Convertible Notes period. The Company has recorded an additional discount of $505,300 as the value of the beneficial conversion option.

Proceeds of the $2,526,500 were allocated as follows:

i) Convertible Notes - $2,013,368; and

ii) Warrants (also Debt Discount) - $513,132

The debt discount of $1,018,432 was amortized using the effective interest method over the life of the Convertible Notes of three years. As part of the transaction, the Company incurred $292,190 of debt issuance costs.

Interest expense on the Original Noteholders Convertible Notes for the nine months ended September 30, 2011 and 2010 was $53,681 and $189,616, respectively and $168,197 is accrued at September 30, 2011. A total of $404,413 of accrued interest was converted into common stock at the time of the note conversions in 2010 and 2011. Interest expense on the debt discount was $0 and $55,391 for the nine months ended September 30, 2011 and 2010, respectively, and amortization of the discount on the beneficial conversion feature was $0 and $54,515, respectively for the nine months ended September 30, 2011 and 2010.

As a result of the Company’s failure to timely pay the interest in May 2009, the convertible notes are in technical default. Therefore, the Company has reclassified the debt to current liabilities. The summary of the Convertible Notes is as follows at September 30, 2011:

$409,500 Convertible Notes at 10% interest
per annum due on demand		$	409,500

Asher Enterprises

In August 2010, the Company entered into a Convertible Promissory Note with Asher Enterprises Inc. in the amount of $50,000. The Convertible Note is convertible to shares of the Company’s common stock anytime in the nine-month period at a variable conversion price meaning 58% multiplied by the market price, the average of the lowest three trading prices. The Company has recorded a discount of $36,207 as the value of the beneficial conversion option. In the nine months ended September 30, 2011, the Company converted $50,000 of the note (the entire principal portion) into 16,440,977 shares of stock. Additionally, 689,655 shares of common stock were issued to convert $2,000 of interest.

Interest expense on the Asher Enterprise Convertible Note for the nine months ended September 30, 2011 and 2010 was $869 and $0, respectively. The Asher Enterprise Convertible Note has $0 remaining principal balance.

F-20

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 5 -

CONVERTIBLE NOTES – RELATED PARTIES

In May 2011, the Company converted two 5% interest bearing notes with the former Directors of the Company, and now officers of the dental technology subsidiary in the amount of $149,017 into new Convertible Notes totaling $150,000. The $983 variance was recorded by the Company as an expense.

The Convertible Notes will be repaid at the rate of 5% of any funding, whether debt or equity, received by the Company or its subsidiaries, or 5% of net revenues of the Company. The noteholders have the right to convert any amounts outstanding and due to them at $0.075 per share at their sole discretion.

As of September 30, 2011, the remaining principal balance is $150,000.

NOTE 6 -

RELATED PARTY LOANS

The Company has unsecured loans with two of its directors. There was $149,017 outstanding in May 2011. These loans were made to fund the Company with working capital during the development stage. The loans are accruing interest at a rate of 5% per annum. Interest expense during the nine months ended September 30, 2011 and 2010 was $3,375 and $4,651. These loans were converted into Convertible Notes (see Note 5).

The Company had entered into employment agreements with its two senior officers through December 31, 2009. The agreements obligated the Company to pay these officers $200,000 per year through December 31, 2009. Total commitment for the Company was $960,000. The amount is due December 31, 2012, however, there is no prepayment penalty. Concurrent with the Merger, the Directors who are owed the $960,000 plus $62,466 in accrued interest that remained outstanding agreed to convert these amounts into 14,400,000 warrants.

The warrants have a term of five-years, with an exercise price of $0.075. The Company performed a black-scholes calculation to determine the value of the warrants, and they were determined to have a value of $100,800. The gain on the conversion of the related party debt to warrants of $921,666 is reflected in additional paid-in capital.

F-21

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 7 -

LICENSE AND ROYALTY FEES

Lawrence Livermore

The Company on September 14, 2001, entered into a Limited Exclusive Patent License Agreement for Optical Coherence Tomography for Human and Animal Dentistry with The Regents of the University of California (Lawrence Livermore National Laboratories). Pursuant to this license agreement, the Company entered into an installment note with Lawrence Livermore National Laboratories. In the license agreement, the Company agreed to pay to Lawrence Livermore a total of $175,000 in installments commencing September 2001. The $175,000 note did not include annual minimum royalty fees or interest. The first installment was a license issue fee of $15,000 which was paid by the Company. The second installment of $50,000 was the second part of the issue fee that was to be paid in nine monthly installments commencing April 2003 was partially paid by the Company ($26,000). The last installment was originally due December 31, 2005 but it was extended by Lawrence Livermore to October 1, 2006 in the amount of $110,000. The total due under the license agreement was $134,000, prior to a payment made by the Company in October 2006 of $50,000.

Upon payment of this amount, the parties agreed to amend the agreement they had for payment of the balance of $84,000 along with the unpaid royalty fees of $380,000 for 2003, 2004 and 2005 as noted below. The Company incurred $10,000 of maintenance fees in February 2007 and paid these on February 28, 2007.

In addition to the license fee, the Company agreed to pay minimum royalties to Lawrence Livermore beginning in 2004. The Company prior to the amendment to the agreement had not paid any of the royalties to Lawrence Livermore.

The royalties due were for 2003 $30,000, for 2004 $100,000 and for 2005 $250,000. These fees were to be paid February 28 of each year for the prior calendar year. The royalties due were $380,000.

The parties agreed on December 22, 2006 to amend the agreement. The Company agreed to pay Lawrence Livermore a total of $144,000 in three installments; $10,000 by February 28, 2007 (which was for maintenance fees for 2007 and paid by the Company), $84,000 by July 28, 2007 (which was paid by the Company on July 9, 2007), and the final $50,000 by December 31, 2007 (which was paid by the Company on December 11, 2007). The $380,000 of minimum royalties have been forgiven by Lawrence Livermore and reclassified to additional paid in capital as of December 22, 2006.

On January 1, 2008, the Company paid minimum annual royalty fees of $20,000 for 2008. On February 18, 2009, the Company and Lawrence Livermore entered into an Amended License Agreement, which has been amended nine times, most recently in Amendment Nine dated June 23, 2011 whereby, the Lawrence Livermore extended the due dates of the minimum royalty fees for 2009 ($20,000) and 2010 ($20,000) until December 15, 2011 and 2011 ($20,000) until February 28, 2012. The remaining minimum royalty fees for 2012 and thereafter remain the same as in the original agreement: 2012 ($20,000) due February 28, 2012; 2013 ($60,000) due February 28, 2013; 2014 ($100,000) due February 28, 2014; and 2015 and thereafter for the life of the Agreement ($250,000) due February 28, 2015, and February 28 of each year thereafter for the life of the Agreement.

The $40,000 that remains outstanding to Lawrence Livermore is accrued for as of September 30, 2011.

F-22

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 7 -

LICENSE AND ROYALTY FEES (CONTINUED)

LightLab

The Company entered into a Non-Exclusive License Agreement for Imaging Patents between themselves and LightLab Imaging, LLC entered into August 8, 2001.

The License Agreement had an original term of 5 years, commencing two years after the original agreement date, which would expire August 8, 2008, and the license could be renewed. The minimum royalty requirements were based on Net Sales by the Company. Since the Company generated no sales in the periods, there were no amounts due. On December 19, 2006, the Company and LightLab Imaging, Inc. negotiated an amendment whereby the new term of the agreement is, unless terminated by either party to remain in effect for three years following whichever of the following events occurs first: i) the Company’s release of a licensed product; ii) the Company’s first commercial sale of a licensed product, or; iii) July 1, 2007 (July 1, 2010). The Company on September 18, 2007 paid LightLab Imaging, LLC $50,000. This Agreement has terminated and will not be renewed as the main scanning patent licensed in this Agreement expires in 2011, before the Company intends to introduce its OCT product into the market.

There were no amounts outstanding to LightLab as of September 30, 2011.

University of Florida

On May 31, 2007, the Company entered into an exclusive licensing agreement for the field of dentistry with The University of Florida Research Foundation for novel technology relevant to the imaging probe of its Dental Imaging System. The Agreement carries a $1,000 initial licensing fee with royalty payments to commence in 2008.

The Company has paid the minimum fees in 2008 and the minimum royalty for 2009 originally due by December 31, 2009 had been deferred until July 31, 2011 and is in accounts payable as it is unpaid as of September 30, 2011. The Company is discussing the possible extension at this time. The Company did pay some patent fees of $123 in 2009 to the University of Florida. In addition, the first year of sale under the agreement has been amended to 2011 from 2009.

University of California – San Francisco

On July 9, 2008, the Company entered an exclusive license agreement for near-infrared transillumination for the imaging of early dental decay with The Regents of the University of California. The agreement requires the payment of an initial non-refundable license fee of $10,000 and annual maintenance fees of $5,000. The agreement also requires the payment of certain milestone payments based on patent allowance and FDA approval.

The Company has amended this agreement five times, most recently on June 30, 2011, whereby milestones were updated to provide adequate time for the Company to complete development, obtain FDA clearance and transition to marketing and manufacturing. Minimum royalties are required as follows:

F-23

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 7 -

LICENSE AND ROYALTY FEES (CONTINUED)

University of California – San Francisco (Continued)

First year of sales, or no later than 2012	$	10,000
Second year		50,000
Third year		100,000
Fourth year		150,000
Fifth and subsequent years		200,000

The latest amendment deferred payment of the annual license maintenance fees due July 9, 2009, July 9, 2010 and July 9, 2011 ($5,000 per year for a total of $15,000) until November 30, 2011.

NOTE 8 -

COMMITMENTS

AXSUN

In June 2008, the Company entered into a strategic agreement with AXSUN Technologies, Inc. (“AXSUN”) whereby AXSUN will manufacture and supply the integrated OCT engine for the OCT System. Under the terms of the agreement, the Company had exclusive rights to the OCT engine for use in diagnostic imaging of teeth and soft tissue in human and animal dentistry. The exclusivity was subject to the Company’s purchasing a minimum number of OCT engines in each year, commencing in 2009. The agreement was terminated in May 2010 for nonperformance by the Company.

NOTE 9 -

STOCKHOLDERS’ EQUITY (DEFICIT)

Common Stock and Preferred Stock

As of September 30, 2011, the Company has 990,000,000 shares of common stock authorized with a par value of $.001. On December 9, 2004, Lantis Laser Inc. increased the authorized shares from 250,000,000 to 990,000,000. Lantis Laser Inc. also removed the 1,000,000 shares of preferred stock from its charter, and on January 23, 2007, amended its articles of incorporation to create a class of preferred stock, and authorized the issuance of 10,000,000 shares of preferred stock at $.001 par value. No shares have been issued to date.

The Company has 353,996,015 shares issued and outstanding as of September 30, 2011.

F-24

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 9 -

STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

Common Stock and Preferred Stock

During the nine months ended September 30, 2011, the Company issued:

16,440,977 shares of common stock in conversion of $50,000 in convertible notes to Asher Enterprises, and 689,655 shares of common stock to convert $2,000 of accrued interest to Asher Enterprises.

165,000,000 shares of common stock for 100% of the shares of TAG Minerals Inc., in a reverse merger.

16,071,432 shares of common stock to convert $80,000 of convertible note payables.

5,400,000 shares of common stock for services rendered in the amount of $20,468.

2,333,333 shares of common stock to convert $50,000 of convertible notes to old noteholders and convert $17,726 in accrued interest.

3,185,713 shares of common stock for $60,000 cash. In addition, the Company collected $216,250 for shares yet to be issued as of September 30, 2011.

5,000,000 shares of common stock as a deposit for an acquisition for TAG Z valued at $150,000.

During the year ended December 31, 2010, the Company issued:

500,000 shares to Agoracom for consulting services. These shares were valued at $.04 per share or $20,000.

The Company also converted $1,942,000 of convertible notes, at a fixed conversion rate of $0.05 per share, less discount, net of accrued interest, into 39,173,333 shares of common stock at a fixed conversion price of $0.05 per share. The Company also converted $386,687 of accrued interest on these converted notes to additional paid in capital.

During the year ended December 31, 2009:

The Company issued 2,000,000 shares to various consultants for administrative services and public and investor relation services. These shares were valued at various prices between $.10 and $.04 per share or $150,000. In addition, the Company issued 250,000 shares to convert a payable to a consultant ($12,500).

F-25

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 9 -

STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

Common Stock and Preferred Stock (Continued)

The Company converted $125,000 of convertible notes, at a fixed conversion rate of $.15 per share, less discount, beneficial conversion feature and issuance costs net of accrued interest, into 833,334 shares of common stock at a fixed conversion price of $.15 per share. The Company incurred additional charges to interest expense and amortization of debt issuance costs to reflect the conversion of these notes. This resulted in a reduction of additional paid in capital in the amount of $13,118.

The Company received 3,000,000 shares of stock in settlement of its complaints against Ice Cold Stocks, LLC and DC International Consulting LLC. These shares were returned to the Treasury and retired (see Note 12).

During the year ended December 31, 2008, the Company issued 575,000 shares to various consulting companies for public and investor relation services and 500,000 shares to a vendor in connection with a strategic supply agreement related to an Optical Coherence Tomography (OCT) engine for use in future products. These shares were valued between $.21 and $.26 per share or $229,500. In addition, a former noteholder who received warrants in 2006 exercised his warrants at $.15 per share for 69,850 shares of common stock for a cash value paid to the Company of $10,478.

In addition, two former noteholders who received warrants in 2006 exercised their warrants at $.15 per share in 2007 for a cash value paid to the Company of $24,506.

During the year ended December 31, 2006, the Company completed a private placement resulting in the sale of 5,850,000 shares of its common stock at a price per share of $.10. For every 1.8 share of common stock purchased, the investors received 1 warrant. The Company valued each component in accordance with APB 14. The Company received, net of fees, $521,500 through December 31, 2006. The Company also issued 1,500,000 to a consulting company for public and investor relation services. These shares were valued at $.10 per share or $150,000.

On June 16, 2006, the Company authorized a reverse 1 for 2 stock split on all issued shares. All shares herein have been reflected retroactive to the stock split.

For the year ended December 31, 2005, the Company issued no shares of common stock.

During 2004, the only shares issued were in connection with the reverse merger between Lantis Laser, Inc. and Hypervelocity, Inc. The total shares issued were 127,718,500 which included the 6,422,500 shares issued for the conversion of the notes, done simultaneously with the merger.

F-26

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 9 -

STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

Warrants

The Company granted 3,250,000 warrants to the investors who took part in the private placement of $585,000 based on a 1: 1.8 conversion ratio. The warrants were valued in accordance with APB 14 at a value of $208,143 utilizing the Black-Scholes method.

The Company granted 1,605,625 warrants to former noteholders that had previously converted their notes into shares of common stock in 2004. The Company valued these warrants utilizing the Black-Scholes method and expensed them in their consolidated statements of operations. The warrants have a fair value of $159,610. Two of these former noteholders who received these warrants exercised their warrants at $.15 per share in 2008 and 2007 for a cash value paid to the Company of $34,984.

The Company granted 178,750 warrants to a consultant who assisted the Company in their private placement. The Company valued these warrants utilizing the Black-Scholes method and expensed them in their consolidated statements of operations. The warrants have a fair value of $17,769.

The Company granted 6,737,333 warrants to the convertible noteholder investors who took part in the debt offering based on a 4:10 conversion ratio. The warrants were valued in accordance with APB 14 at a value of $513,132 utilizing the Black-Scholes method.

The Company granted 2,947,583 warrants to the placement agent who managed the issuance of the 5% Senior Convertible Note. The Company valued these warrants utilizing the Black-Scholes method and expensed them in their consolidated statements of operations. The warrants have a fair value of $292,518.

In September 2010, the Company agreed to reset the warrant exercise price to $0.075 per share and extend the maturity of the warrant an additional three years.

In May 2011, the Company converted $1,022,466 in related party notes and accrued interest into 14,400,000 warrants. The warrants have a term of five-years, with an exercise price of $0.075. The Company performed a black-scholes calculation to determine the value of the warrants, and it was determined to have a value of $100,800. The gain on the conversion of the related party debt to warrants of $921,666 is reflected in additional paid-in capital.

F-27

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 9 -

STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

Warrants (Continued)

The following is a breakdown of the warrants:

Exercise		Date
Warrants		Price		Issued	Term
	3,250,000	$	0.075	09/28/2006	8 Years
	1,372,400	$	0.075	09/28/2006	8 Years
	178,750	$	0.075	09/28/2006	8 Years
	6,737,333	$	0.075	05/01/2007	8 Years
	2,947,583	$	0.075	05/17/2007	8 Years
	14,400,000	$	0.075	05/23/2011	5 Years
	28,886,066

The warrant agreements contain no clauses regarding adjustments to exercise price, net settlement provisions, registration rights or liquidated damages clauses.

NOTE 10 -

PROVISION FOR INCOME TAXES

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

At September 30, 2011, deferred tax assets consist of the following:

Net operating losses	$	3,347,109
Valuation allowance		(3,347,109	)
	$	-

At September 30, 2011, the Company had a net operating loss carryforward in the amount of $9,844,437 available to offset future taxable income through 2031. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods. A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the periods ended September 30, 2011 and 2010 is summarized as follows:

	2011			2010
Federal statutory rate		(34.0	%)		(34.0	%)
State income taxes, net of federal benefits		3.3			3.3
Valuation allowance		30.7			30.7
		0	%		0	%

F-28

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 11 -

JOINT VENTURE AGREEMENT WITH LEI

On December 19, 2007, HyGeniLase, Inc., ("HyGeniLase") a Delaware corporation was formed. HyGeniLase is a joint venture between the Company and Laser Energetics, Inc., ("LEI"), an Oklahoma corporation, with each party owning 50% of the company. HyGeniLase was formed to develop, manufacture, market, sell and distribute dental laser process technology to the dental markets worldwide.

In this joint venture, the Company is responsible for funding HyGeniLase, clinical evaluation, process development, market development, and sales and marketing to the human and animal dental market. The Company shall be directly compensated by HyGeniLase for these functions at a rate equal to 5% of net sales less discounts. LEI is responsible for product development, product specifications, quality control, product improvement and manufacturing. LEI shall be directly compensated by HyGeniLase for these functions at a rate equal to cost plus 10% basis.

The Company is responsible for raising the initial funding of HyGeniLase in the amount of approximately $650,000: approximately $25,000 being allocated to fund a laser cost study to be conducted by LEI (all of which has been advanced); approximately $61,000 being allocated to purchase a reconditioned research laser (of which $42,664 has been advanced); and $550,000 being allocated to fund the development of a pre-production prototype Alexandrite laser system to be provided by LEI (of which $100,000 has been advanced). LEI has cancelled the balance of $18,336 due on the reconditioned laser because of its late delivery, and the Company has suspended additional payments and funding pending delivery of the research prototype by LEI. LEI’s default in delivery of the research prototype occurred for technical reasons experienced by LEI.

Upon delivery of the research prototype by LEI, subject to our satisfactory clinical evaluation, the Company plans to resume performance of its obligations under the terms of the joint venture. Neither party has called the other into default under the agreement. HyGeniLase will repay the Company for all advances it has made in connection with the initial funding after HyGeniLase has received funding of at least $750,000 (in excess of the Company’s initial funding).

The $25,000 allocated to fund the laser cost study and the $550,000 allocated to fund the development of a pre-production prototype will be (or have been) paid to LEI for the benefit of HyGeniLase, and LEI has provided the Company, for the benefit of HyGeniLase, the laser cost study and will deliver the pre-production prototype.

The Company recognized a loss on the investment in HyGeniLase for the year ended December 31, 2007 in the amount of $61,332 and for the year ended December 31, 2008 of $25,000.

As of December 31, 2009, the Company has delayed the joint venture project with LEI due to failure on LEI’s part to comply with their end of the agreement as well as funding. As a result, the Company reserved the remaining $81,332 of the investment on their books.

F-29

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)

NOTE 12 -

INVESTMENT

TAG Z acquired Ontage in July 2011. The only activity in Ontage is a 10% interest in Slashwood Mining. The value of the 10% ownership is valued at $150,000, which is the value of the 5,000,000 shares of common stock that the Company issued to acquire Ontage.

NOTE 13 -

FAIR VALUE MEASUREMENTS

The Company adopted certain provisions of ASC Topic 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. The Company determines the fair value of its liabilities, on a recurring basis using significant observable inputs. The fair value measurement of these liabilities is consistent with ASC 820, "Fair Value Measurements" ASC 820 did not have an impact on the consolidated financial position or results of operations; however, the required disclosure for the nine months ended September 30, 2011 is as follows:

ASC 820 classifies these inputs into the following hierarchy:

Level 1 inputs: Quoted prices for identical instruments in active markets.

Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 inputs: Instruments with primarily unobservable value drivers.

The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2011:

	Level 1		Level 2		Level 3		Total
Investment		-		150,000		-		150,000
Convertible notes		-		-		559,500		559,500

F-30

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RAPTOR RESOURCES HOLDINGS INC. Reports