~~Table of Contents~~UNITED STATES

SECURITIES AND EXCHANGE COMMISSION ~~Washington, D.C. 20549~~

~~FORM 10-K~~Washington, D.C. 20549

~~(Mark one)~~FORM 10-K

~~Annual~~x ~~report~~ANNUAL ~~under~~REPORT ~~Section~~PURSUANT TO SECTION 13 ofOR 15(d) ofOF ~~the~~THE ~~Securities~~SECURITIES ~~and~~EXCHANGE ~~Exchange~~ACT ~~Act~~OF of 1934

For the fiscal year ended December 31, ~~2001~~ 2008

~~Transition~~Commission File ~~report under Section 13 or 15(d) of the Securities Exchange Act of 1934~~Number: 001-15069

~~For the transition period from ____________ to ____________~~InPlay Technologies, Inc.

~~Commission~~(Exact name ~~file~~of ~~number~~registrant ~~001-15069~~ as specified in its charter)

Duraswitch Industries, Inc. (Exact name of registrant as specified in its charter)

Nevada	88-0308867

(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

P.O. Box 28936 Scottsdale, Arizona	85255
(Address of principal executive offices)	(Zip Code)

Nevada		88-0308867
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Registrant’s telephone number, including area code: None

234 S. Extension Road Mesa, Arizona		85210
(Address of principal executive offices)		(Zip Code)

Securities registered pursuant to Section 12(b) of the Act:

(480) 586-3300 (Registrant’s Telephone Number, Including Area Code)

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	The Pink Sheets OTC Markets, Inc.

Securities registered ~~under~~pursuant to Section 12(bg) of the ~~Exchange~~ Act: None

		Name of Each Exchange
Title of Each Class		on Which Registered
Common Stock, par value $0.001		Nasdaq National Market System

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

~~Securities~~Yes ~~registered~~£ ~~under~~No ~~Section 12(g) of the Exchange Act: None~~ S

Indicate by check mark ~~whether~~if the registrant ~~(1) filed~~is ~~all~~not ~~reports~~ required to befile ~~filed~~reports bypursuant to Section 13 or 15(d) of the ~~Securities Exchange~~ Act ~~of 1934 during the past 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 No~~

~~Indicate~~Yes by£ ~~check~~No ~~mark if disclosure of delinquent filers pursuant to Item 405 of Regulation~~ S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

~~The~~Indicate by ~~aggregate~~check ~~market~~mark ~~value~~whether of the ~~common~~registrant ~~stock~~(1) ~~held~~has filed all reports required to be filed by ~~non-affiliates~~Section 13 or 15(d) of the Securities Exchange Act during the preceding ~~registrant~~12 asmonths of(or ~~February 28,~~for ~~2002~~such shorter period that the registrant was ~~$47~~required to file such reports),~~315,768,~~ ~~computed~~and by(2) ~~using~~has ~~the closing~~been ~~price~~subject ofto ~~$8.11~~such asfiling ~~reported~~requirements byfor the ~~Nasdaq~~past 90 ~~National Market~~days. Yes £ No S

~~Number~~Indicate by ofcheck mark whether the registrant’s ~~shares~~has ofsubmitted ~~common~~electronically ~~stock~~and ~~outstanding~~posted ason its ofcorporate ~~February 28~~Web site, ~~2002~~ ~~was~~if 9any,~~530,695~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

~~DOCUMENTS~~ Yes £ ~~INCORPORATED~~No ~~BY REFERENCE~~ £

~~Portions~~Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s ~~Proxy~~knowledge, ~~Statement~~in ~~for~~definitive ~~the~~proxy ~~2002~~or information ~~annual~~statements ~~meeting are~~ incorporated by reference ~~into~~in Part III of this Form 10-K. or any amendment to this Form 10-K. £

1Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

~~TABLE~~Large OFaccelerated ~~CONTENTS~~filer ¨ Accelerated filer ¨ Non-accelerated filer ¨(Do not check if a smaller reporting company) Smaller reporting company x

Part I
	Item 1. Description of Business.
	Item 2. Description of Properties.
	Item 3. Legal Proceedings.
	Item 4. Submission of Matters to a Vote of Security Holders.
Part II
	Item 5. Market for Common Equity and Related Stockholder Matters.
	Item 6. Selected Financial Data.
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
	Item 8. Financial Statements.
	Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Part III
Part IV
	Item 14. Exhibits and Reports on Form 8-K.
EX-10.14
EX-23.1

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

~~Table~~The aggregate market value of ~~Contents~~common stock held by non-affiliates of the registrant (9,747,455 shares) based on the closing price of the registrant’s common stock as reported on the Pink Sheets OTC Market on June 30, 2009 was $292,424. For purposes of this computation, all officers, directors, and 10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that such officers, directors, or 10% beneficial owners are, in fact, affiliates of the registrant.

~~Duraswitch~~As ~~Industries~~of June 30, ~~Inc. Form 10-K For~~2009, the ~~Year~~issuer ~~Ended~~had ~~December 31~~outstanding 11,622,568 ~~2001~~shares of common stock.

~~Table~~Documents Incorporated ofby ~~Contents~~ Reference

		Page
	PART I
Item 1.	Description of Business		3
Item 2.	Description of Properties		8
Item 3.	Legal Proceedings		8
Item 4.	Submission of Matters to a Vote of Security Holders		8
	PART II
Item 5.	Market for Common Equity and Related Stockholder Matters		8
Item 6.	Selected Financial Data		9
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		9
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		16
Item 8.	Financial Statements		17
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		30
	PART III
Item 10.	Directors, Executive Officers, Promoters and Control Persons		30
Item 11.	Executive Compensation		30
Item 12.	Security Ownership of Certain Beneficial Owners		30
Item 13.	Certain Relationships and Related Transactions		30
	PART IV
Item 14.	Exhibits and Reports on Form 8-K		31

None

2INPLAY TECHNOLOGIES, INC.

~~Table~~ANNUAL REPORT ofON ~~Contents~~FORM 10-K

~~Part I~~Fiscal Year Ended December 31, 2008

~~Item 1. Description of Business.~~TABLE OF CONTENTS

Overview

		Page
PART I

ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	7
ITEM 2.	PROPERTIES	9
ITEM 3.	LEGAL PROCEEDINGS	10
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	10

PART II

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	11
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	18
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	36
ITEM 9A(T).	CONTROLS AND PROCEDURES	36
ITEM 9B.	OTHER INFORMATION	37

PART III

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	39
ITEM 11.	EXECUTIVE COMPENSATION	44
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	45
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	48
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES.	49

PART IV

ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	49

SIGNATURES		53

~~We have developed, patented and licensed innovative technologies utilizing~~Statements aRegarding ~~magnetic~~Forward-Looking based design for electronic switches. We are currently expanding the use of these technologies by licensing manufacturers to produce and sell products using our technologies. We believe these patented technologies allow us and our licensees to provide innovative solutions to the design challenges faced by original equipment manufacturers, (“OEMs”), and component suppliers. Statements

WeThe statements ~~were~~contained ~~incorporated~~in this report on ~~May 1,~~Form ~~1997,~~10-K asthat ~~Total~~are ~~Switch,~~not ~~Inc.~~purely ~~(“Total~~historical ~~Switch”).~~are Inforward-looking ~~order~~statements towithin ~~establish~~the ameaning ~~market~~of ~~value~~applicable ~~for~~securities laws. Forward-looking ~~our~~statements ~~stock~~include tostatements ~~acquire~~regarding ~~other~~our ~~businesses~~“expectations,” ~~necessary~~“anticipations,” ~~for~~“intentions,” ~~our growth~~“beliefs,” weor ~~combined~~“strategies” regarding ~~with~~the anfuture. Forward-looking ~~inactive,~~statements ~~publicly~~also include ~~traded~~statements ~~company~~regarding ~~on December 31~~liquidity, ~~1997,~~anticipated ~~and~~cash ~~changed~~resources ~~its~~and ~~name~~expenses ~~to Duraswitch~~for ~~Industries,~~fiscal ~~Inc.~~year ~~(“Duraswitch~~2009 ~~Industries”).~~and Asthereafter; aour ~~result~~ability ofto ~~this~~protect ~~transaction,~~our intellectual ~~Total~~property; ~~Switch~~statements ~~became~~regarding athe ~~wholly~~agreement ~~owned~~to ~~subsidiary~~sell ofour ~~Duraswitch~~FinePoint assets, and our ~~Total~~plan ~~Switch’s former~~to ~~stockholders~~satisfy ~~acquired~~outstanding aobligations. All ~~controlling~~forward-looking statements ~~interest~~included in ~~Duraswitch.~~this ~~During~~report ~~1998,~~are based on information available to us as ~~through~~of the ~~acquisition~~filing date of ~~Aztec~~this ~~Industries~~report, ~~Inc.~~and ~~(“Aztec”),~~we ~~formerly~~assume ano liability to update any such ~~manufacturer~~forward-looking ofstatements. Our ~~membrane~~actual ~~switches,~~results wecould ~~commenced~~differ materially ~~operations~~from ~~and~~the ~~designed,~~forward-looking statements. Among the factors ~~manufactured,~~that ~~marketed~~could ~~and~~cause ~~distributed~~actual ~~integrated~~results ~~electronic~~to ~~control~~differ ~~panels~~materially are the factors discussed ~~developed~~in ~~with~~Item ~~our~~1A, ~~patented~~“Risk ~~technologies~~Factors. ”

During 2000, we started to implement a business model of licensing our technologies rather than manufacturing switches ourselves. During 2001, we completed this transition and expect our future revenue to come from our licensing efforts. As of December 31, 2001, we had 24 licensees, foreign and domestic, and we are continuing our efforts to expand our licensee base worldwide. 2

~~Industry Analysis~~PART I

~~Electronic switches and Integrated Control Panels (“ICPs”) are used in a~~Item wide variety of consumer, industrial and agricultural products, such as appliances, military equipment, airplanes, automobiles, security systems, temperature and point-of-sale systems, elevators, medical equipment, computers, gas pumps, beverage dispensers, gaming units, fitness equipment, consumer electronics, and commercial food preparation equipment1. Business

~~History~~Recent Developments ofand ~~Electronic~~Liquidation ~~Switches~~ of Business

InOn ~~the~~March 10, ~~last~~2009, ~~hundred~~we ~~years,~~executed ~~two~~a ~~basic~~binding ~~switches~~Letter ~~have~~of ~~dominated~~Intent ~~the~~(LOI) ~~market for~~to ~~our~~enter ~~switch~~into ~~technologies:~~a ~~electro-mechanical~~merger agreement ~~and~~with ~~membrane~~U.S. InRental ~~its~~Housing ~~simplest form~~REIT, anInc. ~~electronic~~(USRHR). ~~switch~~Under ~~controls~~ the ~~flow~~terms of ~~electric current: press~~ the ~~switch~~LOI, toUSRHR ~~complete~~had ~~the~~agreed ~~circuit~~to ~~and~~provide ~~the~~funding ~~current flows~~ to ~~operate~~InPlay ~~a micro-processor,~~for ~~which~~audit inand ~~turn,~~consulting ~~performs~~fees and ~~the~~working ~~desired function~~capital. ~~Electro-mechanical~~ ~~switches~~As ~~operate~~of byMay ~~pushing~~5, ~~turning or sliding a button~~2009, ~~knob~~ orUSRHR ~~lever~~had tonot ~~mechanically~~provided ~~activate a series of movable parts that will close or complete an electrical circuit within~~ the ~~switch~~agreed ~~itself~~upon funding. ~~Although~~On ~~they offer~~May ~~excellent tactile feedback for the user~~7, ~~electro-mechanical switches are bulky~~2009, ~~mechanically~~InPlay ~~complex~~announced ~~and~~that ~~can~~it behad ~~difficult~~terminated topursuit ~~manufacture.~~of the merger.

~~Membrane~~As ~~switches~~a result ~~consist~~ of ~~multiple,~~a ~~thin-film~~lack ~~layers~~of ~~topped~~funding, bywe ~~an overlay~~significantly ~~with~~wound ~~printed~~down ~~graphics~~operations orduring ~~instructions to operate~~ the ~~device in which~~ ~~the~~first ~~switch~~quarter isof ~~incorporated~~2009. AWe ~~typical~~focused ~~example~~our ofattention ~~a membrane switch is found~~ on ~~most~~ ~~microwave oven control panels. Without tactile feedback, users may activate~~ the ~~switch~~sale ~~several times, which could cause the opposite effect~~ of ~~what~~ ~~the user intended~~assets. ToOur ~~solve the feedback response problem, membrane switch~~goal ~~manufacturers~~is ~~typically~~to ~~have~~negotiate ~~offered~~outstanding aobligations ~~“beep”~~with ~~sound~~creditors, ~~light,~~satisfy orlegal ~~status icons on~~and aregulatory ~~display~~requirements toassociated ~~inform~~with ~~the~~any ~~user~~sale ~~when~~and ~~the~~wind ~~switch~~down ~~has~~of ~~been~~our ~~activated. However~~company, ~~this~~ ~~solution increases the cost, complexity~~ and ~~size~~close ofoperations ~~the~~with ~~product to which it is added, thus decreasing~~ the ~~advantages~~approval of ~~a membrane switch over an electro-mechanical switch~~stockholders.

~~The~~In ~~second~~April 2009, ~~option to overcome~~ the ~~feedback~~Nasdaq ~~response~~Stock ~~problem~~Market isnotified ~~to incorporate~~us athat ~~metal,~~our ~~rubber~~shares orwere ~~plastic~~subject ~~dome as part of the membrane switch.~~to ~~When~~delisting ~~pressed~~due byto anon-payment ~~user, the center~~ of ~~the~~annual ~~dome~~listing ~~will~~fees, ~~invert~~among ~~and~~other ~~contact the~~deficiencies. ~~circuit~~We ondid ~~the~~not ~~membrane~~appeal ~~layer~~the ~~beneath~~delisting ~~it.~~and ~~Domed~~trading ~~membrane~~of ~~switches~~our ~~are~~common ~~prone~~shares ~~to failure~~on ~~due~~Nasdaq ~~to material fatigue, are much less reliable than membrane switches~~was ~~without~~suspended ~~domes,~~on ~~and~~April ~~require inconsistent amounts of force to be activated~~27, ~~which has~~2009. ~~proven~~Nasdaq ~~frustrating~~subsequently tofiled ~~the~~a ~~user~~Form ~~and~~25 ~~increased~~with the Securities ~~cost~~ and ~~design~~Exchange ~~complexity while~~Commission ~~decreasing~~to ~~the~~complete ~~reliability of~~ the ~~switch~~delisting.

~~The~~On ~~Duraswitch~~May 18, ~~Competitive~~2009, ~~Advantage~~we filed a Form 15 with the SEC, deregistering our common shares and suspending reporting requirements under the Securities Exchange Act of 1934. We anticipate that the deregistration will become effective approximately 90 days after the filing.

~~The~~On ~~keys~~June 26, 2009, we executed an asset purchase agreement (APA) with Wacom Co. Ltd. pursuant to ~~our~~which ~~technologies~~we ~~are~~have ~~their~~agreed ~~simplicity~~to sell all of ~~design~~our ownership right, title and interest ~~reliance~~in and to the intellectual property pertaining to the digital computer onpen ~~magnetic~~and ~~force~~digitizer segment of our business, ~~rather~~including, ~~than~~without ~~mechanical~~limitation, ~~parts~~the human orinterface device technology used in the ~~elastic~~Magic ~~properties~~Point ofPen and the Write ~~materials~~Sense products, towhich ~~operate~~represents asubstantially ~~switch~~all of our remaining assets. This ~~Based~~transaction is conditioned on, ~~our~~among ~~management’s~~other ~~experience~~things, ~~and~~our ~~available~~stockholders ~~research~~approving inthe APA. Upon completion of the ~~electronic~~transaction, we ~~switch~~intend to negotiate settlements for amounts owed to creditors, cease business operations, and ~~ICP~~dissolve ~~industries~~our company and its subsidiaries, including FinePoint Innovations. If we ~~believe~~are able to successfully negotiate settlements of our ~~technologies~~obligations, ~~offer~~we believe we will be able to avoid bankruptcy. In connection with the dissolution, if any proceeds remain following ~~competitive~~the ~~advantages~~settlement ~~compared~~and payment of our outstanding liabilities, we intend to ~~switches~~distribute any remaining proceeds to our stockholders and ~~ICPs~~dissolve ~~using~~our ~~traditional~~company ~~electro-mechanical~~in oraccordance ~~membrane~~with ~~switch~~the ~~technologies:~~plan of liquidation and dissolution. However, depending on the settlements with creditors, there may be no remaining proceeds to distribute to shareholders.

3Wacom may terminate the APA if, among other reasons, the transaction is not consummated by October 5, 2009. If we are unable to consummate the transaction, we believe we will be forced to file for bankruptcy protection. See “Risk Factors – If we are unable to successfully obtain necessary stockholder approval or otherwise consummate the transaction with Wacom for the sale of our assets, we will be forced into bankruptcy.”

~~Table~~During July 2009, the Company entered into amendments to our Change of ~~Contents~~Control Severance Agreements with Mr. Potter and Mark Sokolowski, our Chief Financial Officer. The Company entered into these agreements to incent Messrs. Potter and Sokolowski to remain employed with the Company to assure the successful wind down of its operations and the payment and settlement of outstanding payables and liabilities. Under the agreements, as amended, each of Messrs. Potter and Sokolowski will be paid closing bonuses of $215,000 subsequent to the closing of the asset purchase transaction with Wacom. The closing payments will be paid in three installments, with (a) $161,250 due within three business days following the closing date of the asset purchase transaction, (b) $43,000 due within three business days after the Company’s board of directors approves a plan providing for the settlement of all of the outstanding creditors’ claims and the creditors’ approval of such plan, and (c) $10,750 due within three business days after the Company’s board of directors approves a plan to terminate business affairs and dissolve the Company. The Company will also provide each of Messrs. Potter and Sokolowski lump sum payment amounts equal to the amount of premium necessary as of the date the last closing bonus installment is paid to continue all medical, dental, vision, life, accidental death and dismemberment, and short-term and long-term disability insurance as is presently provided by the Company, for the period commencing on the date the last closing bonus installment is paid through and until December 31, 2009. In the event the Company files for bankruptcy protection, all remaining closing bonus payments that have not been paid to Messrs. Potter and Sokolowski as of the date of that filing, as well as the payment for continued group insurance benefits, shall accelerate and become immediately due.

Significantly Greater Durability and Reliability. Our technologies rely on a magnetic-based design with few moving parts and virtually no stress, fatigue, or potential breaking points. By eliminating or reducing the mechanical complexity and precision required by traditional technologies, we believe switches made with our technologies are significantly more durable and reliable than traditional electro-mechanical and membrane switches. From January 1998 to January 2001, we tested one of our Duraswitch PushGate™ switches. It exceeded 500,000,000 activations on an electronic counter without material fatigue or degraded tactile feedback. We believe this test result supports our belief in the reliability and durability of products manufactured using our technologies. 3

Tactile Feedback Response That Does Not Degrade Over Time. Membrane switches and some electro-mechanical switches require additional cues such as beeps, lights or status icons to artificially provide feedback to the user which increases the complexity and total cost of the switch. Our PushGate design consistently produces a distinctive “click” each time the user activates our switch and eliminates the costs associated with additional cues. Overview

~~Ease~~We ofhave developed, ~~Integration~~patented inand ~~Slim~~marketed ~~Profile,~~innovative ~~Environmentally~~human ~~Sealed~~interface ~~Design. Because~~devices ~~switches~~(HIDs) ~~produced~~for electronic ~~using~~products. Our ~~our~~focus ~~technologies~~during ~~use~~2008 awas ~~thin,~~our ~~multiple~~FinePoint ~~layer~~digital ~~design~~pen ~~that~~and ~~incorporates~~touch ainput ~~flexible circuit rather than bulky mechanical parts~~solutions, ~~they~~ ~~are~~which ~~easily~~we ~~integrated~~marketed ~~into~~to ~~flat~~developers ~~panel/slim~~and ~~profile products currently~~manufacturers ~~desired~~of bymobile ~~the~~electronic ~~market~~devices. ~~This~~In ~~design~~October ~~also~~2008, ~~eliminates~~we ~~the~~sold ~~need~~our ~~to breach the~~Duraswitch® ~~surface~~electronic ofswitch ~~the~~segment ~~ICP, enabling our ICPs~~ to beMemtron ~~easily~~Technologies ~~sealed~~Co, ~~cleaned,~~part ~~disinfected and~~of ~~protected~~the ~~from~~Interface Technologies ~~harsh~~platform ~~environmental~~of ~~conditions~~Esterline Corporation.

~~Value~~Until ~~Engineering Alternative. We believe switches produced using our~~May ~~technologies~~1, ~~offer~~2009, awe ~~better~~maintained ~~overall~~executive ~~value~~offices ~~compared~~at to13845 ~~switches using traditional technologies~~N. ~~The~~Northsight ~~integration attributes of our technologies allow~~Boulevard, ~~for~~Scottsdale, aArizona ~~complete~~85260, ~~value~~and ~~engineering~~our ~~alternative~~telephone tonumber ~~switch~~was ~~panel~~(480) ~~designs,~~586-3300. ~~which can~~Given ~~allow for cost~~ reductions in ~~various~~staff ~~components~~ and ~~manufacturing~~limited ~~processes.~~ongoing ~~In addition~~operations, ~~devices~~we ~~using~~have ~~our~~not ~~switches~~secured ~~are more durable and reliable than~~new ~~electro-mechanical~~office ~~switches and are therefore less costly to maintain~~space.

~~Strategy~~Through the SEC website, www.sec.gov , available free of charge are our annual reports on Form 10-K and 10-KSB, our quarterly reports on Form 10-Q and 10-QSB, our current reports on Form 8-K, our proxy statements, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. These reports are available as soon as reasonably practicable after we electronically file those reports with the SEC. Our Board of Directors has adopted a Code of Conduct, and a Code of Ethics for the CEO and Senior Financial Officers. Our corporate governance materials including our Audit Committee Charter, Code of Conduct, and Code of Ethics for the CEO and Senior Financial Officers. These documents, and any amendments or waivers thereto, and any other corporate governance materials contemplated by SEC regulations are available in print to anyone requesting a copy in writing from our corporate secretary at our executive offices.

Our objective is to become a leading switch technology provider in the electronic switch and ICP industries by entering into licensing agreements with established switch manufacturers, switch component assemblers and OEMs. In order to achieve this objective, we intend to implement the following strategies: Strategy

~~Maintain~~We ~~and~~have spent ~~Further~~substantial ~~Our~~resources ~~Patented~~developing ~~Technologies’~~innovative, ~~Competitive~~cost-effective ~~Advantages.~~solutions Wefor ~~intend~~the toautomotive, ~~maintain~~communications, ~~and~~computing, ~~further~~consumer ~~our~~and ~~patented~~industrial markets. While ~~technologies’~~we ~~competitive advantages~~were successful in ~~order~~generating tosubstantial ~~make~~interest in our technologies, ~~standard~~we inhave ~~the~~not ~~industry~~secured sufficient revenue to cover our expenses. We ~~intend~~ towere ~~pursue~~also ~~this~~unable ~~strategy~~to bysecure ~~aggressively~~additional ~~marketing~~funding ~~our~~to ~~technologies’~~allow time to ~~advantages~~develop a larger customer base and ~~broaden~~support ~~market~~volume ~~awareness~~manufacturing. WeIn ~~are~~2009, ~~focusing~~we substantially ~~our~~wound ~~sales~~down operations and ~~marketing~~ ~~efforts~~focused our attention on the sale of our intellectual ~~licensing~~property ~~program~~assets. ~~and~~Our ~~are~~goal ~~investing~~is ~~heavily~~to insuccessfully close on the proposed ~~research,~~asset ~~development~~sale ~~and~~transaction ~~testing~~with Wacom. Assuming stockholder approval of the transaction, we intend to ~~further~~use ~~refine~~the ~~our~~remaining ~~technologies~~cash ~~and~~to ~~expand~~negotiate, settle and ~~their~~satisfy, ~~possible~~to ~~applications~~the inbest aof ~~wide~~our ~~variety~~ability, obligations with all of ~~industries.~~our creditors.

Increase Market Awareness of Duraswitch’s Patented Technological Advantages. We will aggressively promote our patented technologies and design expertise to achieve widespread market awareness of our technologies’ advantages. Our promotional efforts will target design engineers and purchasing managers, whom we believe are the primary decision makers within the switch purchasing market. These efforts will include increasing exposure in trade magazines, increasing traffic to our Web site, participating actively in vendor-sponsored seminars for design engineers and aggressively promoting our technologies in the trade media. We believe that promoting our success and our licensees’ successes in providing custom-designed solutions for a number of high-profile companies will further enhance market awareness of our technologies and their unique competitive advantages. History

~~License Switch Manufacturers.~~ We ~~are~~were founded ~~offering~~in to1997 ~~license Duraswitch technologies~~ to ~~switch~~commercialize ~~manufacturers,~~our ~~turnkey~~internally ~~manufacturers~~developed ~~and~~Duraswitch ~~OEMs as a~~electronic ~~product~~switch ~~extension and a market differentiation~~technology. In ~~Our~~1999, ~~switch~~we ~~technologies~~completed ~~enable integration of multiple types of switches into~~ a ~~flat~~public ~~panel~~offering ~~environment~~ and ~~can~~became ~~transform~~listed ~~electrical~~on ~~type switches to electronic output utilizing their traditional switch housings. Our licensing strategy incorporates a simplified requirement whereby~~ the ~~licensee~~American ~~purchases~~Stock ~~defined licensed components from Duraswitch~~Exchange. ~~The~~In ~~component~~2000, ~~cost~~we ~~includes~~became ~~the~~listed ~~royalty~~on ~~for~~ the ~~rights to~~Nasdaq ~~manufacture,~~Stock ~~assemble and sell patented Duraswitch technologies~~Market. In ~~some~~May ~~cases where no components are supplied~~2009, ~~we are paid a royalty per switch manufactured. We support~~ our ~~licensees~~shares ~~with~~were ~~engineering,~~delisted ~~design,~~from ~~testing, specification~~the ~~materials,~~Nasdaq ~~training~~Stock ~~programs, marketing assistance, customer~~Market ~~leads,~~ and ~~patent~~currently ~~protection.~~trade ~~Every~~on ~~licensee~~the ~~has~~Pink ~~strict~~Sheets ~~qualitative~~OTC ~~standards to~~market ~~maintain~~under asthe ~~part of their licensing agreement.~~symbol NPLA.

~~Provide~~In ~~Full Service Training~~2005, we ~~Design~~acquired ~~Engineering~~FinePoint Innovations, ~~Testing~~a ~~and~~developer ~~Design Review.~~of Wedigital ~~intend~~computing topen technology bethat aenables ~~“one~~pen ~~stop~~input ~~shop”~~on ~~for~~tablet ~~electronic~~PCs, ~~switch~~Smartphones, ~~solution~~kiosks ~~design engineering~~ and ~~testing for licensees~~ point-of-sale ~~our technologies~~systems. Our ~~With~~FinePoint ~~our~~computing ~~history~~pen ~~in design~~ and ~~manufacturing~~digitizer ofare produced ~~these~~through ~~technologies~~contract manufacturers, wethen ~~are~~provided ~~able~~ to ~~provide engineering~~the ~~support,~~ODM ~~design~~or ~~assistance,~~OEM customer ~~testing~~for ~~and~~integration ~~prototype~~into ~~assembly~~the ~~services to~~final ~~our licensees~~product. We ~~Our~~have ~~manufacturing~~developed digital ~~expertise~~pen istechnology, ~~shared~~offering ~~with~~a ~~our~~significant ~~licensees through~~advancement in~~-house~~ orperformance over current analog products at a competitive cost.

4In October 2008, we sold the Duraswitch assets to Memtron Technologies Co. in an effort to streamline our operations and focus our efforts on marketing FinePoint products for mobile computing and communications.

~~Table of Contents~~4

~~on-site Duraswitch technologies training with our engineering and sales~~FinePoint ~~and~~Digital ~~marketing~~Computing ~~teams,~~Pen ~~which includes hands-on training of Duraswitch technologies, documentation manuals and product design reviews.~~ Industry

~~Form Strategic~~Computing pens ~~Technology~~and ~~Alliances.~~digitizers ~~During~~are ~~2001,~~used weto ~~entered~~transform human input into ~~two strategic~~a ~~technology~~digital ~~alliances.~~signal Wethat a ~~formed~~computer anor ~~alliance~~portable ~~with~~device ~~Hanaco~~can ~~Manufacturing Co~~process. Products tothat ~~bring~~use digitizer ~~together~~input ~~our~~include ~~switch~~tablet ~~technologies~~or ~~with~~convertible ~~Hanaco’s~~PCs, ~~silicone~~personal ~~rubber~~digital assistants ~~keypad~~(PDAs), ~~overlays.~~Smartphones, Wepoint-of-sale ~~also~~devices, ~~formed~~kiosks, anand ~~alliance~~various ~~with~~computer peripherals. ~~Durel~~We ~~Corp.~~have developed digital pen technology, anoffering ~~affiliate~~a ofsignificant 3Madvancement ~~and~~in ~~Rogers~~performance ~~Corp.~~over ~~The~~current ~~alliance~~analog ~~with~~products ~~Durel~~at ~~capitalizes~~a oncompetitive cost. We ~~Durel’s~~had ~~innovative electroluminescent~~been ~~(EL) backlighting~~marketing this technology. ~~Our~~to ~~strategic~~OEMs ~~alliances~~as ~~with~~an innovative ~~companies~~pen ~~offering~~input ~~complementary~~solution ~~technologies~~for ~~leverage~~builders ~~resources~~of ~~and~~tablet ~~expertise in~~personal ~~engineering~~computers, ~~marketing~~computer peripheral products, ~~training~~point-of-sale terminals, and ~~purchasing~~kiosks. This technology ~~and~~is ~~increase~~intellectual ~~the~~property ~~variations and~~intending ~~options~~to ~~that~~be ~~licensees~~sold ~~can~~under ~~offer~~the ~~their~~Asset Purchase ~~customers~~Agreement bydiscussed ~~designing~~above ~~our technologies~~in ~~into~~“Recent ~~their~~Developments ~~products.~~and Liquidation of Business”.

~~Technologies~~History of Digitizer Technology. Digitizer technology has been around for many years and continues to evolve to meet the increasing demands for higher resolution, higher accuracy, and lower power consumption.

WeThere ~~have~~are two abasic ~~number~~types of ~~switch~~digitizer ~~applications~~technology ~~based~~used ontoday: ~~our~~active ~~patented magnetic-based~~digitizers ~~technologies. We have licensed the PushGate™, thiNcoder™ RT~~ and ~~MagnaMouse™~~passive ~~to our licensees~~digitizers. Both ~~Our~~active ~~non-exclusive~~and ~~licensees~~passive ~~pay~~digitizers ~~between~~use ~~$0.10 and~~similar ~~$0.30~~components ~~per~~to ~~PushGate,~~digitize ~~between $0.25 and $0.75 per thiNcoder RT~~data, ~~and~~including ~~between~~the ~~$0.28 and $0.78 per MagnaMouse depending on volume. Fees for additional technologies will be determined upon release.~~ following:

~~The Duraswitch PushGate™.~~ · A ~~typical Duraswitch PushGate switch consists of~~ ~~up to five bonded micro-thin layers of material~~pen, ~~which collectively measure less than 1/10th of an inch. The top layer of the switch is printed with a graphical overlay that indicates which buttons must be pressed to activate a desired function~~stylus, ~~such~~or ashuman ~~the~~finger “on”, “defrost” and “cook” buttons on a microwave oven. Below the top layer is a thin, flexible layer of magnetic material. Below the magnetic layer is spacer material containing a hole through which a patented metal disc is pushed. The disc has a small, raised, off-center button that is pushed by the user through the surface of the switch. A flexible circuit is located at the bottom of the switch. When the button is pressed, the disc separates from the magnet and the underside of the disc completes the circuit by touching the contacts located on the flexible circuit. When the button is released, the magnet pulls the disc upward and away from the switch contacts into its resting position, and the circuit is broken. This magnetic-based design produces a consistent tactile feedback response to ~~the user~~generate ~~each~~input ~~time the switch is activated.~~ data;

~~In 2001, we introduced the PushGate Island construction which reduces the~~· A ~~number~~sensor ofdevice ~~material layers and allows for the switching element of the PushGate~~ to begenerate ~~fabricated~~x, asy aanalog ~~freestanding~~coordinates ~~subassembly~~from ~~that can be easily inserted into a foam layer. The ability to manufacture~~ the ~~PushGate as an~~input ~~Island, simplifies the manufacturing process and reduces cost.~~ data;

~~The Duraswitch thiNcoder™ RT. The Duraswitch thiNcoder RT resembles a~~· A ~~typical~~micro ~~volume~~controller control knob on a car radio, except that unlike an electro-mechanical rotary switch, the back of our switch is flat. The entire assembly can be less than 1/10th of an inch thick. The Duraswitch thiNcoder RT consists of a rotary knob containing embedded magnets all fastened to aconvert ~~flat surface. The top of~~ the ~~surface displays instructions for the user. The bottom of the surface seals a circular space below the magnet containing small~~x, ~~1mm, gold-plated~~y ~~balls.~~coordinates ~~Beneath~~into ~~the~~digital ~~circular space are printed electronic circuits,~~data; which are activated through contact with the gold-plated balls. When the user turns the knob, the magnet within the rotary knob causes the gold-plated balls to rotate within their circular space. As the balls roll across the flex-circuit membrane, they close or open the circuit and convey the user’s instructions to the device. The design of the Duraswitch thiNcoder RT also allows for a consistent tactile feedback response to the user, such that the user can feel each “click” as the knob is turned.

~~The Duraswitch MagnaMouse™. The Duraswitch MagnaMouse is an~~· Driver omnidirectional switch that works by using a disc-shaped actuator held by magnetic attraction. Pushing on the rim or any custom designed key cap closes the contact and actuates the MagnaMouse. Electrodes are arranged to produce different outputs when contacted in different locations. The MagnaMouse can be pressure sensitive. software

~~Switch~~Passive technology ~~Technologies~~is ~~Under~~used ~~Development~~in PDAs and many vertical tablet applications today. The ~~Switch~~term ~~technologies~~“resistive” ~~under~~is used synonymously with the term ~~development~~“passive” in these applications. In a resistive digitizer all of the electronic components are atcontained ~~various~~on ~~stages~~or beneath the surface of ~~modeling,~~the ~~prototyping~~contacted surface. The input device contains no electronics and ~~testing.~~can ~~These~~be any hard ~~switch~~object ~~technologies~~(typically ~~include~~a stylus), to create the: data to be input.

•In ~~thiNcoder~~a resistive ~~EZI~~digitizer, ~~the~~a ~~next~~voltage ~~generation~~is ~~rotary~~applied ~~encoder,~~to •the ~~thiNcoder~~top ~~EZI~~sheet. As ~~5-bit,~~the user ~~designed~~touches ~~for use in~~ the ~~appliance industry and other applications which require a large number of selector positions~~screen, •the ~~thiNcoder~~top ~~PK,~~sheet acompresses ~~thiNcoder~~the ~~EZI~~spacer ~~incorporating~~dots aso ~~push~~that ~~knob,~~the top •and ~~Slider,~~bottom alayers ~~linear~~are ~~version~~in ofcontact. Upon ~~our thiNcoder RT~~contact, •current ~~Thumbwheel,~~flows ato the ~~next~~four ~~generation~~corners ~~thiNcoder~~in RTproportion ~~configured~~to ~~for~~the ~~vertical,~~distance ~~single~~from ~~digit~~the ~~(finger)~~edge. The ~~operations,~~x & •y ~~Rocker,~~position aof ~~two~~the ~~position~~stylus ~~switch,~~is •then ~~thiNcoder~~calculated ~~PB,~~by athe ~~standard~~controller ~~thiNcoder~~based RTon ~~incorporating~~the changes ain ~~push~~the ~~button~~current ~~switch~~flows ~~for~~and ~~multiple~~digital ~~functionalities,~~coordinates ~~and~~are generated.

5Other passive digitizing technologies used primarily in non-portable touch screen applications include capacitive, near-field imaging, acoustic wave, and infrared technology.

~~Table~~Electromagnetic or active digitizers utilize an input device, such as a pen, which contains some electronics external to the touched surface of ~~Contents~~the digitizing device. An active digitizer uses electromagnetic technology to transmit information about the pen’s location, via the pen, to the sensor grid located behind the liquid crystal display. The controller’s chipset uses this information to create digital data, including ASCII data packages, which are used by the host computer. In active pen input solutions, data communication between the pen and the digitizer is based on either analog or digital communication.

•FinePoint Digital ~~Various~~Computing ~~PushGate~~Pen ~~actuator designs to replace electro-mechanical and electronic push button mechanisms.~~Technology

~~Generally,~~Our FinePoint ~~our~~products ~~switches~~consist ~~are~~of ~~custom-designed~~a todigitizer ~~meet~~and ~~specific~~digital ~~design~~writing ~~challenges~~pen. The orpen is a ~~licensee’s~~cordless, ~~customer~~active ~~requirements~~RF ~~dictated~~digital bypen versus the ~~nature of~~earlier ~~specific~~analog ~~applications.~~pen ~~Accordingly,~~technology ~~all~~used ofwith ~~these~~most ~~switch~~computer-based ~~designs~~systems. The digitizer ~~may~~is bea ~~adapted to~~complete ~~fit~~assembly ~~various~~comprised ~~types~~ of ~~integrated~~a ~~control~~sensor ~~panel~~grid ~~arrays~~ and ~~electronic~~integrated ~~products.~~controller Weelectronics ~~are~~with ~~constantly~~standard ~~refining~~connectors. The ~~our~~pen ~~technologies~~transmits ~~and designing new~~a ~~variations~~digital signal to ~~meet~~the ~~specific~~digitizer ~~application~~which ~~design~~is ~~needs.~~then processed by the system.

~~Customers~~The FinePoint 800 (MPD800) system includes a digitizer and self-powered pen. The pen is powered by a long-life battery. The self-powered pen transmits a very small constant and continuous electromagnetic signal. This signal is captured by the digitizer which is positioned behind the display of the tablet PC or video monitor to determine pen position. The pen position information is sent to the PC or host and is displayed as cursor or mouse position information.

Our success depends in part on being able to supply switches to key industry segments. As a result, we have licensed various custom and turnkey switch manufacturers to produce switches in various devices in a wide variety of industries. Some of the key industries in which our licensees operate include the following: elevator, beverage dispensing, energy management, test and measurement, medical, point of sale, appliance, vending machine, gaming, recreational marine, industrial automation, health and fitness, restaurant equipment, gas pump, mass transit, computer, lighting and sound, aerospace and industrial controls. 5

~~In May 2000, Duraswitch received $4 million from Delphi Automotive Systems~~The ~~LLC,~~FinePoint ~~now~~900 ~~Delphi Corporation~~ (~~“Delphi”~~MPD900) inis ~~exchange for (~~a~~) Delphi’s~~ ~~exclusive right~~battery-free topen ~~utilize~~technology. Like ~~and manufacture~~ our ~~patented switch technologies for the~~ ~~automotive~~self-powered ~~industry~~pen, ~~(b) a~~the ~~warrant~~MPD900 tois ~~purchase~~a ~~225~~cordless,~~000~~ ~~shares~~active ofRF ~~our stock and~~digital ~~(c) an~~pen. The ~~option~~FinePoint todigitizer ~~purchase~~behind ~~approximately~~the ~~1.65 million~~LCD ~~shares~~screen ofpowers ~~our stock~~the pen. This ~~The license~~technology ~~agreement~~is ~~with~~different ~~Delphi~~than ~~generated~~other ~~licensing~~digitizer-powered ~~revenue of $411,362 or 49% of~~analog ~~licensing~~signal ~~revenue~~pen ~~and~~products ~~$277,860~~on orthe ~~52%~~market. We ofbelieve ~~licensing~~we ~~revenue~~have indesigned ~~2001~~the system ~~and~~to ~~2000, respectively.~~optimize ~~Licensing~~power ~~revenue~~consumption from ~~Delphi~~the ~~primarily~~tablet ~~resulted~~PC ~~from~~or ~~the~~convertible notebook ~~amortization~~while ofmaintaining ~~deferred~~high ~~licensing~~accuracy, ~~revenue~~high ~~which~~resolution, ~~was~~and ~~received~~low ~~in 2000.~~noise performance.

~~Intellectual~~In ~~Property~~2007, we introduced two platforms that enable integrated pen and touch input. Our MPRD95x system incorporates our pen technology with resistive touch input. Our MPCD97x system incorporates pen and capacitive touch technology.

~~Our~~In ~~success also depends in part on maintaining and protecting our proprietary technologies. As a result~~2008, we ~~have~~introduced ~~adopted~~our ~~an intellectual property~~WriteSenseTM ~~protection~~technology ~~policy~~which ~~designed~~couples toactive ~~deter~~RF ~~and~~pen ~~stop~~input ~~infringement.~~with Tocapacitive ~~deter infringement,~~touch ~~we file U~~systems.S. WriteSense ~~and~~eliminates ~~foreign~~the ~~patents~~need for ~~relevant~~a ~~material technological~~separate ~~advances,~~electromagnetic ~~and~~digitizer ~~warn against potential infringement~~ by ~~posting~~ ~~patent~~communicating ~~numbers~~directly onwith ~~our~~the ~~products,~~capacitive ~~packaging~~touch ~~and published materials. These materials include our Web site~~sensor, ~~business~~resulting ~~cards, letterhead, brochures, advertisements, and some technology samples. We have not had to become involved~~ in ~~infringement~~a ~~litigation to protect our intellectual property, however, we~~smaller ~~intend~~three-dimensional toform ~~aggressively~~factor ~~prosecute~~and ~~litigation~~a ~~against~~cost ~~infringers~~effective ~~if necessary~~solution.

~~In order to protect our trade secrets and other intellectual property, we~~FinePoint also require our employees, contract workers, consultants, advisors and collaborators to enter into confidentiality agreements, which prohibit the disclosure of proprietary information to third parties or the use of our proprietary information for commercial purposes. Our technical and sales employees also must agree to disclose and assign to us all methods, improvements, modifications, developments, discoveries, and inventions conceived or developed on our time, using our property, or relating to our business. Our management team has extensive experience in protecting technology from global competitors and will oversee our intellectual property protection program. As of December 31, 2001, we had $588,272 of capitalized costs related to patents. Markets

AsWe ofhad marketed ~~December 31,~~our ~~2001,~~products wedirectly ~~held~~to 11computer ~~U.S.~~OEMs ~~patents~~and ~~(Nos.~~contract 5manufacturers,~~523,730,~~ ~~5,666,096,~~targeting ~~5,867,082,~~manufacturers ~~5,990,772,~~of ~~6,023,213,~~tablet 6PCs,~~069,545,~~ 6convertible notebooks,~~069,552,~~ 6Smartphones,~~130,593,~~ ~~6,137,387,~~kiosks ~~6,262,646,~~ and ~~6,305,071), two Taiwanese patents (Nos. NI~~point-~~090979 and NI~~of-~~132948),~~sale ~~one Chinese patent (No~~systems. ~~96110385.X), one Australian patent (No. 727962) and one Canadian patent (No. 05046291).~~ We ~~also~~ have ~~several~~worked ~~patent~~with contract ~~applications~~manufacturers ~~pending~~to inmanufacture ~~the~~our ~~United~~pen ~~States,~~and ~~Mexico,~~digitizer ~~Canada, France, Great~~product. The ~~Britain,~~assembly ~~China,~~is ~~Taiwan,~~then ~~Italy~~provided ~~and~~to ~~Germany. We have made further filings under~~ the ~~Patent~~ODM ~~Cooperation~~or ~~Treaty~~OEM ~~which~~customer ~~makes it possible to seek patent protection~~ for anintegration ~~invention~~into ~~simultaneously in each of a large number of countries by~~the ~~filing~~final ~~an “international” patent application~~product.

WeOur FinePoint ~~have~~revenue ~~registered~~in ~~the~~2008 ~~following~~was ~~trademarks~~due ~~with~~primarily ~~the~~to ~~United~~one ~~States~~customer. During 2009, due to ~~Patent~~limited ~~and~~financial ~~Trademark~~resources, ~~Office:~~we ~~“Duraswitch®”~~finished all outstanding purchase orders for this customer. Concurrently, ~~“Duraswitch”~~we asbegan ato ~~stylized~~seek ~~word~~potential partners or buyers of the technology. We have entered into an agreement with aWacom ~~unique~~for ~~“D”~~the ~~and~~sale ~~“The~~of substantially ~~World~~all isof ~~Switching®”~~our assets, subject to stockholder approval. InSee ~~addition,~~“Risk Factors – If we ~~have~~are unable to ~~registrations~~successfully ~~pending~~obtain necessary stockholder approval or otherwise consummate the transaction with Wacom for the ~~following;~~sale ~~PushGate™,~~of ~~thiNcoder™~~our assets, ~~and~~we will be forced into ~~MagnaMouse™~~bankruptcy. ”

~~Research and Development~~FinePoint Competitive Advantages

~~We have 38 people in our research and development department who focus on~~Our ~~new~~FinePoint ~~technology~~digital ~~development,~~pen ~~new~~products ~~technology~~offer ~~applications and testing. In 2001, we restructured our research and development department to include~~ a ~~number~~significant ~~of technicians~~advancement ~~who were formerly part of our manufacturing department and are now primarily involved~~ in ~~the prototyping and testing of the technologies under~~performance ~~development.~~over Incurrent ~~order~~analog ~~for~~products usat toa ~~compete~~competitive ~~effectively, our technologies must continue to evolve with changing standards and design demands of manufacturers who need switches~~cost. We Tobelieve that ~~end, we continue to dedicate a large amount of our~~ ~~resources~~our todigital ~~research~~solution ~~and~~offers ~~development~~competitive ~~and~~advantages ~~the~~including ~~protection of our patented~~the following:

6Better Accuracy. Analog communications assign a specific frequency band to each function and measure the frequency to determine what information is being transmitted from the pen. Thus, added features in an analog system will reach a limit, or bandwidth limitation. Increasing the operational bandwidth will result in a noisier system which reports position information with less fidelity. For the user, this means lower accuracy and increased jitter. Digital communication is not limited by bandwidth, thus improving the position signal fidelity (better accuracy and less jitter). We believe our digital system offers the user a true pen-and-paper experience.

~~Table~~Lower Cost. With ofour ~~Contents~~digital technology, adding features does not require additional tuning and has minimal impact on the cost of production.

~~technologies~~Increased Feature-Enhancement Capability. Our ~~During~~digital ~~2001,~~technology inherently ~~2000~~offers ~~and~~increased ~~1999,~~feature-enhancement wecapability ~~spent~~that ~~$2,773,221,~~is $1not easily achieved with analog technology. For example,~~716,825~~ ~~and~~our FinePoint pen can ~~$889~~be configured with a unique identification,~~922~~ ~~respectively~~enabling a security key or identifiers for a collaborative environment. Memory can be incorporated into the pen much like a USB device. A host of imaginative features, onpreviously ~~research~~prohibited due to limitations of analog circuitry and ~~development~~communication ~~efforts~~protocols, can be achieved with our digital solution.

~~Sales~~Customization and differentiation. By ~~Marketing~~offering a wide range of choices for size, design, features and functionality, we believe that our technology enables OEMs to design and produce differentiated products.

~~We have 12 people in the sales and marketing department who focus on~~FinePoint supporting our existing licensees, marketing our technologies to OEMs and obtaining new licensees. In support of our licensees, we train their internal and independent sales and marketing teams on Duraswitch technologies. Strategies

~~Web~~Maintain ~~Site:~~our Intellectual ~~www~~Property.~~duraswitch.com~~ As we are focused on the sale of our technology assets, we intend to maintain the current intellectual property, and technology know-how under development.

We believe design engineers and purchasing managers – the individuals most likely to make the decision to incorporate our technologies in their products – frequently use the Internet to search for design solutions. Therefore, our Web site, www.duraswitch.com, is a key component of our current direct marketing efforts. Most of our advertising and promotional materials direct readers to our Web site. In addition to attracting potential licensees to our Web site for information, we use our Web site to generate interest in our technologies. Using our Web site as a promotional tool is also less expensive than other methods, is interactive, and reaches a global audience. Our Web site has several features, including: 6

•License ~~Information~~and/or Sell ~~about~~ the ~~advantages~~Technology. ofWe ~~our~~have ~~patented~~actively ~~technologies,~~marketed ~~accompanied~~the bycompetitive ~~articles published by third parties about our products; • Virtual demonstrations~~ advantages of our ~~technologies~~technology ~~and products; • Technical data~~ to ~~assist~~display ~~design~~manufacturers ~~engineers in designing ICPs~~ and ~~electronic~~providers ~~products~~of ~~using Duraswitch~~ complementary components;. •We ~~E-mail~~have ~~communication~~entered ~~links~~into toan ~~our~~agreement ~~design~~with ~~engineers~~Wacom ~~and sales representatives~~ to ~~facilitate~~sell ~~dialogue about how our technologies can be integrated into customers’ products; • Information on products available through our current licensees’ customers; and • Benefits and~~ the ~~process for obtaining information about licensing rights to utilize and manufacture Duraswitch technologies~~FinePoint assets.

~~Public Relations~~FinePoint Competition

We ~~target~~are aware ~~technical~~of ~~periodicals~~several ~~for~~other ~~media~~companies ~~exposure~~that inprovide anactive ~~effort~~digitizer toincluding ~~raise~~Wacom ~~awareness~~Co. ~~for Duraswitch technologies and our licensing strategy~~Ltd. ~~Our public relations campaigns have included editorial coverage of our technologies, co-operative advertising opportunities with licensees~~ and ~~listings in industry~~N-~~specific~~trig ~~supplier guides~~Inc. While Wethese ~~believe~~companies ~~this~~provide ~~is a cost-effective method~~similar ofproducts ~~capturing~~to ~~the~~ours, ~~attention~~their ofproducts ~~design~~use ~~engineers~~analog ~~and~~communication ~~OEMs and educating them on the benefits of our technologies. For example, according~~ to ~~Design~~send ~~News, approximately~~pen ~~335,000~~status ~~design professionals throughout the world read Design~~and ~~News’~~function ~~bi-weekly publications~~data. We Inare ~~addition~~not toaware ~~Design~~of ~~News,~~any ~~articles~~competitor onthat ~~our technologies~~is ~~have~~offering ~~been included in numerous trade publications including EDN~~a ~~(Electronic~~pen ~~Design~~computing ~~News),~~product ~~Appliance~~using ~~Magazine,~~digital ~~and~~stream ~~ECN (Electronic Component News)~~communication.

~~Seminars~~Our competitors possess financial, technical, human and ~~Trade~~other ~~Shows~~resources greater than ours.

~~We give educational presentations about our technologies at~~Intellectual vendor-sponsored seminars for product design engineers. At these seminars, we are able to meet attendees and provide them with information about our technologies through multi-media presentations, product demonstrations, brochures and samples. Property

~~The~~We ~~appliance~~have maintained ~~industry~~an isintellectual aproperty ~~key~~protection ~~target~~policy ~~market~~designed ~~for~~to ~~Duraswitch~~deter ~~technologies.~~and stop Ininfringement. To ~~order~~deter ~~to penetrate this market~~infringement, we ~~participated~~have infiled ~~the~~United ~~“Mobile~~States ~~Marketing~~and ~~Industry”~~foreign ~~tour~~patents for ~~the~~relevant ~~last~~material ~~two~~technological ~~years.~~advances ~~The~~and ~~tour,~~warn ~~sponsored~~against potential infringement by ~~Appliance Magazine,~~posting ~~brought~~patent ~~our~~numbers ~~technologies~~on ~~directly~~our toproducts, ~~engineers~~packaging, ~~from~~and published ~~over~~materials. Examples 30of ~~leading appliance~~these ~~manufacturers~~materials ~~including:~~include ~~Amana,~~our ~~Frigidaire~~website, brochures, GEadvertisements, ~~Maytag~~ and ~~Whirlpool~~some technology samples. We have not had to become involved in infringement litigation to protect our intellectual property.

~~Competition~~To protect our trade secrets and other intellectual property, we required our employees, contract workers, consultants, advisors, and collaborators to enter into confidentiality agreements, that prohibit the disclosure of proprietary information to third parties or the use of our proprietary information for commercial purposes. Our technical and sales employees also disclosed and assigned to us all methods, improvements, modifications, developments, discoveries, and inventions conceived or developed on the job, using our property, or relating to our business. As of December 31, 2008, we had approximately $0.5 million of capitalized costs related to patents, net of accumulated amortization.

WeAs ~~operate in an industry characterized by intense competition. We believe that our primary competitors are manufacturers~~ of ~~the~~ ~~electro-mechanical~~December ~~and~~31, ~~dome~~2008, ~~membrane~~we ~~switches.~~held ~~Many~~seven ofUnited ~~these~~States ~~manufacturers have~~patents ~~established products, broad brand~~ and ~~name~~one ~~recognition,~~foreign ~~and significantly~~patent ~~greater~~for ~~resources~~the ~~than~~FinePoint ~~ours~~technologies. We ~~Our~~also ~~tactic~~have ~~has~~patent ~~not been to compete directly with~~applications ~~these~~pending ~~manufacturers,~~in ~~but~~the toUnited ~~offer to license them our switch technologies. If these manufacturers~~States, as ~~licensees,~~well ~~incorporate~~as ~~our~~a ~~technology~~number ~~into~~of ~~their switches,~~countries wein ~~will~~Asia ~~have turned our competitors into business partners.~~and Europe.

~~While~~We ahave registered ~~licensing~~the ~~business~~following ~~model~~trademarks ~~fosters~~with ~~cooperation,~~the ~~switch~~United ~~manufacturers~~States Patent and Trademark ~~may~~Office: ~~not~~“InPlay ~~adopt~~Technologies®,” ~~Duraswitch’s~~and ~~technologies~~“MagicPoint®.” In ~~particular~~2008, ~~manufacturers~~we ~~may~~filed bea trademark ~~reluctant~~registration tofor ~~alter current designs or have other long-standing~~ “WriteSense.”

7Research, Development, and Commercial Application Engineering

~~Table~~During 2008, we had 15 people in our research, development, and commercial application engineering department who focused on supporting our licensees, ODMs and OEM customers in the design and implementation of ~~Contents~~products using our technologies. In 2009, we significantly wound down operations, eliminating future research and development work.

During 2008 ~~relationships~~and ~~that~~2007, ~~may~~we ~~affect~~spent ~~the~~$3,503,891 ~~manufacturers’~~and ~~decision~~$1,926,452, torespectively, ~~use~~on ~~one~~research, ~~technology over another~~development, ~~even~~and ifcommercial ~~our~~application ~~technologies~~engineering ~~offer additional benefits~~efforts.

In order for us to compete effectively, our technologies must continue to evolve with changing standards and design demands of manufacturers who need switches. To that end, we continue to dedicate a large amount of our resources to research and development and the protection of our patented technology. Employees

~~Employees~~As of June 30, 2009, we had two employees. None of our employees are covered by collective bargaining agreements and we consider our employee relations to be good.

~~As of December 31, 2001, we had 69 employees, 66 of which work full time.~~Item ~~None~~1A. Risk ~~of our employees are covered by collective bargaining agreements and we consider our employee relations to be good~~Factors.

~~Item 2.~~If we ~~Description~~are unable to successfully obtain necessary stockholder approval or otherwise consummate the transaction with Wacom for the sale of ~~Properties.~~our assets, we will be forced into bankruptcy.

~~Our~~Due ~~principal~~to ~~administrative, design, testing, and prototype manufacturing~~a ~~facilities~~lack ~~are~~of ~~located in Mesa~~funds, ~~Arizona, where~~ we ~~presently~~have ~~lease~~ceased ~~33,650~~business ~~square feet~~operations ~~of office~~ and ~~manufacturing~~focused ~~space~~on inthe asale ~~building~~of ~~located at 234 South~~our ~~Extension Road~~assets. While ~~This~~we ~~facility~~believe ~~consists~~that ofthe ~~approximately~~binding ~~10,000~~asset ~~square~~purchase ~~feet of~~agreement ~~office~~with ~~space~~Wacom ~~and~~will 23close,~~650~~ ~~square~~risks ~~feet~~remain ofuntil ~~testing~~the ~~and~~transaction ~~prototype~~is ~~manufacturing space~~consummated. ~~Our~~Wacom or ~~lease~~InPlay ~~terminates~~may onterminate ~~January 1,~~the ~~2004,~~agreement ~~subject~~due to ~~our~~various ~~option~~factors tooutlined ~~extend the~~in ~~term for an additional two years. The base monthly rent for 2001 was~~the ~~$17~~agreement,~~000.~~ ~~Future~~including ~~minimum~~our ~~monthly~~failure ~~rental~~to ~~payments~~obtain ~~are~~stockholder ~~$18,000~~approval ~~for~~by ~~2002~~a ~~and~~majority of ~~$18,000~~our ~~for 2003~~stockholders. WeIf ~~believe~~stockholders ~~our~~do ~~current~~not ~~facilities~~approve ~~will~~the besale ~~sufficient~~of ~~for our operational purposes for~~ the ~~foreseeable~~assets, ~~future~~we cannot ~~and~~complete any ~~additional~~such ~~facilities needed~~proposed ~~thereafter~~deal and will be ~~available~~forced ~~on commercially reasonable terms.~~into bankruptcy.

~~Item 3. Legal Proceedings.~~ 7

~~From~~As ~~time~~part of tothe ~~time~~asset wepurchase ~~may~~agreement, beWacom ~~subject~~has advanced to ~~claims~~us $350,000 for working capital and ~~litigation~~legal ~~incident~~and other costs related to ~~our~~ ~~business~~the transaction. If Asthe transaction ofis ~~February 28,~~not ~~2002~~consummated, we ~~were~~could ~~not~~be arequired ~~party~~ to ~~any~~repay ~~material~~Wacom amounts ~~legal~~advanced ~~proceeding~~and a termination fee.

~~Item 4.~~We believe ~~Submission~~that bankruptcy should be avoided if possible, as filing for bankruptcy will be both an expensive and lengthy process that will reduce the amount of cash ~~Matters~~available to apay ~~Vote~~our creditors. If stockholder approval of ~~Security~~the asset ~~Holders.~~purchase agreement is not obtained, or we are unable to negotiate satisfactory settlements with all our creditors, we may have no choice but to file for bankruptcy.

~~None.~~Cash needed to successfully complete the close of the asset purchase transaction and satisfy regulatory obligations may deplete funds available to creditors or stockholders

~~Part~~Assuming stockholder IIapproval is obtained, and the asset sale is completed, we intend to use the remaining cash to negotiate, settle and satisfy to the best of our ability obligations discontinue business operations. There can be no assurance that we will be successful in closing the asset purchase transaction, or that the remaining cash will be sufficient to cover our outstanding debts and obligations. As such, there may be no remaining proceeds to distribute to stockholders.

~~Item 5.~~We may ~~Market~~not ~~for~~be ~~Common~~successful ~~Equity~~in ~~and~~our ~~Related~~effort ~~Stockholder~~to ~~Matters.~~liquidate assets and dissolve the corporation.

~~Market~~We ~~Information~~plan to put in place a proposed plan of liquidation and dissolution. We believe that such a plan will enable us to most effectively satisfy outstanding obligations and close the company. If we do not obtain stockholder approval for the plan, or other complications arise, we may not be successful in this effort.

OnAs a ~~October 11,~~result ~~2000,~~of weour ~~began~~history ~~trading~~of ~~under~~operating ~~the~~losses, ~~symbol~~loss ~~“DSWT”~~of onmajor ~~the Nasdaq~~customers ~~National Market System~~ and ~~ceased under the symbol “DRA” on the American~~other ~~Stock Exchange. Between August 26~~factors, ~~1999 and October 11, 2000,~~ our ~~common~~auditors ~~stock was~~have ~~traded~~raised onsubstantial ~~the~~doubt ~~American~~about ~~Stock~~our ~~Exchange~~ability ~~under the symbol “DRA.” Prior~~ to ~~August 26,~~continue ~~1999,~~as ~~our~~a ~~common~~going ~~stock was traded on the OTC Bulletin board under the symbol “DSWT~~concern.~~” The high and low inter-dealer prices for the calendar quarters during the past two fiscal years are as follows:~~

Fiscal Year Ended December 31, 2001	High		Low
March 31, 2001	$	12.25	$	10.13
June 30, 2001		17.92		12.70
September 30, 2001		16.25		12.33
December 31, 2001		12.50		7.04

We have experienced significant operating losses since our inception. We have committed substantial resources to the establishment and support of new FinePoint customer relationships. We have minimal financial resources, and our cash flow from operating activities continues to be insufficient to meet our operating needs and other payment obligations. As a result of these factors, among others, our independent public accountants have raised substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary as a result of this uncertainty. As a result of receiving this opinion from our independent public accountants, we may experience possible adverse effects from our customers, on our creditworthiness, or on investor confidence, any of which may have a material adverse effect on our business and the trading price of our common stock.

Fiscal Year Ended December 31, 2000	High		Low
March 31, 2000	$	8.25	$	5.38
June 30, 2000		8.75		5.00
September 30, 2000		13.44		6.50
December 31, 2000		12.56		8.75

Our failure to detect unknown defects in products that we have sold could result in future financial or other damages. We do not have sufficient funds to cover any product liability claims.

~~These~~Notwithstanding the ~~bid~~testing ~~prices~~that ~~are~~we ~~inter-dealer~~have ~~prices~~performed ~~without~~on ~~retail~~our ~~markup~~products, ~~markdown~~defects could be found in our existing or ~~commission~~new products. These defects could result in product liability or warranty claims. In addition, any defects found in our products could result in indemnification claims, litigation, increased insurance costs, and ~~may~~increased ~~not~~service ~~represent~~costs, ~~actual~~any ~~transactions~~of which could discourage Wacom from consummating the asset purchase transaction. Additionally, defects in our products could result in financial or other damages to our customers. Our customers could also seek and obtain damages from us. We do not have sufficient funds to cover warranty or other expenses that could arise in the future as a result of defects found in our products.

~~Table~~If ofwe ~~Contents~~are unable to protect our intellectual property, or if we are found to have infringed third party intellectual property rights, our financial condition and future prospects could be materially harmed.

~~Dividends~~We have entered into an agreement to sell substantially all of our assets. The price for these assets is largely linked to the value of our intellectual property. Any material change in the perceived value of these assets could impact our ability to successfully consummate the sale of the assets.

We ~~have~~rely on ~~not~~a ~~declared~~combination ~~any~~of ~~cash~~patents ~~dividends~~and ontrade secret protection for most of our proprietary ~~common~~technology, ~~stock~~in ~~since~~part through confidentiality agreements with our ~~inception~~employees, consultants, and third parties. If Weany doof ~~not~~these ~~intend~~agreements are found to ~~declare~~be ~~any~~unenforceable, ~~dividends~~we onmay be unable to adequately protect our technology. If ~~common~~any ~~stock~~of inthese ~~the~~agreements are breached, especially by ~~foreseeable~~companies ~~future~~much larger than us, we may not have adequate financial resources to adequately enforce our rights. Also, others may come to know about or determine our trade secrets.

~~Holders~~It is possible that pending patent applications may not result in the issuance of patents. Additionally, our issued patents may be challenged, invalidated or circumvented and claims may not be sufficient to provide meaningful protection. The laws of certain territories in which we develop, manufacture, or sell our products may not protect our intellectual property rights to the same extent as the laws of the United States.

AsWhile we are currently not aware of ~~February 28,~~any ~~2002,~~claims ~~there~~against ~~were~~us ~~approximately~~for ~~308~~the ~~holders~~infringement of intellectual ~~record~~property ofrights, any such claim could cause a material adverse valuation of our ~~common~~intellectual ~~stock.~~property assets. We ~~believe~~do ~~that~~not ~~our~~have sufficient ~~common~~funds ~~stock~~to isdefend ~~held~~against byany ~~more~~such ~~than 2~~claims,~~500 beneficial~~ ~~holders.~~nor to pay any damages.

~~Item 6.~~We are ~~Selected~~subject ~~Financial~~to ~~Data~~litigation risks.

		Year Ended December 31,
		2001			2000			1999			1998			1997 (1)
Consolidated Statement of Operations Data (2)
	(In thousands, except per share data)
Net revenue		$	985		$	2,319		$	1,674		$	1,355		$	6
Gross profit (loss)			728			264			(355	)		55			(1	)
Net loss			(5,390	)		(4,110	)		(3,475	)		(1,599	)		(449	)
Non-cash discount (3)			—			—			—			(740	)		—
Net loss attributable to common stockholders		$	(5,390	)	$	(4,110	)	$	(3,475	)	$	(2,339	)	$	(449	)
Net loss per common share, basic and diluted		$	(0.57	)	$	(0.49	)	$	(0.58	)	$	(0.55	)	$	(0.12	)
Weighted average common shares outstanding, basic and diluted			9,443			8,436			6,034			4,269			3,787
Consolidated Balance Sheet Data (2)
	(In thousands)
Cash and cash equivalents		$	12,016		$	16,446		$	5,885		$	144		$	236
Total assets			14,816			19,098			8,238			1,528			380
Long-term debt, net of current portion			26			44			125			158			—
Total stockholders’ equity		$	11,532		$	15,749		$	6,871		$	752		$	324

From time to time we may be subject to legal claims, with and without merit. We are involved in various claims and legal actions arising from the ordinary course of business including those with customers and suppliers and those involving employment matters. We believe it is unlikely that these claims will have a material adverse effect on our financial position or results of operations. Regardless of their validity, such claims may divert management attention and have substantial defense expenses or settlement costs. Due to the inherent uncertainty of the litigation process, we cannot predict the resolution of any particular claim and its ultimate impact on our business and financial condition.

(1)		Represents the period from May 1, 1997 (date of inception) to December 31, 1997.
(2)		No cash dividends were declared or paid in any year presented.
(3)		A non-cash charge of $740,000 was incurred in connection with a beneficial conversion feature relating to the sale of convertible preferred stock on June 29, 1998.

We face risks related to rapidly changing technology.

~~Item 7.~~We ~~Management’s~~are subject ~~Discussion~~to the challenges of rapidly changing technology and ~~Analysis~~evolving industry standards characteristic of ~~Financial~~the ~~Condition~~market for electronic components. These challenges include predicting the nature and ~~Results~~timing of technological changes and the direction of ~~Operations~~evolving industry standards and identifying, developing, and successfully introducing new technologies. If our competitors develop and introduce products that are more advanced than ours, the value of our technology portfolio could be reduced, and our ability to consummate the asset purchase transaction with Wacom would be compromised.

~~FORWARD-LOOKING~~Our ~~STATEMENTS~~stock price has been volatile.

~~This~~The ~~report~~price of ~~contains forward-looking statements regarding~~ our ~~plans, expectations,~~common ~~estimates~~stock ~~and~~fluctuates ~~beliefs~~significantly. During ~~Actual~~2009, ~~results~~our ~~could~~stock was ~~differ~~delisted ~~materially~~ from ~~those~~the ~~discussed~~Nasdaq ~~in,~~Stock orMarket ~~implied~~and ~~by,~~currently ~~these~~trades ~~forward-looking~~on ~~statements. Forward-looking~~the ~~statements are identified by words such as “believe,”~~Pink ~~“anticipate,”~~Sheets ~~“expect,”~~OTC ~~“intend,”~~Market. ~~“plan,”~~The ~~“will,”~~trading ~~“may”~~price ~~and~~of ~~other~~our ~~similar expressions.~~common Instock ~~addition,~~could ~~any~~be ~~statements~~subject ~~that refer~~ to ~~expectations,~~ ~~projections~~wide orfluctuations ~~other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements~~ in ~~these~~response ~~documents include,~~a ~~but~~variety ~~are~~of ~~not necessarily limited to, those relating to our:~~ factors.

• Beliefs regarding the competitive technological advantages and anticipated commercial success of our technologies, • Intention to achieve widespread commercial acceptance of our licensed technologies, • Ability to obtain new licensees, • Ability to develop new or existing switch technologies, • Objective to establish Duraswitch technologies as the design standard in the electronic switch and ICP industries, • Estimates of anticipated growth in the switch and ICP markets, • Success in developing new or enhanced products to take advantage of market opportunities or to respond to competition, • Manufacturing industry’s acceptance and demand for our technology licenses, • Licensees’ willingness and ability to successfully market our technologies to new and existing customers, and • Opportunities derived from our investmentsItem 2. Properties

During 2008, our principal facilities were located in Scottsdale, Arizona, where we leased 9,385 square feet of office space in a building located at 13845 North Northsight Boulevard. Our lease terminates in September 2012. In May 2009, we were required to vacate the facility due to nonpayment of our lease. We have negotiated a settlement with the landlord to be paid upon close of the transaction with Wacom. The Company is presently conducting its remaining business and liquidation process without office facilities.

~~Table of Contents~~9

~~When you consider the forward-looking statements in this report, you~~Item ~~should keep in mind the cautionary information located elsewhere in this report~~3. ~~Our performance may differ materially from that contemplated by such~~ Legal ~~forward-looking statements as a result of certain risk factors, including but not limited to those set forth below.~~ Proceedings

~~Should~~Our company weis beinvolved ~~unable~~in tovarious ~~protect~~claims ~~our~~and ~~proprietary~~legal ~~technologies,~~actions ~~their~~arising ~~value~~from the ~~and~~ordinary ~~our~~course ~~competitive~~of ~~position~~business. There ~~would~~are becurrently ~~significantly~~no ~~impaired.~~such ~~Although~~pending proceedings to which we ~~seek to~~are ~~protect~~a ~~our~~party ~~intellectual~~that ~~property~~we ~~rights~~believe ~~through~~will ~~patents,~~have ~~copyrights,~~a ~~trade~~material adverse ~~secret~~effect ~~protection~~on ~~and~~our ~~other~~financial ~~measures~~position, weresults ~~cannot~~of beoperations, ~~certain that:~~or liquidity.

•In WeMay 2007, ~~will~~Stephen beCaldwell, ~~able~~the toformer ~~protect~~president ~~our~~of ~~technologies~~FinePoint ~~adequately;~~Innovations, •Inc. filed ~~Competitors~~a ~~will~~Demand ~~not~~for beArbitration ~~able~~with tothe ~~develop~~American ~~similar~~Arbitration orAssociation alleging ~~better~~various ~~technology~~claims ~~independently;~~against •InPlay. He ~~Any~~alleged ofthat ~~our~~InPlay terminated ~~pending~~his ~~patent~~employment ~~applications~~in ~~will~~violation beof ~~issued;~~his oremployment •agreement, ~~Intellectual~~and ~~property~~that InPlay ~~laws~~breached ~~will~~the ~~continue~~terms toof ~~protect~~a ~~our~~2005 ~~intellectual~~Merger ~~property~~Agreement ~~rights~~between InPlay, ~~particularly~~FinePoint, and ashim, wefor ~~expand~~which ~~our~~he ~~licensing~~sought incompensatory ~~foreign~~and ~~countries~~other ~~where~~damages. In ~~the~~March 2008, ~~local~~we ~~laws~~entered dointo ~~not~~a ~~provide~~Settlement and Release of Claims Agreement whereby we paid a ~~strong~~cash ~~protection~~settlement of ~~intellectual~~$330,000 ~~properties~~to orresolve ~~recognize~~all ~~international~~of ~~treaties~~Mr. Caldwell's claims and dismiss his case in its entirety.

~~Claims that we infringe third party intellectual property rights could~~Item ~~result in significant expenses or restrictions on our ability to license technology~~4. Submission In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. From time to time, third parties may assert patent, copyright, trademark and other intellectual property claims against technologies used in our business. Any such claims, with or without merit, could be time-consuming to defend, would result in costly litigation and divert the efforts of ~~our~~Matters ~~personnel. Claims of intellectual property infringement might require us~~ to enter into costly royalty or license agreements. Additionally, we might be unable to obtain royalty or license agreements on terms acceptable to us. A successful claim of patent, or other intellectual property infringement against us could adversely affect our business in a ~~material~~Vote ~~way. We are not currently involved in any litigation to protect our technologies from infringement nor to defend against claims~~ of ~~infringement.~~ Security Holders

~~Our quarterly revenue and operating results may fluctuate. Our results~~On ~~may~~December ~~fluctuate~~19, ~~from~~2008, ~~those~~we inheld ~~prior~~our ~~quarters~~Annual ~~and~~Meeting ~~will~~of ~~continue~~Stockholders. toAt dothe ~~so due to a~~meeting ~~variety~~the offollowing ~~factors.~~actions ~~These~~were ~~factors include~~taken:

•Dino ~~The~~D. Farfante ~~establishment,~~was ~~growth~~elected orto ~~loss~~serve ofas ~~licensee~~a ~~relationships;~~Class •1 ~~The~~Director ~~timing~~for ofa ~~introductions,~~three-year ~~production~~term expiring ~~and~~in ~~sales cycles of new products by our licensees incorporating our technologies, which is at the discretion of our licensees and their customers; and • Market acceptance of our technologies~~2011.

Our stock price may be volatile. The stock market has experienced extreme volatility that often has been unrelated or disproportionate to the performance of particular companies. These market fluctuations may cause our stock price to decline regardless of our performance. The market price of our common stock has been, and in the future could be, significantly affected by factors such as, but not limited to:

Votes For		Votes Withheld
7,332,036		549,623

•P. ~~Actual~~Robert Moya orwas ~~anticipated~~elected ~~fluctuations~~to inserve ~~operating~~as ~~results;~~a •Class ~~Announcements~~1 ofDirector ~~our~~for ~~technologies~~a orthree-year ~~our~~term ~~competitors’ technologies, new licensees or other business developments; • Sales or the perception~~ expiring in ~~the market of possible sales by insiders or others which could have a disproportionate effect on our stock price due to our typically low trading volume~~2011.

We are dependent on our management team. Our future success will be largely dependent on the efforts of key management personnel who have extensive experience in the switch industry. The loss of one or more of these key employees could have a material adverse effect on our business. We are particularly dependent upon the services of Robert J. Brilon, our Chief Executive Officer, President and Chief Financial Officer and Anthony J. Van Zeeland, our Chief Operating Officer and Executive Vice President of Engineering. We have employment agreements with both of these individuals for terms, which expire in April 2004.

Votes For		Votes Withheld
7,332,116		549,543

~~Our~~The amendments ~~technology~~to ~~may~~the ~~not~~2005 ~~gain~~Stock ~~market~~Award ~~acceptance.~~Plan, ~~Our~~including ~~success~~an ~~will~~increase ~~depend~~the number of inshares ~~part~~of onour common stock reserved for issuance under the ~~commercial~~plan ~~acceptance~~from 1,000,000 shares to 2,000,000 shares plus (i) the number of ~~our~~shares ~~patented~~with ~~technologies.~~respect Toto bewhich ~~accepted,~~awards previously granted under our ~~technologies~~1997, ~~must~~1999, ~~meet~~and 2000 stock option plans that terminate without the ~~expectations~~issuance of ~~our~~the ~~potential~~shares or where the shares are forfeited ~~customers.~~or Werepurchased; ~~market~~(ii) ~~our~~any ~~technologies~~shares ~~directly~~available tofor ~~OEMs~~grant ~~whose~~in ~~products~~the ~~utilize~~share reserve for the ~~switches~~1997, 1999, and to2000 ~~our~~stock ~~licensees~~option toplans ~~encourage~~as ~~them~~of tothe ~~incorporate~~date ~~our~~this ~~technologies~~proposal is approved inby the ~~switches~~stockholders; ~~they~~(iii) ~~supply~~with respect to ~~OEMs,~~awards ~~focusing~~granted onunder the ~~advantages~~plans, the number of ~~our~~shares ~~switches~~which are not issued as a result of the award being settled for ~~over~~cash or otherwise not issued in connection with the ~~electro-mechanical~~exercise ~~and~~or ~~dome~~payment ~~membrane~~of ~~switches.~~the award; Ifand (iv) the ~~OEMs~~number of shares that are surrendered or ~~our~~withheld in payment ~~licensees~~of ~~ultimately~~exercise ~~decide~~price toof ~~continue~~any ~~with~~award ~~their~~or ~~existing~~any ~~switch~~tax withholding requirements in connection ~~technologies,~~with ~~our~~any ~~business~~award ~~would~~granted beunder ~~adversely~~the ~~affected~~existing plans.

Votes For		Votes Against		Abstentions		Broker Non Votes
2,693,048		763,966		25,944		4,398,701

~~Table of Contents~~10

~~We have a history of operating losses and expect to incur losses in the~~PART ~~immediate future. We have had substantial losses since our inception and we expect to incur additional losses as we expand our licensing business. We expect to commit substantial resources to:~~ II

•Item 5. Market ~~Research~~for ~~and~~Registrant’s ~~development;~~Common Equity, •Related ~~The~~Stockholder ~~establishment~~Matters ~~of new licensee relationships;~~ and •Issuer ~~Enhanced~~Purchases ~~sales~~of ~~and~~Equity ~~training capabilities.~~Securities

~~Because~~Our common westock ~~have~~is ~~only~~currently ~~recently~~listed ~~completed~~on ~~our~~the ~~shift~~Pink toSheets aOTC ~~technology~~Market under the symbol ~~licensing~~“NPLA.PK”. From ~~business~~June ~~model~~2005 to April 2009, weour ~~are~~common ~~unable~~stock was listed on the NASDAQ Capital Market (formerly the NASDAQ SmallCap Market) under the symbol “NPLA.” Prior to ~~accurately~~that ~~estimate~~time, ~~future~~our ~~revenue~~common stock was listed on the ~~and~~NASDAQ ~~operating~~SmallCap ~~expenses~~Market ~~based~~or ~~upon~~the ~~historical~~NASDAQ ~~performance~~National ~~and~~Market weunder ~~cannot~~the ~~assure~~symbol ~~you~~“DSWT.” The iffollowing table sets forth high and ~~when~~low wesales ~~will~~prices ~~become~~of the ~~profitable.~~common stock for each calendar quarter indicated as reported on the NASDAQ Capital Market.

Risks related to rapidly changing technology. Our results of operations will depend in part on successful management of the challenges of rapidly changing technology and evolving industry standards characteristic of the market for switch technology. These challenges include predicting the nature and timing of technological changes and the direction of evolving industry standards and identifying, developing and successfully marketing new technologies as they emerge. We work with our licensees and OEMs to design solutions specific to their needs and the needs of their customers.

	High		Low
Year Ended December 31, 2007
First Quarter	$	2.20	$	1.07
Second Quarter		2.43		0.80
Third Quarter		3.50		0.86
Fourth Quarter		2.45		1.10

Year Ended December 31, 2008
First Quarter	$	1.70	$	0.90
Second Quarter		0.94		0.25
Third Quarter		0.53		0.13
Fourth Quarter		0.23		0.06

~~Our~~As ~~growing international business activities subject us to risks that~~of ~~could~~June ~~reduce~~30, 2009, the ~~demand~~closing ~~for~~price ~~our~~of ~~products and increase~~ our ~~operating~~common ~~expense. In~~stock ~~2001,~~on ~~net~~the ~~revenue~~Pink ~~from~~Sheets ~~international licensees made up an insignificant~~OTC ~~portion~~Market ofwas ~~our total net revenue~~$0. ~~We have been~~03, ~~however, expanding our licensing business with international licensees~~ and ~~expect~~there ~~that~~were ~~net~~approximately ~~revenue from~~130 ~~international~~holders ~~licensees~~of ~~will~~record ~~increase. To date, all~~ of our ~~licensing~~ ~~revenue~~common ~~and costs have been denominated in U~~stock.S. We ~~dollars.~~believe Itthat is our ~~expectation that~~common ~~net~~stock ~~revenue~~is ~~and~~held ~~costs will continue to be denominated in U.S. dollars for the foreseeable future. We could be significantly affected~~ by ~~other risks~~ ~~associated~~approximately ~~with international activities~~2,000 ~~including:~~ beneficial holders.

• Different technology standards and design requirements; • Longer payment cycles for and greater difficulties collecting accounts receivable; • Fluctuations in currency exchange rates; • Nationalization, expropriation and limitations on repatriation of cash; • Social, economic, banking and political risks; • Taxation; • Changes in U.S. laws and policies affecting trade, foreign investment and loans; and • Changes in enforcement of laws protecting intellectual property.Dividend Policy

~~General~~We have never declared any cash dividends on our common stock, and we do not intend to declare any dividends on our common stock prior to discontinuing our business operations.

~~The following discussion should be read in conjunction with our audited~~Securities ~~consolidated~~Authorized ~~financial~~for ~~statements~~Issuance ~~and~~Under ~~associated~~Equity ~~notes~~Compensation ~~appearing elsewhere in this report.~~ Plans

WeThe following ~~have~~table ~~developed,~~sets ~~patented~~forth ~~and~~information ~~licensed~~with ~~innovative~~respect ~~technologies~~to ~~utilizing a~~shares ~~magnetic~~of ~~based~~our ~~design~~common stock ~~for~~that ~~electronic~~may ~~switches.~~be Weissued ~~are~~upon ~~currently expanding~~ the ~~use~~ exercise of ~~these~~outstanding ~~technologies~~warrants byas ~~licensing~~well ~~manufacturers~~as outstanding tostock ~~produce~~options ~~and~~under ~~sell products using~~ our ~~technologies.~~1997 WeStock ~~believe~~Option ~~these~~Plan, ~~patented~~our ~~technologies~~1999 ~~allow~~Stock usOption ~~and~~Plan, our ~~licensees~~2000 toStock ~~provide~~Option ~~innovative~~Plan, ~~solutions~~and toour ~~the~~2005 ~~design~~Stock ~~challenges faced~~Award byPlan ~~original~~as ~~equipment~~of December ~~manufacturers~~31, ~~(“OEMs”), and component suppliers~~2008.

~~We were incorporated on May 1, 1997, as Total Switch, Inc. (“Total~~Equity ~~Switch”).~~Compensation InPlan order to establish a market value for our stock to acquire other businesses necessary for our growth, we combined with an inactive, publicly traded company on December 31, 1997, and changed its name to Duraswitch Industries, Inc. (“Duraswitch”). As a result of this transaction, Total Switch became a wholly owned subsidiary of Duraswitch, and Total Switch’s former stockholders acquired a controlling interest in Duraswitch. During 1998, through the acquisition of Aztec Industries, Inc. (“Aztec”), formerly a manufacturer of membrane switches, we commenced operations and designed, manufactured, marketed and distributed integrated electronic control panels developed with our patented technologies. Information

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights			Weighted Average Exercise Price of Outstanding Options, Warrants, And Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
	(a)			(b)		(c)
Equity Compensation Plans
Approved by Stockholders		1,551,030		$	2.02		1,360,657

Equity Compensation Plans
Not Approved by Stockholders		509,091	(1)	$	3.64		-
Total		2,060,121		$	2.42		1,360,657

~~Our~~(1) Issuance ~~research and development expenses are comprised mainly~~ of ~~research~~warrants ~~and development~~in ~~personnel~~connection ~~and~~with ~~occupancy~~the ~~costs.~~December ~~Our~~2005 ~~selling,~~private ~~general~~placement ~~and administrative expenses are comprised mainly~~ of ~~labor costs associated with our~~ 1,272,728 shares.

~~Table~~Item 7. Management’s Discussion and Analysis of ~~Contents~~Financial Condition and Results of Operations

~~sales and administrative salaries, depreciation and amortization, travel costs, advertising and occupancy costs.~~ Overview

~~During~~We ~~the~~have developed ~~second~~and ~~quarter~~marketed ofinnovative ~~2001,~~human weinterface ~~completed~~devices ~~the~~(HID) ~~transition~~for ~~to a~~electronic ~~licensing~~products. During ~~business~~2008, ~~model~~our ~~away~~focus ~~from~~was ~~switch~~on ~~manufacturing~~marketing ~~and, as a result,~~ the FinePoint ~~relationship~~digital ~~between~~computing ~~net~~pen ~~revenue,~~and ~~cost~~dual-mode ofpen ~~goods~~and ~~sold~~touch ~~and~~technologies. ~~operating~~Until ~~expenses~~October ~~reflected~~2008, inwe ~~our~~also ~~financial~~developed ~~information~~and ~~may~~licensed ~~not~~technologies ~~represent~~using ~~future~~a ~~expected~~magnetic-based design ~~financial~~for ~~relationships.~~electronic ~~Given~~switches under the ~~early~~Duraswitch ~~stage~~brand ofname. ~~our~~In ~~licensing~~October ~~business model~~2008, we sold dothis ~~not~~segment ~~believe period-~~to~~-period~~ ~~comparisons~~Memtron ofTechnologies ~~results of operations are meaningful~~Co.

~~Critical~~During September ~~Accounting~~2005, ~~Policies~~we acquired FinePoint Innovations, a developer of digital computing pen technology. We are marketing the MagicPoint digitizer and pen products developed by FinePoint to manufacturers of convertible notebooks and tablet PCs. We believe our digital pen technology offers significant advantages over the current analog products. We have made substantial investment to further this technology, including solutions for combined pen and touch, and our WriteSense technology which eliminates the need for a digitizer.

InOn ~~accordance~~March 10, ~~with recent Securities and Exchange Commission guidance~~2009, ~~the material accounting policies that~~ we ~~believe~~executed ~~are~~a ~~the~~binding ~~most~~Letter ~~critical to an investor’s understanding~~ of ~~our~~Intent ~~financial~~(LOI) ~~results~~to ~~and~~enter ~~condition~~into ~~and~~a ~~require~~merger ~~management’s~~agreement ~~judgment~~with ~~are discussed below~~U.S. AsRental aHousing ~~technology~~REIT, ~~licensing~~Inc. ~~company, we~~(USRHR). ~~believe~~Under ~~our~~the ~~critical~~terms ~~accounting~~of ~~policies~~the LOI, ~~are~~USRHR ~~those~~had ~~that~~agreed ~~deal~~to ~~with~~provide ~~the~~funding ~~value of~~to ~~our~~InPlay ~~patents~~for audit and ~~goodwill~~consulting fees and ~~with~~working ~~our~~capital. ~~method~~As of ~~recognizing~~May ~~revenue. Information~~5, ~~regarding~~2009, ~~all~~USRHR ~~other~~had ~~significant~~not ~~accounting~~provided ~~policies~~the isagreed ~~included in~~upon ~~Note~~funding. 2On ofMay ~~our~~7, ~~Notes~~2009, toInPlay ~~the~~announced ~~Consolidated~~that ~~Financial~~it ~~Statements.~~had terminated pursuit of the merger.

~~Impairment~~As a result of ~~Long-Lived~~a ~~Assets~~lack ~~and Assets to be Disposed~~ of. ~~The~~funding, ~~Company reviews~~we ~~its~~significantly ~~long-lived~~wound ~~assets~~down ~~and~~operations ~~identifiable~~during ~~intangibles for impairment~~the ~~whenever~~first ~~events~~quarter ~~or changes in circumstances indicate that the carrying amount~~ of ~~the asset may not be recoverable~~2009. ~~Our~~We ~~intangible~~focused ~~assets are primarily~~ our ~~patents~~ ~~and~~attention ~~the~~on ~~goodwill associated with~~ the ~~acquisition~~sale of ~~Aztec Industries~~assets. If ~~such~~Our ~~assets~~goal is ~~were considered~~ to benegotiate ~~impaired,~~outstanding ~~the~~obligations ~~impairment~~with tocreditors, besatisfy ~~recognized~~legal and ~~would~~regulatory berequirements ~~measured~~associated bywith ~~the~~any ~~amount~~sale byand ~~which~~wind ~~the~~down ~~carrying amount~~ of ~~the~~our ~~assets~~company, ~~exceeds~~and ~~the~~close ~~fair~~operations ~~market~~with ~~value of~~ the ~~assets.~~approval As of ~~December 31, 2001, no assets have been considered to be impaired~~stockholders.

WeIn ~~evaluate the recoverability of property and equipment and intangibles~~April ~~not~~2009, ~~held for sale by comparing~~ the ~~carrying~~Nasdaq ~~amount~~Stock ofMarket ~~the~~notified ~~asset~~us orthat ~~group~~our ~~of assets~~shares ~~against~~were ~~the~~subject ~~estimated undiscounted future net cash flows expected~~ to ~~result~~delisting ~~from~~due ~~the~~to ~~use~~non-payment of ~~the~~annual ~~asset~~listing orfees, ~~group~~among ofother ~~assets~~deficiencies. ~~Goodwill from acquisitions~~ ~~related~~We todid anot ~~group~~appeal ~~of assets being evaluated for impairment is included in~~ the ~~evaluation.~~ Ifdelisting ~~the~~and ~~undiscounted~~trading ~~estimated cash flows are less than the carrying value~~ of ~~the~~our ~~asset~~common orshares ~~group~~on ofNasdaq ~~assets being reviewed, an impairment loss would~~was besuspended ~~recorded. The loss would be measured based~~ on ~~the~~April ~~estimated~~27, ~~fair value of the asset or group of assets compared to cost~~2009. ~~The~~Nasdaq ~~estimated~~subsequently ~~fair~~filed ~~value~~a ~~would be~~Form ~~based~~25 onwith the ~~best information available under the circumstances, including~~ ~~prices~~Securities ~~for similar assets~~ and ~~the~~Exchange ~~results~~Commission ofto ~~valuation~~complete ~~techniques, including~~ the ~~present value of expected future cash flows using a discount rate commensurate with the risks involved~~delisting.

~~Revenue~~On ~~Recognition. We enter into licensing agreements with our~~May ~~customers.~~18, ~~Our~~2009, ~~licensing~~we ~~strategy~~filed ~~incorporates~~ a ~~simplified~~Form ~~requirement whereby~~15 with the ~~licensee~~SEC, ~~purchases~~deregistering ~~defined~~our ~~licensed~~common ~~components~~shares ~~from Duraswitch.~~and ~~The~~suspending ~~component~~reporting ~~cost~~requirements ~~includes~~under the ~~royalty~~Securities ~~for~~Exchange ~~the~~Act ~~rights~~of to1934. ~~manufacture, assemble~~We ~~and~~anticipate ~~sell~~that ~~patented~~the ~~Duraswitch~~deregistration ~~technologies.~~will Inbecome ~~some~~effective ~~cases~~approximately ~~where~~90 ~~no components~~days ~~are~~after ~~supplied,~~the ~~we are paid a royalty per switch manufactured~~filing.

WeOn ~~support~~June 26, ~~our~~2009, ~~licensees~~we executed an asset purchase agreement (APA) with ~~engineering~~Wacom Co. Ltd. pursuant to which we have agreed to sell all of our ownership right, ~~design~~title and interest in and to the intellectual property pertaining to the digital computer pen and digitizer segment of our business, ~~testing~~including, ~~specification~~without limitation, the ~~materials~~human interface device technology used in the Magic Point Pen and the Write Sense products, ~~training~~which ~~programs~~represents substantially all of our remaining assets for a price of $2.0 million, ~~marketing~~$100,000 ~~assistance~~of which had been paid prior to signing the APA upon execution of a letter of intent. This transaction is conditioned on, ~~customer~~among ~~leads~~other things, ~~and~~our ~~patent protection~~stockholders approving the APA. ~~Every~~Upon ~~licensee~~completion ~~has~~of the ~~strict~~transaction, ~~qualitative~~we ~~standards~~intend to ~~maintain~~negotiate assettlements for amounts owed to ~~part~~creditors, ofcease ~~their~~business ~~licensing~~operations, ~~agreement~~and dissolve our company and its subsidiaries, including FinePoint Innovations. ~~Our~~If ~~non-exclusive~~we ~~licensees~~are ~~pay~~able ~~between~~to successfully $0negotiate settlements of our obligations, we believe we will be able to avoid bankruptcy.10 In connection with the dissolution, if any proceeds remain following the settlement and ~~$0.78~~payment ~~per~~of ~~switch~~our ~~depending~~outstanding onliabilities, we intend to distribute any remaining proceeds to our stockholders and dissolve our company in accordance with the ~~type~~plan of ~~switch~~liquidation and ~~volume~~dissolution.

~~The~~Wacom ~~terms of some of our license agreements require prepayment of~~may ~~royalties~~terminate tothe ~~Duraswitch.~~APA ~~The~~if, ~~prepayments~~among ~~are~~other ~~recorded~~reasons, asthe ~~deferred~~transaction ~~revenue and licensing revenue~~ is ~~recognized~~not ~~when~~consummated ~~the royalties are earned under the~~by ~~licensing~~October ~~agreements~~5, 2009. If ~~Royalties~~we are ~~considered~~unable ~~earned~~to ~~when~~consummate the ~~licensee purchases component parts from Duraswitch or~~transaction, ~~when component parts are not~~we ~~supplied~~believe bywe ~~Duraswitch,~~will ~~royalties~~be ~~are~~forced ~~considered~~to ~~earned~~file ~~when~~for ~~the~~bankruptcy ~~licensee~~protection. See ~~manufactures~~“Risk aFactors ~~switch~~– ~~utilizing~~If ~~Duraswitch~~we ~~technology. The deferred revenue~~are ~~received~~unable ~~from~~to ~~Delphi~~successfully ~~Automotive~~obtain ~~Systems~~necessary ~~LLC,~~stockholder ~~now~~approval ~~Delphi~~or ~~Corporation (“Delphi”)~~otherwise inconsummate ~~2000~~the istransaction ~~being~~with ~~amortized~~Wacom ~~over~~for the ~~initial~~sale ~~seven-year~~of ~~term~~our ofassets, ~~the~~we ~~exclusive~~will be ~~license~~forced ~~agreement~~into bankruptcy. ”

~~Results of Operations for the Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000~~ 12

~~Net Revenue:~~Application of Critical Accounting Policies

We ~~recorded~~have identified ~~net revenue of $985,312 for~~ the ~~year~~policies ~~ended~~below ~~December 31,~~as ~~2001, compared~~critical to ~~$2,318,736~~our ~~for~~business ~~the~~operations ~~year~~and ~~ended~~the understanding ~~December 31,~~of ~~2000,~~our aresults ~~decline~~ of ~~$1,333,424.~~ operations. The ~~decline~~impact inand ~~our~~any associated ~~net~~risks ~~revenue~~related isto ~~primarily~~these ~~due~~policies toon our ~~shift in our~~ business ~~model~~operations ~~from switch manufacturing to technology licensing.~~are ~~Accordingly,~~discussed ~~our~~throughout ~~licensing~~Management’s ~~revenue~~Discussion ~~for~~and ~~2001~~Analysis ~~increased~~when tosuch ~~$835,541 compared to~~policies ~~$533,137~~affect ~~in 2000, an increase of $302,404, and~~ our ~~product~~reported ~~sales~~or ~~revenue decreased~~expected tofinancial ~~$147,771 for 2001 compared to $1,785,599 for 2000, a decline of $1,635,828~~results.

~~During~~In ~~2000~~the ordinary course of business, we ~~started~~have tomade ~~implement~~a ~~our~~number ~~new~~of ~~business~~estimates ~~model~~and assumptions relating to the reporting of ~~licensing~~results of operations and financial condition in the preparation of our ~~technologies~~financial ~~rather~~statements ~~than~~in ~~manufacturing~~conformity ~~switches~~with ~~ourselves.~~accounting principles generally accepted in the United States. We ~~have~~base our ~~completed~~estimates ~~this~~on ~~transition~~historical experience and ~~expect~~on ~~almost~~various ~~all~~other ofassumptions ~~our~~that ~~future~~we believe ~~revenue~~are toreasonable ~~come~~under the circumstances. The results form the ~~from~~basis ~~our~~for ~~licensing~~making ~~efforts.~~judgments Asabout the carrying values of ~~December 31,~~assets ~~2001,~~and weliabilities that ~~had~~are 24not ~~licensees,~~readily apparent from other sources. Actual results ~~foreign~~could ~~and~~differ ~~domestic~~significantly from those estimates under different assumptions and conditions. We ~~Because~~believe that the ~~revenue~~following ~~generated~~discussion ~~from~~addresses ~~licensing switch~~our ~~technologies~~most iscritical ~~lower~~accounting ~~than~~policies, ~~the~~which ~~revenue~~are ~~from~~those ~~manufacturing~~that are most important to the ~~same~~portrayal ~~number~~of our financial condition and results of operations and require ~~switches~~our most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

12Basis of Presentation: The Company has presented the accompanying financial statements on the basis that contemplates the realization of assets and settlement of obligations in the normal course of conducting the business. In May 2009, we decided that we would liquidate the Company’s assets and attempt to settle our obligations. The 2008 and 2009 financial statements are presented on a basis assuming the Company would continue as a going concern. We alternatively considered whether presentation on a liquidation basis of accounting would be appropriate. We determined that historical cost basis of the assets and liabilities was appropriate at December 31, 2008 because we continued to operate the business through our decision to liquidate in May 2009.

~~Table~~Revenue Recognition. Our FinePoint segment manufactures digital computing pens and digitizers for the convertible notebook and tablet PC market. Revenue is recognized when persuasive evidence of ~~Contents~~an arrangement exists, delivery has occurred, the fee is fixed and determinable and collectability is probable. Generally, all of these conditions are met at the time we deliver products to customers.

Our Duraswitch wesegment, ~~expected~~which ~~our~~was ~~net~~sold ~~revenue~~ to ~~decline~~Memtron asTechnologies wein ~~transitioned~~October 2008, entered into alicensing agreements with our customers. Our licensing ~~business~~agreements ~~model~~required the licensee to purchase licensed components from us. The ~~During~~purchase price of the ~~transition~~licensed components included the royalty fee. When the components were shipped, we ~~have~~recognized ~~referred~~revenue and ~~our~~cost ~~switch~~of ~~customers~~goods sold. In cases where no licensed components were supplied, we were paid a royalty per switch manufactured by the licensee and ~~product~~we recognized ~~sales~~revenue ~~leads~~in tothe ~~our~~period ~~licensees.~~the Asswitch ~~expected~~was manufactured. During 2007, ~~product~~we recognized $7.6 million of revenue ~~have~~related to a final settlement ~~decreased~~through asthe webankruptcy ~~completed~~court ~~delivery~~on ~~against~~the ~~our~~minimum ~~remaining~~license ~~customer~~requirement ~~purchase~~on the Delphi ~~orders~~licensing agreement.

~~The~~Some ~~shift in~~ of our ~~business~~licensees ~~model~~had ~~from~~prepaid ~~manufacturing~~royalties to ~~licensing~~us ~~and~~pursuant ~~the addition~~to oftheir ~~licensed~~license agreements. These ~~manufacturers~~prepayments ~~during~~were ~~the~~recorded ~~year~~as ~~accounted~~deferred ~~for the increase in our~~ licensing revenue. This ~~Our~~deferred ~~license~~revenue ~~agreement~~was ~~with~~recognized ~~Delphi~~as ~~generated licensing~~ revenue ofwhen ~~$411,362~~earned under orthe ~~49% of our~~ licensing ~~revenue~~agreement. If ~~and~~a ~~42%~~licensee ofpurchased ~~our~~a ~~total net~~licensed ~~revenue~~component ~~for~~from us, the ~~year~~royalty ~~ended~~was ~~December 31,~~earned ~~2001~~when ~~and~~the ~~$277,860~~licensed orcomponent ~~52% of our~~was ~~licensing~~shipped. If ~~revenue~~the ~~and~~licensee ~~12%~~directly ofmanufactured our ~~total~~switches ~~net revenue for the year ended December~~without ~~31,~~purchasing ~~2000.~~licensed ~~Licensing~~components ~~revenue~~ from ~~Delphi~~us, ~~primarily~~we ~~resulted~~considered ~~from~~ the ~~amortization~~ ofroyalty ~~deferred~~earned ~~licensing~~when the ~~revenue~~switch ~~which~~is ~~was received in 2000~~manufactured.

~~Product~~Inventory Valuation. Our ~~revenue~~inventory ~~was~~is ~~$149,771~~primarily ~~and~~comprised ~~$1,785,599~~of ~~for~~certain ~~the years ended December~~raw ~~31,~~materials ~~2001~~that ~~and~~are ~~2000,~~used ~~respectively,~~in athe ~~decline~~manufacture of ~~$1,635,828~~digital ~~resulting~~pens ~~from~~and ~~the~~digitizers and ~~implementation~~licensed ofcomponents, ~~our~~and ~~new~~finished ~~business~~goods ~~model,~~ which ~~called~~are ~~for~~primarily ~~transitioning~~pens ~~away~~and digitizers ~~from~~that ~~switch~~are ~~manufacturing.~~in transit to the customer. We ~~have~~record ~~referred~~inventories ~~all~~at the lower of ~~our~~cost ~~switch~~or ~~customers~~market tovalue, ~~our~~determined using the first-in, first-out ~~licensees~~method. Our ~~revenue~~policy inis ~~2000~~to ~~was~~write ~~primarily~~down ~~generated~~our ~~from~~inventory ~~designing,~~for estimated ~~developing,~~obsolescence ~~and~~or ~~producing~~unmarketable ~~prototypes~~inventory ofto ~~customer~~the ~~switch~~extent ~~applications~~the ~~and~~cost ~~low~~exceeds the ~~volume~~estimated ~~production~~market ~~runs~~value. We ~~Additionally,~~base wethe ~~had~~estimate ~~been~~on ~~performing~~our ~~pursuant~~assumptions ~~to a~~about ~~long-term~~future ~~purchase~~demand ~~order~~and ~~with~~market ~~Siemens~~conditions. If ~~Building~~actual ~~Technologies,~~market ~~Inc.~~conditions ~~This purchase~~are ~~order~~less ~~was~~favorable ~~completed~~than those assumed in ~~the~~our ~~second~~estimates, ~~quarter~~additional ofinventory write-downs ~~2001~~might ~~and~~be ~~generated~~required. We ~~74%~~reflect any write-down of ~~our~~inventory ~~product~~in ~~revenue~~the ~~for~~period in which the ~~year~~facts ~~ended~~giving ~~December 31,~~rise ~~2001.~~to ~~This~~the ~~project~~inventory ~~has~~write-down ~~been~~become ~~transitioned~~known to ~~one of our licensees~~us.

~~Cost of Goods Sold:~~ 13

~~Cost~~Impairment or Disposal of ~~goods~~Long-Lived ~~sold~~Assets. ~~was~~We ~~$256,838~~review ~~for~~our ~~2001,~~long-lived ~~compared~~assets toand identifiable ~~$2,054,655~~intangibles for ~~2000,~~impairment whenever events or changes in acircumstances ~~decrease~~indicate that the carrying amount of ~~$1,797,817~~the asset may not be recoverable. Additionally, ~~The~~goodwill ~~decrease~~is inreviewed ~~cost~~on ofan ~~goods~~annual ~~sold~~basis. Our ~~reflects~~intangible assets are primarily our ~~transition~~ ~~from~~patents and the ~~low-margin~~goodwill ~~business~~associated with the 2005 acquisition of ~~manufacturing~~FinePoint toInnovations and the ~~high-margin business~~1998 acquisition of ~~licensing~~Aztec Industries. ~~Licensing~~If ~~cost~~such ofassets ~~sales~~were ~~for~~considered ~~2001~~to ~~was~~be ~~$100~~impaired,~~540~~ ~~compared~~ the impairment to ~~$49,666~~be recognized inwould ~~2000,~~be anmeasured ~~increase~~by ofthe ~~$50,874~~amount ~~reflecting~~by which the ~~growth~~carrying amount of ~~our~~the ~~licensing~~assets ~~business~~exceeds the fair market value of the assets.

~~Product~~We evaluate ~~cost~~the recoverability of ~~goods~~property ~~sold~~and ~~was~~equipment ~~$156,298~~and inintangibles ~~2001~~(excluding goodwill) ~~compared~~not toheld ~~$2,004,989~~for ~~in 2000,~~sale aby ~~decline~~comparing ofthe ~~$1,848,691.~~carrying ~~The~~amount ~~decrease~~of inthe ~~product~~asset ~~cost~~or group of ~~goods~~assets ~~sold~~against ~~was primarily~~the ~~due~~estimated toundiscounted ~~our~~future ~~transition~~net cash flows expected to aresult ~~licensing~~from ~~business~~the ~~model~~use ~~from~~of ~~a manufacturing~~the ~~model~~asset or group of assets. If the ~~The~~undiscounted ~~decrease~~estimated incash ~~overall~~flows ~~cost~~are ofless ~~goods~~than ~~sold~~the ascarrying avalue ~~percentage~~of the asset or group of ~~net~~assets ~~revenue~~being ~~was~~reviewed, ~~primarily~~an ~~due~~impairment toloss would be recorded. The loss would be measured based on the ~~higher~~estimated ~~gross~~fair value ~~margins~~of wethe ~~achieved~~asset or group of assets compared to its carrying ~~through~~value. The ~~our~~estimated ~~licensing~~fair ~~agreements~~value ~~and~~would ~~decreased~~be ~~manufacturing~~based ~~costs~~on bythe ~~utilizing~~best ~~our~~information ~~licensees~~available ~~and~~under ~~subcontractors~~the circumstances, including prices for ~~manufacturing.~~similar assets and the results of valuation techniques, including the present value of expected future cash flows using a discount rate commensurate with the risks involved.

~~Selling~~We evaluate goodwill and other intangible assets for impairment at least annually, in ~~General~~accordance with Statement of Financial Accounting Standard No. 142, “Goodwill and ~~Administrative~~Other ~~Expenses:~~Intangible Assets” (SFAS 142). For goodwill, we first compare the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds the fair value of a reporting unit, additional tests would be used to measure the amount of impairment loss, if any. We use present value and market value techniques to measure reporting unit fair value. If the carrying amount of any other intangible asset exceeds its fair value, we would recognize an impairment loss for the difference between fair value and the carrying amount. If other events occur and circumstances change, causing the fair value of a reporting unit to fall below its carrying amount, impairment losses may be recognized in the future. In accordance with SFAS No. 142, we performed our annual impairment test in December 2008 and determined that the goodwill and related patents were impaired. In December 2008, the company recorded an impairment charge, included in other expenses, to fully amortize goodwill in the amount of $877,366.

~~Selling,~~Income Taxes. Deferred taxes ~~general~~are ~~and~~provided ~~administrative~~on ~~expenses~~temporary ~~were~~differences ~~$3,899,652~~between ~~for~~the ~~2001, compared~~tax tobasis ~~$3,343,605~~of ~~for~~assets ~~2000,~~and liabilities anfor ~~increase~~financial ofreporting ~~$566,047.~~purposes ~~The~~and ~~increase~~income intax ~~selling,~~purposes. The ~~general~~valuation ~~and~~allowance ~~administrative~~reduces ~~expenses~~deferred ~~was~~tax ~~primarily~~assets ~~related~~ to ~~costs~~an ~~associated~~amount ~~with~~that ~~the~~represents ~~Chairman~~our ofbest ~~the~~estimate, ~~Board’s~~as ~~resignation~~ of ~~his~~December ~~CEO~~31, ~~position. Under~~2008, ~~the terms~~ of ~~his agreement, in~~ the ~~event~~ amount of ~~resignation,~~such hedeferred ~~was~~tax ~~entitled to~~assets ~~salary~~that, ~~and~~more ~~benefits~~likely ~~for~~than annot, ~~18-month~~will ~~period~~be realized. As a result, weof ~~have~~this ~~recorded~~estimate, ~~a charge~~as of ~~$397~~December 31,~~431~~ in2008 ~~2001. Costs associated with additional sales and~~we ~~administrative~~have ~~personnel~~reduced ~~added~~the ~~during~~entire ~~2001~~deferred ~~also~~tax ~~contributed~~asset toby the ~~increase.~~valuation allowance.

~~Research~~Results of ~~and~~Operations ~~Development:~~for the Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007

~~Research and development expenses were $2,773,221 for 2001, compared to~~Net ~~$1,716,825 for 2000, an increase of $1,056,396~~Revenue. The ~~increase~~following ~~was~~table ~~primarily attributable~~summarizes toour ~~costs related to additional research and development personnel,~~net ~~expanded modeling and testing capabilities and related occupancy costs.~~ revenue:

Loss from Operations:

	Year ended December 31,				(Decrease)
	2008		2007		Amount			Percent
FinePoint	$	483,975	$	2,714,579	$	(2,230,604	)		(82	)%

AsNet aFinePoint Revenue. For ~~result of~~ the ~~factors~~year ~~described~~ended ~~above~~December 31, ~~the~~2008 ~~loss~~and ~~from~~2007, revenue ~~operations~~related to Gateway was $5248,~~944~~246 and $2,~~399~~585,168 ~~for~~representing ~~2001~~and 51% and 95% of net FinePoint revenue. This customer discontinued use of our products at the end of 2007. In 2008, ~~compared~~revenue related to ~~$4,796,349~~Panasonic ~~for~~(Matsushita Electric ~~2000~~Industrial Co. LTD) was $179,727 anrepresenting ~~increase~~37% of net FinePoint ~~$1,148,050~~revenue.

~~Other~~Cost ~~Income-Net:~~of Goods Sold. The following table summarizes our cost of goods sold (COGS):

Other income-net was $554,245 for 2001, compared to $686,472 for 2000, a decline of $132,227. The decrease in other income-net is due to the decrease in investment income as a result of lower interest rates and lower average cash balances. 14

Net Loss:

	Year ended December 31,				(Decrease)
	2008		2007		Amount			Percent
FinePoint	$	515,456	$	2,260,073	$	(1,744,617	)		(77	)%

AsThe decrease ain ~~result~~total ofCOGS ~~the~~was ~~factors~~primarily ~~described~~the ~~above,~~result ~~the~~of ~~net~~decreased ~~loss~~sales ~~was~~of ~~$5,390,154~~our ~~for~~FinePoint ~~2001,~~digital ~~compared~~pens toand ~~$4,109,877 for 2000, an increase of $1,280,277~~digitizers.

13FinePoint COGS. FinePoint COGS relates to the production of the FinePoint digital computing pens and digitizers. The decrease in total COGS was primarily the result of decreased sales of our FinePoint digital pens and digitizers. The COGS as a percentage of FinePoint revenue will fluctuate depending on the average selling price to OEMs. FinePoint COGS and related gross margin was adversely affected in 2008 by increased expenses related to raw materials and manufacturing costs for our FinePoint digital pens and digitizers to Panasonic.

~~Table~~Selling, ofGeneral and ~~Contents~~Administrative Expenses. The following table summarizes our selling, general and administrative expenses (SG&A):

Results of Operations for the Year Ended December 31, 2000 Compared to the Year Ended December 31, 1999

	Year ended December 31,				Decrease
	2008		2007		Amount			Percent
FinePoint	$	704,565	$	1,124,348	$	(419,783	)		(37	)%
Corporate		2,213,643		3,073,946		(860,303	)		(28	)%
Total SG&A	$	2,918,208	$	4,198,294	$	(1,280,086	)		(30	)%

~~Net~~FinePoint SG&A. FinePoint ~~Revenue:~~SG&A primarily consists of salaries of sales and administrative personnel and occupancy costs. The decrease was primarily due to a decrease in salaries and wages, and 2007 included unusually high legal costs relating to severance negotiation and the termination of a lease in 2007 for a building used solely by FinePoint.

WeCorporate SG&A. Corporate ~~recorded~~SG&A ~~net~~primarily ~~revenue~~consists of $2salaries,~~318,736 for the year ended December 31,~~ ~~2000~~accounting, ~~compared~~legal toand ~~$1,674,174~~other ~~for~~professional ~~the~~expenses ~~year~~and ~~ended December 31, 1999, an increase~~occupancy ~~of $644,562~~costs. The ~~Licensing~~decrease ~~revenue~~from ~~for~~the ~~2000~~previous ~~was~~year ~~$533,137~~is ~~compared~~primarily due to ~~$0 in 1999.~~higher ~~Our~~compensation ~~shift~~expense in ~~our~~2007 ~~business~~relating ~~model~~to ~~accounted~~employment ~~for the increase in our licensing revenue. The license~~ agreement ~~with~~severance ~~Delphi generated licensing revenue of~~expenses ~~$277,860 or 52%~~ of ~~our~~approximately ~~licensing revenue for the year ended December 31~~$800, ~~2000~~000. ~~Licensing revenue from Delphi primarily resulted from the amortization of deferred licensing revenue which was received in 2000.~~

~~During 2000~~Research, ~~product revenue was $1,785,599 compared to $1,674,174 in~~ ~~1999,~~Development an increase of $111,425. Effective March 31, 2000, we resolved the Ericsson Inc. (“Ericsson”) purchase order cancellation discussed in our 1999 10-KSB annual report. This resolution was based on Ericsson’s acknowledgement of financial responsibility for the purchase order dated April 7, 1999, between Ericsson and ~~Duraswitch~~Commercial ~~for~~Application ~~the custom design of a compact mode selector/volume~~Engineering ~~control rotary type switch~~Expenses. ~~Ericsson agreed to pay and Duraswitch accepted $340,000 as an equitable resolution.~~ The ~~payment~~following ~~from~~table ~~Ericsson~~summarizes ~~represented 19% of~~ our ~~product revenue for 2000. The remaining change in product revenue was~~research, ~~driven~~development ~~by market acceptance of our switches relying on our patented technologies rather than older membrane switch technology~~ and ~~the~~commercial ~~shift~~application toengineering ~~our~~expenses ~~new business model of licensing.~~ (R&D):

Cost of Goods Sold:

	Year ended December 31,				Increase (Decrease)
	2008		2007		Amount		Percent
FinePoint	$	3,503,891	$	1,926,452	$	1,577,439		82	%

~~Cost of goods sold was $2,054,655 for 2000, compared to $2,029,208 for~~FinePoint ~~1999, an increase of $25,447~~R&D. FinePoint ~~Licensing~~R&D ~~cost~~consists primarily of ~~sales~~salaries ~~for 2000 was $49,666~~of ~~compared~~engineering topersonnel $0and inengineering ~~1999~~supplies. The increase inis primarily ~~licensing cost of sales was~~ due to ~~our transition~~increased tospending ain ~~licensing~~its ~~business~~efforts ~~model, as opposed~~ to adevelop ~~product-based~~new ~~model.~~products and ~~2000~~samples ~~was~~for ~~our~~the ~~initial~~new ~~transition~~customers ~~year~~the ~~from~~company ~~manufacturing~~had ~~to licensing~~targeted.

~~Product~~Interest ~~cost of goods sold was $2,004,989 in 2000 compared to $2,029,208~~and inOther ~~1999,~~Income(Expense) a– ~~decline of $24,219~~Net. The ~~decrease~~following intable ~~cost of goods sold as a~~summarizes ~~percentage~~Interest of net revenue was primarily due to our transition to a licensing business model from a manufacturing model. The decrease in overall cost of goods sold as a percentage of net revenue was primarily due to the higher gross margins we achieved through our licensing agreements and ~~decreased manufacturing~~other ~~costs by utilizing our licensees and subcontractors for manufacturing.~~ income:

Selling, General and Administrative Expenses:

	Year ended December 31,						Increase (Decrease)
	2008			2007			Amount			Percent
Interest Income	$	49,462		$	301,138		$	(251,676	)		(84	)%
Loss on disposal of equipment	$	(159,614	)		(16,037	)	$	(143,577	)		895	%
Loss on sale of Duraswitch segment	$	(43,708	)	$	-		$	(43,708	)		-
Impairment charge for Goodwill	$	(877,366	)	$	-		$	(877,366	)		-
Total R&D	$	(1,031,226	)	$	285,101		$	(1,316,327	)		(462	)%

Selling, general and administrative expenses were $3,343,605 for 2000, compared to $2,311,577 for 1999, an increase of $1,032,028. The increase in selling, general and administrative expenses was directly related to building an infrastructure to accommodate expected licensing programs and sales growth, including increased salary costs, occupancy costs and travel costs. Documenting our manufacturing processes, structuring the technology-licensing program and training our licensees all contributed to increased expenses. 15

~~Research~~Interest income. The ~~and~~decrease ~~Development:~~was due to lower interest income as a result of lower cash balances in 2008.

~~Research~~Loss ~~and~~on ~~development~~disposal ~~expenses were $1,716,825 for 2000, compared to~~of ~~$889,922~~equipment. The ~~for 1999, an~~ increase ofin ~~$826,903.~~loss ~~The~~was ~~increased~~primarily ~~costs~~due ~~were attributed~~ to ~~hiring additional engineering personnel, engineering consulting services,~~the ~~and~~disposal ~~additional~~of ~~modeling,~~obsolete ~~occupancy~~tooling ~~and~~that ~~small~~was ~~tools~~no ~~purchased~~longer toneeded ~~continue development,~~for ~~modeling and testing of~~ new ~~product applications.~~ designs.

Loss ~~from~~on ~~Operations:~~disposal of Duraswitch segment. The loss in 2008 represents the book loss on the sale of assets related to the Duraswitch segment.

AsImpairment acharge ~~result~~for Goodwill. In ofDecember ~~the~~2008, ~~factors~~it ~~described~~was ~~above,~~determined that the FinePoint ~~loss~~goodwill ~~from~~was ~~operations~~impaired ~~was $4,796,349~~and ~~for~~an ~~2000,~~impairment ~~compared~~charge was recorded to ~~$3,556,533~~adjust goodwill ~~for~~to ~~1999,~~a anfair ~~increase~~market value of ~~$1,239,816~~ zero.

~~Other Income-Net:~~Liquidity and Capital Resources

~~Other~~Prior ~~income-net~~to entering ~~was~~into ~~$686,472~~the ~~for~~asset ~~2000~~purchase agreement with Wacom, ~~compared~~we did not have sufficient working capital to meet our obligations to comply with the conditions required to consummate the transaction. Therefore, of the $812,~~615~~000,000 purchase price for ~~1999~~the asset purchase transaction, an$100,000 was previously paid ~~increase~~by Wacom to us in connection with a letter of ~~$604~~intent signed by us and Wacom on April 2,~~857~~ 2009 to help us meet these obligations. We ~~Additional~~also ~~cash~~entered ~~generated~~into a ~~from~~loan ~~our~~and ~~public~~security ~~offering~~agreement with Wacom on June 26, 2009 pursuant to which ~~(August~~Wacom ~~1999~~is lending the remaining $1,900,000 to us, of which amount (a) $350,000 has ~~and~~been disbursed to us upon execution of the ~~exclusive~~asset ~~license~~purchase ~~fee~~agreement and ~~equity~~(b) $1,550,000 ~~transactions~~has been deposited in a depository account, with such amount to be ~~Delphi~~distributed ~~(May~~to us and ~~June~~certain ~~2000,~~of ~~respectively)~~our ~~was~~creditors upon consummation of the ~~primary~~asset purchase ~~reason~~transaction. We ~~for~~believe that the funds provided by Wacom ~~increase.~~will be sufficient to meet our capital needs through such date that the asset purchase transaction is consummated.

~~Net~~In October ~~Loss:~~2008, we sold all the assets and rights related to our Duraswitch segment to Memtron Technologies Co. As part of the agreement, we have the potential to receive a supplemental payout up to $800,000 if certain revenue targets are met from the sale date through December 31, 2009. If any amounts are due under this supplemental payout, the cash payout will be made in March of 2010. It is uncertain if any payout will be earned or received. Any cash received would be used to increase funds paid to creditors and distribution, if any, to stockholders.

As ~~a result~~ of December ~~the factors described above~~31, ~~the net loss was $4~~2008,~~109,877 for~~ ~~2000,~~we ~~compared~~had tocash ~~$3,474,918~~and ~~for~~cash ~~1999,~~equivalents ~~an increase~~ of approximately $~~634~~372,~~959~~621.

~~Liquidity~~Net ~~and~~cash used ~~Capital~~in ~~Resources~~operating activities during the year ended December 31, 2008 was $6,378,426. The cash used in operating activities was used primarily to fund the operating expenses of our FinePoint segment.

~~Cash~~Net ~~and~~ cash provided ~~equivalents~~in ~~were~~investing ~~$12,016,430,~~activities ~~$16,445,564~~during ~~and~~the ~~$5,884,827~~year on ended December 31, ~~2001~~2008 was $1,161,135. The ~~2000~~cash ~~and~~provided ~~1999,~~in ~~respectively.~~investing ~~The~~activities ~~decrease~~was inprimarily related to the ~~cash~~net ~~and~~proceeds from the sale of our Duraswitch segment of ~~cash~~$1,335,938 ~~equivalents~~offset ~~during~~by ~~2001~~purchases isof ~~primarily~~equipment ~~attributable~~of to$134,769 ~~cash~~and ~~used~~patents infor ~~operations~~ $20,034

14Net cash used in financing activities during the year ended December 31, 2008 was $2,500 for stock issuance fees to NASDAQ.

~~Table~~At December 31, 2008, we had net operating loss carry forwards for federal income tax purposes of ~~Contents~~$24.5 million which expire in 2019 through 2028 and net operating loss carry forwards for state income tax purposes of $7.4 million which expire 2009 through 2013.

The accompanying ~~offset~~financial bystatements ~~the~~have ~~proceeds~~been ~~from~~prepared ~~the~~on ~~stock~~a ~~sales~~going ~~related~~concern tobasis, which contemplates the ~~exercise~~realization of assets and satisfaction of liabilities in ~~employee~~the ~~stock~~normal ~~options~~course of business. We ~~The~~have ~~increase~~experienced recurring operating losses since our inception and our accumulated net deficit is in excess ~~cash~~of $32.5 million. In 2008, we sold the Duraswitch segment and, with ~~cash~~the ~~equivalents~~exception ~~during~~of ~~2000~~a possible earn-out payment in 2010, do not expect any future revenue from this technology. Our FinePoint revenue was primarily ~~due~~low volume production, and we intend to sell all of our interest in the ~~exclusive~~FinePoint assets ~~license~~to ~~fee~~Wacom. The accompanying financial statements do not include any adjustments relating to the recoverability and ~~equity~~classification ~~transactions~~of recorded assets amounts or the amounts and classification of liabilities that may be necessary should we be unable to continue as a going concern. In 2008, we made significant investments in our technologies, and development of products for potential customers. However, the timing and amount of revenue generated from these efforts is uncertain. We believe that available cash resources, together with anticipated revenues from operations ~~Delphi~~will not be sufficient to satisfy our business plan and capital requirements through December 31, 2009. Due to a lack of funds, we ceased operations in 2009, and have focused efforts on the sale of our assets and dissolution of the corporation.

Net cash used in operating activities was $4,885,985, $1,206,287 and $3,248,117 for 2001, 2000 and 1999, respectively. In 2001, cash used in operating activities consisted primarily of the net loss and a decrease in deferred licensing revenue which was partially offset by an increase in accrued salaries and benefits, an increase in other non-current liabilities and by depreciation and amortization. In 2000, cash used in operating activities consisted primarily of the net loss, a decrease in accounts payable and accrued salaries and benefits which was partially offset by an increase in deferred licensing revenue, depreciation and amortization and a decrease in inventory. In 1999, cash used by operating activities consisted primarily of the net loss and an increase in inventory which was partially offset by depreciation and amortization and an increase in accrued salaries and benefits. 16

~~Net cash used in investing activities was $670,114, $841,239 and $627,314~~Other inthan ~~2001,~~disclosed ~~2000 and 1999~~herein, ~~respectively.~~we ~~Our~~have ~~net~~no ~~cash~~special ~~used~~purpose inentities ~~investing~~or ~~activities in~~off ~~2001~~balance ~~and 2000 consisted primarily of purchases of computer equipment,~~sheet ~~modeling~~financing ~~and test equipment~~arrangements, ~~and an increase in patents. In 1999~~commitments, ~~cash~~or ~~used~~guarantees ~~in investing~~other ~~activities~~than ~~consisted~~certain ~~primarily of purchases of computer equipment,~~long-term ~~modeling~~operating ~~and~~lease ~~test~~arrangements ~~equipment~~for ~~and~~our ~~leasehold~~facilities ~~improvements~~ and ashort-term ~~loan~~purchase toorder ~~Camplex/Concept~~commitments Wto ~~Corporation in anticipation of~~ our ~~acquisition of Camplex, which we subsequently abandoned and received repayment of $60,000 by December 31, 1999~~suppliers.

~~Net~~New ~~cash~~Accounting Pronouncements. In ~~provided~~February by2007, ~~financing~~the ~~activities~~FASB ~~was~~issued ~~$1,126,965,~~SFAS ~~$12~~No. 159,~~608,263~~ “The Fair Value Option for Financial Assets and Financial Liabilities” $9(SFAS 159),~~616,398~~ inwhich ~~2001,~~permits ~~2000~~entities to choose to measure many financial instruments and ~~1999,~~certain ~~respectively.~~other ~~Cash~~items ~~provided~~at byfair ~~financing~~value that are not currently ~~activities~~required into ~~2001~~be ~~consisted~~measured ~~primarily~~at offair ~~net~~value. SFAS ~~proceeds~~159 ~~from~~will be effective for us on January 1, 2008. We are currently evaluating the ~~sale~~impact of ~~stock~~ ~~related~~adopting toSFAS ~~the~~159 ~~exercise~~on our financial position, cash flows, and results of operations ~~employee~~but ~~stock~~do ~~options.~~not believe it will have any impact on our financial condition and results of operations.

In December ~~2000~~2007, ~~cash~~the ~~provided~~FASB byissued ~~financing~~SFAS ~~activities~~No. ~~consisted~~141(R), ~~primarily~~“Business ofCombinations” ~~net proceeds~~(“FAS ~~from~~141 ~~our~~(R)”), ~~equity~~to ~~transactions~~replace FAS ~~with~~141, ~~Delphi~~“Business Combinations”. FAS In141(R) requires ~~May~~use ~~2000~~of the acquisition method of accounting, wedefines ~~received~~the acquirer, ~~$4.0 million~~establishes ~~from~~the ~~Delphi~~acquisition indate ~~exchange~~and ~~for~~broadens ~~(a) Delphi’s~~the ~~exclusive~~scope ~~right~~ to ~~utilize~~ all transactions and other ~~manufacture~~events ~~our~~in ~~patented~~which ~~switch~~one ~~technologies~~entity obtains control over one or more other businesses. This statement is effective for ~~the~~financial ~~automotive~~statements ~~industry,~~issued ~~(b) a~~for ~~warrant~~fiscal toyears ~~purchase~~beginning ~~225,000~~on ~~shares~~or ofafter ~~our~~December ~~stock~~15, ~~and~~2008 ~~(c) an~~with earlier ~~option~~adoption toprohibited. While ~~purchase~~we ~~approximately~~do ~~1.65 million~~not ~~shares~~expect ofthat ~~our~~the ~~stock.~~adoption Inof ~~June~~FAS ~~2000,~~141 ~~Delphi~~(R) ~~exercised~~to ~~its~~have ~~option~~a material impact to ~~purchase~~our ~~approximately~~consolidated ~~1.65 million~~financial ~~shares~~statements for oftransactions ~~our~~completed ~~common~~prior ~~stock~~to December 31, ~~representing~~2008, ~~approximately~~the ~~18%~~impact of ~~our~~the ~~outstanding shares~~accounting atchange ~~that~~could ~~time,~~be material for ~~approximately~~business ~~$11.5 million~~combinations inwhich ~~cash.~~may be consummated subsequent thereto.

~~The~~In December ~~license~~2007, ~~agreement~~the ~~with~~FASB ~~Delphi~~issued ~~also~~Statement ~~requires~~of ~~Delphi~~FAS toNo. ~~make~~160, ~~minimum~~“Non controlling ~~royalty~~Interests ~~payments~~in ~~totaling~~Consolidated ~~$12 million~~Financial ~~during~~Statements”— ~~the~~an ~~initial~~amendment ~~seven-year~~of ~~term~~ARB ~~ending June 30~~No. 51, (“FAS ~~2007~~160”). FAS ~~Delphi~~160 ~~can~~establishes ~~maintain~~accounting ~~exclusivity~~and reporting standards for the ~~automotive~~non ~~industry through~~controlling ~~June 30,~~interest ~~2012~~in bya ~~making~~subsidiary ~~additional~~and ~~minimum~~for ~~annual~~the ~~royalty~~retained ~~payments~~interest ~~during~~and ~~that~~gain ~~period~~or loss when a subsidiary is deconsolidated. This ~~After~~statement is ~~June 30,~~effective ~~2012,~~for ~~either~~financial ~~Delphi~~statements issued for fiscal years beginning on or after ~~the~~December ~~Company~~15, ~~may~~2008 with earlier adoption prohibited. We are ~~convert~~currently evaluating the ~~agreement~~impact toof aFAS ~~nonexclusive~~160 ~~agreement~~on ~~through~~our ~~2020.~~consolidated financial statements.

In 1999, cash provided by financing activities consisted primarily of the net proceeds from our private stock offering and our public stock offering. On August 26, 1999, we filed a registration statement with the Securities and Exchange Commission to issue 2,000,000 shares of our common stock at $5.00 per share. The offering was concluded after all shares available were sold. The underwriter of the stock offering was Roth Capital Partners (formerly Cruttenden Roth). The net proceeds from the offering were $8,196,312, which is net of $1,803,688 in costs paid by us related to the offering. 17

~~At December 31, 2001, we had approximately $14,890,000 in net operating~~Item ~~loss carryforwards available for federal and state income tax purposes~~8. Financial WeStatements ~~have~~and ~~not~~Supplementary ~~recognized any benefit from these operating loss carryforwards, which expire in 2011 through 2021.~~ Data

~~The~~REPORT ~~Company has employment and separation agreements with key members of~~OF ~~management.~~INDEPENDENT ~~These~~REGISTERED ~~agreements~~PUBLIC ~~call~~ACCOUNTING for a base salary and bonuses based upon the performance of the Company. These agreements also provide for salary and benefits in the event of separation. Effective December 31, 2001, the Chairman of the Board resigned his CEO position and remained as Chairman. His employment agreement provided for salary and benefits in the event of termination or resignation. As such, the company has recorded a charge of $397,431 for the year ended December 31, 2001 to be paid over an 18-month period. FIRM

WeBoard have experienced significant operating losses since our inception. We expect that our capital expenditure and working capital requirements in the foreseeable future would increase depending on the rate of ~~our expansion, our~~ operating results, and other adjustments in our operating plan as needed in response to competition or unexpected events. We do not have any current plans to obtain additional financing through the sale of equity or by establishing lines of credit. We believe that cash on hand will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. Directors

15InPlay Technologies, Inc.

~~Table of Contents~~Scottsdale, Arizona

~~Item 7A~~We have audited the accompanying consolidated balance sheet of InPlay Technologies, Inc. and ~~Quantitative~~subsidiaries (the “Company”) as of December 31, 2008, and ~~Qualitative~~the ~~Disclosures~~related consolidated ~~About~~statements ~~Market~~of ~~Risk.~~operations, stockholders’ equity/deficit, and cash flows for each of the years in the two-year period ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

~~Market~~We conducted ~~risk~~our isaudits in accordance with the ~~potential~~standards ~~loss~~of ~~arising~~the ~~from~~Public ~~adverse~~Company Accounting ~~changes~~Oversight inBoard ~~market~~(United States). Those standards require ~~rates~~that we plan and ~~prices,~~perform ~~such~~the asaudit ~~foreign~~to ~~currency~~obtain ~~exchange~~reasonable ~~and~~assurance ~~interest~~about ~~rates.~~whether the financial statements are free of material misstatement. The Company ~~does~~is not ~~use~~required ~~derivative~~to ~~financial~~have, ~~instruments~~nor were we engaged to ~~manage~~perform, ~~these~~an ~~risks~~audit ~~and~~of its ~~does~~internal ~~not~~control ~~hold~~over orfinancial ~~issue~~reporting. Our audit included consideration of internal control over financial ~~instruments~~reporting as a basis for designing ~~trading~~audit ~~purposes~~procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

WeIn ~~are~~our opinion, ~~currently~~such ~~exposed~~consolidated tofinancial ~~credit~~statements ~~risk~~present onfairly, ~~credit~~in ~~extended~~all ~~to our~~material ~~licensees.~~respects, ~~Based on~~ the ~~credit~~financial ~~worthiness~~position of ~~our~~InPlay ~~licensee~~Technologies, ~~base~~Inc. and ~~the relative~~subsidiaries ~~size~~as of ~~these~~December ~~financial~~31, ~~instruments~~2008, weand ~~believe~~ the ~~risk~~results ~~associated~~of ~~with~~their ~~these~~operations and their cash ~~instruments~~flows ~~will~~for ~~not~~each ~~have~~of athe ~~material~~years ~~adverse~~in ~~affect~~the ontwo-year ~~our~~period ~~business~~ended December 31, ~~financial~~2008 in ~~position,~~conformity ~~results~~with ofaccounting ~~operations~~principles orgenerally ~~cash~~accepted ~~flows.~~in the United States of America.

~~Additionally,~~The accompanying wefinancial ~~are~~statements ~~exposed~~have tobeen ~~some~~prepared ~~market~~assuming ~~risk~~that ~~through~~the ~~interest rates~~Company ~~related~~will tocontinue ~~our~~as ~~investment~~a ofgoing ~~cash~~concern. As ~~and~~discussed ~~cash~~in ~~equivalents~~Note of2 ~~approximately~~to ~~$12~~the ~~million.~~financial ~~The~~statements, ~~risk~~the isCompany’s has not ~~considered~~secured sufficient revenue ~~material~~from new customers, and wein ~~manage~~2009, ~~such~~began ~~risk~~to bywind ~~evaluating~~down operations and liquidate assets. These matters raise substantial doubt about the ~~best~~Company’s ~~investment~~ability ~~rates~~to ~~available~~continue ~~for~~as ~~short-term~~a ~~high-quality~~going ~~investments~~concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Presently,~~As discussed ~~all of the Company’s receivables and payments are made~~ in ~~U.S. dollars~~Note ~~and,~~17 ~~consequently,~~to the ~~Company~~accompanying ~~believes~~financial ~~it has no foreign currency exchange rate risk. However~~statements, in the ~~future, the~~ Company ~~may enter into~~ ~~agreements~~decided ~~in foreign currencies that may subject the Company~~ to ~~foreign exchange~~cease ~~rate~~operations, ~~risk.~~liquidate ~~There can be no assurance that~~ the Company’s ~~future~~remaining assets and ~~efforts~~attempt to ~~reduce~~settle ~~foreign~~its ~~exchange risk will be successful~~obligations.

16/s/ Moss Adams LLP

~~Table of Contents~~Scottsdale, Arizona

~~Item 8. Financial Statements.~~August 10, 2009

~~INDEPENDENT AUDITORS’ REPORT~~ 18

~~Board of Directors~~INPLAY ~~Duraswitch Industries~~TECHNOLOGIES, ~~Inc~~INC. ~~Mesa, Arizona~~

~~We have audited the accompanying consolidated balance sheets of Duraswitch~~CONSOLIDATED ~~Industries,~~BALANCE Inc. and subsidiaries (the “Company”) as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. SHEET

DECEMBER 31, 2008

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

	2008
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	372,621
Restricted short-term investment		20,000
Accounts receivable		73,783
Inventory (Note 5)		13,838
Prepaid expenses and other current assets		89,611
Total current assets		569,853
PROPERTY AND EQUIPMENT - Net (Note 6)		275,027
PATENTS - Net (Note 7)		411,207
OTHER ASSETS		17,731
TOTAL	$	1,273,818

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable	$	911,368
Accrued salaries and benefits		311,879
Liabilities of discontinued operations		68,049
Other accrued expenses and other current liabilities		599,797
Total current liabilities		1,891,093
Total liabilities		1,891,093
COMMITMENTS AND CONTINGENCIES (Notes 5 and 15)
STOCKHOLDERS' DEFICIT (Notes 9 and 10)
Preferred stock, no par value, 10,000,000 shares authorized, no shares issued and outstanding		-
Common stock, $.001 par value, 40,000,000 shares authorized 11,622,568 shares issued and outstanding		11,623
Additional paid-in capital		31,942,010
Accumulated deficit		(32,570,908	)
Total stockholders' deficit		(617,275	)
TOTAL	$	1,273,818

InSee ~~our~~notes to ~~opinion, such~~ consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America.

~~DELOITTE & TOUCHE LLP Phoenix, Arizona February 15, 2002~~ 19

17INPLAY TECHNOLOGIES, INC.

~~Table~~CONSOLIDATED STATEMENTS ofOF ~~Contents~~OPERATIONS

YEARS ENDED DECEMBER 31, 2008 AND 2007

DURASWITCH INDUSTRIES, INC.

	2008			2007

NET REVENUE	$	483,975		$	2,714,579
COST OF GOODS SOLD		515,456			2,260,073
Gross profit		(31,481	)		454,506

OPERATING EXPENSES:
Selling, general and administrative		2,918,208			4,198,294
Research, development and commercial
application engineering		3,503,891			1,926,452
Total operating expenses		6,422,099			6,124,746

INCOME (LOSS) FROM OPERATIONS		(6,453,580	)		(5,670,240	)

OTHER INCOME (EXPENSE):
Interest and other income - net		(1,031,226	)		285,101

Loss from continuing operations		(7,484,806	)		(5,385,139	)

DISCONTINUED OPERATIONS:
Income from discontinued Duraswitch segment		212,038			6,926,682

NET INCOME (LOSS)	$	(7,272,768	)	$	1,541,543

NET INCOME (LOSS) PER COMMON SHARE:
From continuing operations	$	(0.64	)	$	(0.47	)
Discontinued operations		0.01			0.60
TOTAL BASIC AND DILUTED LOSS/INCOME PER SHARE	$	(0.63	)	$	0.13

WEIGHTED AVERAGE SHARES OUTSTANDING,
BASIC AND DILUTED		11,613,022			11,530,233

~~CONSOLIDATED~~See ~~BALANCE SHEETS~~notes ~~DECEMBER~~to ~~31,~~consolidated ~~2001~~financial ~~AND 2000~~ statements.

			2001			2000
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	12,016,430		$	16,445,564
	Accounts receivable (net of allowance for doubtful accounts of $17,500 in 2001 and $20,000 in 2000)			101,934			224,419
	Inventory (Note 4)			275,919			250,983
	Prepaid expenses and other current assets			186,658			230,995
		Total current assets		12,580,941			17,151,961
PROPERTY AND EQUIPMENT – Net (Notes 6 and 8)				1,052,603			903,150
GOODWILL – Net				443,874			516,840
PATENTS – Net				588,272			337,481
OTHER ASSETS				150,459			188,722
TOTAL			$	14,816,149		$	19,098,154
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Accounts payable		$	84,812		$	52,469
	Accrued salaries and benefits			575,738			321,649
	Other accrued expenses and other current liabilities			166,912			224,289
	Deferred licensing revenue (Note 7)			458,150			477,880
	Current portion of capital leases payable (Note 8)			17,457			46,035
		Total current liabilities		1,303,069			1,122,322
LONG-TERM LIABILITIES:
	Capital leases payable (Note 8)			26,323			43,780
	Other non-current liabilities (Note 13)			181,240			—
	Deferred licensing revenue — long-term (Note 7)			1,773,981			2,183,362
		Total long-term liabilities		1,981,544			2,227,142
		Total liabilities		3,284,613			3,349,464
COMMITMENTS AND CONTINGENCIES (Notes 3 and 13)
STOCKHOLDERS’ EQUITY (Notes 9 and 10):
	Common stock, $.001 par value, 40,000,000 shares authorized in 2001 and 2000, 9,528,695 and 9,266,696 shares issued and outstanding in 2001 and 2000, respectively			9,529			9,267
	Preferred stock, Series A, no par value, 10,000,000 shares authorized, no shares issued and outstanding in 2001 and 2000			—			—
	Additional paid-in capital			27,285,470			26,112,732
	Accumulated deficit			(15,763,463	)		(10,373,309	)
Total stockholders’ equity				11,531,536			15,748,690
		TOTAL	$	14,816,149		$	19,098,154

~~See~~INPLAY TECHNOLOGIES, ~~notes to consolidated financial statements~~INC.

18CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY/DEFICIT

~~Table~~YEARS ENDED ofDECEMBER ~~Contents~~31, 2008 AND 2007

DURASWITCH INDUSTRIES, INC.

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

BALANCE, DECEMBER 31, 2006		11,502,315	$	11,502	$	31,424,436		$	(26,839,683	)	$	4,596,255
Issuance of stock options		-		-		173,165			-			173,165
Issuance of restricted stock		2,823		3		4,997			-			5,000
Employee stock options exercised		90,000		90		103,860			-			103,950
Net loss		-		-		-			1,541,543			1,541,543
BALANCE, DECEMBER 31, 2007		11,595,138		11,595		31,706,458			(25,298,140	)		6,419,913
Issuance of stock options		-		-		219,330			-			219,330
Issuance of restricted stock		27,430		28		18,722			-			18,750
Employee stock options exercised		-		-		(2,500	)		-			(2,500	)
Net income		-		-		-			(7,272,768	)		(7,272,768	)
BALANCE, DECEMBER 31, 2008		11,622,568	$	11,623	$	31,942,010		$	(32,570,908	)	$	(617,275	)

~~CONSOLIDATED~~See ~~STATEMENTS OF OPERATIONS~~notes ~~YEARS~~to ~~ENDED~~consolidated ~~DECEMBER~~financial ~~31, 2001, 2000 AND 1999~~ statements.

				2001			2000			1999
NET REVENUE (Note 3):
	Licensing (Note 7)			$	835,541		$	533,137		$	—
	Product				149,771			1,785,599			1,674,174
		Total net revenue			985,312			2,318,736			1,674,174
COST OF GOODS SOLD:
	Licensing				100,540			49,666			—
	Product				156,298			2,004,989			2,029,208
		Total cost of goods sold			256,838			2,054,655			2,029,208
			Gross profit (loss)		728,474			264,081			(355,034	)
OPERATING EXPENSES:
	Selling, general and administrative (Note 13)				3,899,652			3,343,605			2,311,577
	Research and development				2,773,221			1,716,825			889,922
		Total operating expenses			6,672,873			5,060,430			3,201,499
LOSS FROM OPERATIONS					(5,944,399	)		(4,796,349	)		(3,556,533	)
OTHER INCOME – Net					554,245			686,472			81,615
NET LOSS				$	(5,390,154	)	$	(4,109,877	)	$	(3,474,918	)
NET LOSS PER COMMON SHARE, BASIC AND DILUTED				$	(0.57	)	$	(0.49	)	$	(0.58	)
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED					9,443,313			8,435,856			6,033,767

~~See~~INPLAY TECHNOLOGIES, ~~notes to consolidated financial statements~~INC.

19CONSOLIDATED STATEMENTS OF CASH FLOWS

~~Table~~YEARS ENDED ofDECEMBER ~~Contents~~31, 2008 AND 2007

DURASWITCH INDUSTRIES, INC.

	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(7,272,768	)	$	1,541,543
Adjustments to reconcile net loss to net cash used in
operating activities:
Impairment of Goodwill		877,366			-
Depreciation and amortization		264,906			335,497
Stock compensation		238,080			178,165
(Gain) Loss on disposal of equipment		203,322			103,194

Changes in operating assets and liabilities; net of assets
acquired and liabilities assumed:
Accounts receivable		(4,292	)		150,759
Inventory		(9,653	)		1,051,066
Prepaid expenses and other current assets		39,321			56,442
Accounts payable		162,783			(55,814	)
Accrued salaries and benefits		(466,108	)		279,895
Other accrued expenses and other current liabilities		(237,460	)		362,134
Other non-current liabilities		(173,228	)		172,377
Deferred licensing revenue		(695	)		(9,831	)
Net cash provided by (used in) operating activities		(6,378,426	)		4,165,427

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase/Sale of restricted short-term investment		(20,000	)		-
Increase in patents		(20,034	)		(41,473	)
Net proceeds from sale of Duraswitch segment		1,335,938			7,923
Purchases of property and equipment		(134,769	)		(234,727	)
Net cash provided by (used in) investing activities		1,161,135			(268,277	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Stock issuance fee to NASDAQ		(2,500	)		-
Net proceeds from exercise of employee stock options		-			103,950
Principal payments on capital leases and notes payable		-			-
Net cash provided by (used in) financing activities		(2,500	)		103,950
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(5,219,791	)		4,001,100
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		5,592,412			1,591,312
CASH AND CASH EQUIVALENTS, END OF YEAR	$	372,621		$	5,592,412

SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Cash paid for interest	$	-		$	-

~~CONSOLIDATED~~See ~~STATEMENTS OF STOCKHOLDERS’ EQUITY~~notes ~~YEARS~~to ~~ENDED~~consolidated ~~DECEMBER~~financial ~~31, 2001, 2000 AND 1999~~ statements.

						Series A							Additional
		Common Stock				Preferred Stock				Note			Paid-in		Accumulated
		Shares		Amount		Shares		Amount		Receivable			Capital		Deficit			Total
BALANCE, JANUARY 1, 1999			4,911,250	$	4,911		—	$	—	$	—		$	3,535,878	$	(2,788,514	)	$	752,275
	Net proceeds from sale of common stock for cash in private offering		305,992		306									955,280					955,586
	Net proceeds from sale of common stock for cash in public offering		2,000,000		2,000									8,194,312					8,196,312
	Stock warrants exercised		275,685		276						(147,263	)		565,995					419,008
	Issuance of stock for services		2,667		3									8,497					8,500
	Compensation expense from stock options													13,965					13,965
	Net loss															(3,474,918	)		(3,474,918	)
BALANCE, DECEMBER 31, 1999			7,495,594		7,496		—		—		(147,263	)		13,273,927		(6,263,432	)		6,870,728
	Issuance of option to purchase stock for cash (Notes 7 and 9)													688,132					688,132
	Issuance of warrant to purchase stock for cash (Notes 7 and 9)													446,206					446,206
	Stock option exercised (Notes 7 and 9)		1,651,846		1,652									11,499,510					11,501,162
	Employee stock options exercised		76,386		76									119,993					120,069
	Stock warrants exercised		42,870		43									84,964					85,007
	Cash received from note receivable										147,263								147,263
	Net loss															(4,109,877	)		(4,109,877	)
BALANCE, DECEMBER 31, 2000			9,266,696		9,267		—		—		—			26,112,732		(10,373,309	)		15,748,690
	Employee stock options exercised		261,999		262									1,172,738					1,173,000
	Net loss															(5,390,154	)		(5,390,154	)
BALANCE, DECEMBER 31, 2001			9,528,695	$	9,529		—	$	—	$	—		$	27,285,470	$	(15,763,463	)	$	11,531,536

~~See~~INPLAY TECHNOLOGIES, ~~notes to consolidated financial statements~~INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

20 1. NATURE OF BUSINESS

~~Table~~InPlay Technologies, Inc. (the “Company”) has developed and marketed innovative human interface devices (HID) for electronic products. The Company’s current technologies include the FinePoint digital computing pen and dual-mode pen and touch technologies. The Company markets the FinePoint digitizer and pen products to manufacturers of ~~Contents~~convertible notebooks and tablet PCs.

~~DURASWITCH~~Previously, the ~~INDUSTRIES~~Company had developed, ~~INC.~~patented, and licensed innovative technologies utilizing a magnetic-based design for electronic switches under the Duraswitch brand name. This technology segment was sold in October 2008.

~~CONSOLIDATED~~2. ~~STATEMENTS~~GOING ~~OF CASH FLOWS YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999~~ CONCERN

					2001			2000			1999
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss				$	(5,390,154	)	$	(4,109,877	)	$	(3,474,918	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization				418,546			294,023			223,788
		Loss on disposal of equipment				2,552			4,792			(11,640	)
		Stock option compensation expense				—			—			13,965
		Issuance of stock for services				—			—			8,500
		Bad debt expense				—			—			30,654
		Changes in operating assets and liabilities:
			Accounts receivable			122,485			13,974			(132,969	)
			Inventory			(24,936	)		285,511			(300,927	)
			Prepaid expenses and other current assets			4,338			(21,618	)		(92,737	)
			Accounts payable			32,343			(190,082	)		21,308
			Accrued salaries and benefits			254,089			(140,365	)		310,068
			Other accrued expenses and other current liabilities			(57,377	)		(3,887	)		156,791
			Other non-current liabilities			181,240			—			—
			Deferred licensing revenue			(429,111	)		2,661,242			—
				Net cash used in operating activities		(4,885,985	)		(1,206,287	)		(3,248,117	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Increase in patents					(283,464	)		(185,102	)		(34,232	)
	Decrease (increase) in other assets					14,838			(164,425	)		(24,297	)
	Advance to Camplex					—			—			(150,000	)
	Repayment of (payment of) advance to employee					40,000			(40,000	)		—
	Proceeds from Camplex					—			31,578			60,000
	Proceeds from sale of equipment					7,000			—			12,500
	Purchases of property and equipment					(448,488	)		(483,290	)		(491,285	)
				Net cash used in investing activities		(670,114	)		(841,239	)		(627,314	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net proceeds from sale of stock					1,173,000			11,706,238			9,395,906
	Proceeds from issuance of note payable					—			—			550,000
	Payment received on note receivable					—			147,263			—
	Proceeds from sale of warrant & option					—			1,134,338			—
	Principal payments on notes payable and capital leases					(46,035	)		(304,576	)		(364,227	)
	Repayment of loans from officers					—			—			(40,281	)
	Net borrowings (repayments) on line of credit					—			(75,000	)		75,000
				Net cash provided by financing activities		1,126,965			12,608,263			9,616,398
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS						(4,429,134	)		10,560,737			5,740,967
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR						16,445,564			5,884,827			143,860
CASH AND CASH EQUIVALENTS, END OF YEAR					$	12,016,430		$	16,445,564		$	5,884,827
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION – Cash paid for interest					$	12,169		$	39,347		$	76,985
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
	Acquisition of equipment through capital lease					—			34,800			57,873
	Reduction of debt in connection with exercise of warrants					—			—			175,000
	Note receivable in connection with exercise of warrants					—			—			147,263
	Services received in exchange for reduction of advance to Camplex					—			10,000			48,422

These financial statements have been prepared assuming that the Company will continue as a going concern. The Company has experienced significant operating losses since its inception and its accumulated net deficit is in excess of $32.5 million. During 2007, the Company completed production for its primary customer, Gateway. During 2008, the Company’s revenue was primarily related to non-recurring engineering fees and low volume production for Panasonic. Due to a lack of funding, the Company subsequently completed production and does not anticipate revenue from either customer. During the first quarter of 2009, the Company ceased ongoing operations and began the process of liquidation.. These factors, among others, indicate that the Company will not continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.

~~See~~In ~~notes~~May of 2009, the Company’s management and Board of directors elected to ~~consolidated~~wind ~~financial~~down operations ~~statements~~and liquidate the net assets of the Company. The Company has focused its attention on the sale of its assets, negotiation of outstanding obligations with creditors, satisfaction of legal and regulatory requirements associated with any sale and wind down of the Company, and ultimately dissolving the corporation with the approval of stockholders. As described in Note 17, the Company has executed an asset purchase agreement pursuant to which it has agreed to sell the intellectual property pertaining to the digital computer pen and digitizer segment of its business, which represents substantially all of the Company’s remaining assets, for a price of $2.0 million. Upon completion of the transaction, the Company intends to negotiate settlements for amounts owed to creditors, cease business operations, and dissolve the Company and its subsidiaries. At the date of the financial statements, the Company’s best estimate of the liquidation value of its remaining assets and liabilities is the recorded value of these assets and liabilities consequently, the Company has not adjusted the historical values of the assets and liabilities.

21 Because the determination to liquidate was not made until well into 2009, the fact that Company maintained its operations in the first fiscal quarter of 2009, and, during that time period the Company continued to seek capital and negotiate with potential new customers, the accompanying financial statements do not include adjustments that would reflect such on a liquidation basis of accounting.

~~Table~~The Company has settled substantially all accounts receivable at December 31, 2008 at the carrying value of ~~Contents~~such. The Company believes salvage value for its property and equipment will be nominal. As discussed on Note 17, the Company has an agreement to sell the patented technology for $2,000,000. The Company has not yet begun to negotiate the settlement of its obligations and therefore cannot estimate the amount of such settlements.

~~DURASWITCH INDUSTRIES, INC.~~ 23

~~NOTES~~3. TOSUMMARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~SIGNIFICANT ~~STATEMENTS~~ ACCOUNTING PRINCIPLES

1The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. ~~NATURE~~ The OFconsolidated ~~BUSINESS~~financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The following paragraphs summarize the significant accounting policies followed by the Company in the preparation of its financial statements.

~~Duraswitch~~Principles ~~Industries, Inc. (the “Company”) engineers, markets and licenses electronic switch technologies used to operate or control products in a wide variety~~ of ~~commercial and consumer applications. The~~ Company is building domestic and foreign patent protection for its technologies and is entering into license agreements with switch manufacturers and OEMs worldwide to achieve widespread distribution of its technologiesConsolidation. All ~~During~~material ~~2000,~~intercompany ~~Duraswitch~~balances ~~started to implement its new business model of licensing its technologies rather than manufacturing switches. The Company has completed this transition~~ and ~~expects almost all~~ oftransactions ~~its~~have ~~future~~been ~~revenue~~eliminated toin ~~come from its licensing efforts~~consolidation. ~~Licensing royalties are based on licensed manufacturers’ use of the Company’s intellectual property for electronic switch applications on a per switch basis.~~

~~The Company has experienced significant operating losses since its~~Cash ~~inception~~Equivalents. The Company ~~raised~~considers ~~approximately~~all ~~$8.2 million,~~highly ~~net,~~liquid ~~from its~~debt ~~public~~instruments ~~offering~~purchased inwith ~~August~~maturities ~~1999.~~of Inthree ~~May~~months ~~2000,~~or ~~the~~less ~~Company~~to ~~received~~be ~~$4.0~~cash ~~million~~equivalents. Cash ~~from Delphi Automotive Systems LLC, now Delphi Corporation (“Delphi”), for the exclusive right to utilize~~ and ~~manufacture~~cash ~~the Company’s~~equivalents ~~patented~~are ~~switch~~maintained ~~technologies~~with ~~for the automotive industry, a~~reputable ~~warrant~~major tofinancial ~~purchase 225,000 shares of stock and a short-term option to purchase approximately 1~~institutions.~~65 million~~ Deposits ~~shares~~with ofthese ~~common~~banks ~~stock.~~may ~~In June 2000,~~exceed ~~Delphi~~the ~~exercised~~amount ~~this option to purchase approximately 1.65 million shares~~ of ~~the~~insurance ~~Company’s~~provided ~~common~~on ~~stock,~~such ~~representing~~deposits; ~~approximately 18% of the Company’s outstanding shares~~however, ~~for~~these ~~approximately $11.5 million in cash.~~deposits ~~Management~~typically ~~believes~~may ~~the Company will~~ be ~~able~~redeemed toupon ~~meet~~demand ~~the Company’s presently projected cash~~ and ~~working capital requirements for at least the next 12 months. The timing and amounts of cash used will depend on many factors~~, ~~including the Company’s ability to increase revenue~~therefore, ~~control expenditures,~~bear ~~and become profitable.~~minimal risk.

2Inventory. ~~SUMMARY~~ Inventory is OFcarried ~~SIGNIFICANT~~at ~~ACCOUNTING~~the ~~PRINCIPLES~~lower of cost, determined using the FIFO (“first-in, first-out”) method, or market. The Company writes down its inventory for estimated obsolescence or unmarketable inventory to the extent the cost exceeds the estimated market value. The Company bases the estimate on its assumptions about future demand and market conditions. If actual market conditions are less favorable than those assumed in its estimates, additional inventory write-downs might be required. The Company reflects any write-down of inventory in the period in which the facts giving rise to the inventory write-down become known to it.

~~The~~Property ~~consolidated financial statements include the accounts of the Company~~ and ~~its wholly owned subsidiaries~~ Equipment. Depreciation ~~The~~is ~~consolidated~~computed ~~financial statements~~using ~~are~~the ~~prepared in accordance with accounting principles generally~~straight-line ~~accepted~~method inover the ~~United~~useful ~~States~~lives of ~~America. The following paragraphs summarize~~ the ~~significant~~related ~~accounting~~assets ~~policies~~as ~~followed by the Company in the preparation of its financial statements.~~ follows:

Principles of Consolidation – All material intercompany balances and transitions have been eliminated in consolidation.

Computer software	3 years
Computer equipment	3 to 5 years
Tooling	5 to 7 years
Other machinery and equipment	5 years
Office furniture and fixtures	7 years

~~Cash~~Leasehold improvements ~~Equivalents~~are –amortized ~~The~~over ~~Company~~the ~~considers~~lesser ~~all~~of ~~highly~~their ~~liquid~~estimated ~~debt instruments~~useful ~~purchased~~life ~~with~~or ~~maturities~~the term of ~~three~~the ~~months or less to be cash equivalents~~lease.

~~Inventory~~Patents. Patents are isreported ~~carried~~ at ~~the~~cost, ~~lower~~net of ~~cost~~accumulated amortization, ~~determined~~and ~~using~~are ~~the~~amortized ~~FIFO~~using ~~(“first-in,~~the ~~first~~straight-~~out”)~~line method, orover ~~market~~the estimated life of eight years.

~~Property~~Goodwill. The Company ~~and~~tests ~~Equipment~~goodwill –for ~~Depreciation~~impairment ison ~~computed~~an ~~using~~annual basis at December 31, or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. The ~~straight-line~~Company ~~method~~first ~~over~~compares the ~~useful~~fair ~~lives~~value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds the fair value of a reporting unit, additional tests would be used to measure the amount of impairment loss, if any. The Company uses a present value technique to measure reporting unit fair value. If other events occur and circumstances change, causing the fair value of a reporting unit to fall below its carrying amount, impairment losses may be recognized in the future. In accordance with SFAS No. 142, the Company performed its annual impairment test and determined that the goodwill and related ~~assets~~patents aswere impaired. In December 2008, the Company ~~follows:~~recorded an impairment charge, included in other expenses, to fully write-off the carrying value of goodwill in the amount of $877,366. The Company considered the factors discussed in Note 2 in performing the impairment analysis.

Computer software		3 years
Computer equipment		5 years
Other machinery and equipment		5 years
Office furniture and fixtures		7 years

Revenue Recognition. The Company’s FinePoint segment manufactures digital computing pens and digitizers for the convertible notebook and tablet PC market. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable and collectability is probable. Generally, all of these conditions are met at the time the Company delivers products to customers.

~~Leasehold improvements are amortized over the lesser of their~~The ~~estimated~~Company’s ~~useful~~Duraswitch ~~life~~segment orwas ~~the~~discontinued ~~term~~and ofsold ~~the~~in ~~lease.~~October 2008.

~~Patents~~Accounts Receivable. Credit ~~are~~is ~~reported~~extended atbased ~~cost~~on evaluation of a customer’s financial condition and, ~~are~~generally, ~~amortized~~collateral ~~using~~is ~~the~~not ~~straight-line~~required. Accounts ~~method~~receivable ~~over~~are ~~the~~due ~~estimated~~within ~~life~~30 ofto ~~twenty~~60 ~~years.~~days ~~Patents~~and are ~~reported~~stated at amounts due from customers net of ~~accumulated~~an ~~amortization~~allowance offor ~~$103,722~~doubtful accounts. Accounts ~~and~~outstanding ~~$71,049~~longer atthan the contractual payment ~~December 31,~~terms ~~2001~~are reviewed for collectability and ~~2000,~~after ~~respectively.~~90 days are considered past due.

Goodwill is recorded at cost and is being amortized on a straight-line basis over ten years. Goodwill is recorded net of accumulated amortization of $285,782 and $212,816 at December 31, 2001 and 2000 respectively. 24

~~Revenue~~The Company ~~Recognition~~determines –its Weallowance ~~enter~~by ~~into~~considering ~~licensing~~a ~~agreements~~number ~~with~~of ~~our~~factors, including ~~customers.~~the ~~Our~~length ~~licensing~~of ~~strategy~~time ~~incorporates~~trade aaccounts ~~simplified~~receivable ~~requirement~~are past due, the Company’s ~~whereby~~previous loss history, the ~~licensee~~customer’s ~~purchases~~current ~~defined~~ability ~~licensed~~to ~~components~~pay ~~from~~its obligation to ~~Duraswitch.~~the ~~The~~Company, ~~component~~and ~~cost~~the ~~includes~~condition of the ~~royalty~~general ~~for~~economy and the ~~rights~~industry toas a ~~manufacture,~~whole. The ~~assemble~~Company writes-off accounts receivable when they become uncollectible and ~~sell~~payments ~~patented~~subsequently ~~Duraswitch~~received ~~technologies.~~on Insuch ~~some~~receivables are ~~cases~~credited ~~where~~to the allowance for doubtful accounts. There was no allowance for doubtful accounts at December 31, 2008.

22Stock-Based Compensation. At December 31, 2008, the Company had four stock-based employee compensation plans. The plans provide for the granting of awards in the form of incentive and nonqualified stock options, stock appreciation rights, shares of restricted common stock, bonus stock in lieu of obligations, or other stock-based awards to employees, directors and independent contractors who provide valuable service to the Company. As of December 31, 2008, the Company had granted nonqualified stock options and restricted common stock. Options are granted at the closing market price of our common stock on the date the grant is approved and have ten-year terms. The stock options for directors typically vest within 30 days of grant. The employee options issued in 2008 are vesting over a 28 to 30 month period. In May 2006, the Compensation Committee increased compensation for the Chairman of the Board, effective as of the second fiscal quarter of 2006, to include grants of $2,500 worth of non-registered restricted stock for each quarter of service, with each award vesting one year from the date of grant. The granting of restricted stock to the Chairman was suspended when the Chairman was appointed CEO in July 2007. Beginning in 2008, 50% of all fees paid to Directors were in the form of restricted stock. In August of 2008, the Board elected to defer compensation until such time as the Company had secured additional funding. At December 31, 2008, 1,360,657 shares of the Company’s registered common stock were available for grant under the plans.

~~Table~~Effective January 1, 2006, the Company adopted Statement of ~~Contents~~Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123R), which requires the Company to measure the cost of employee services received in exchange for all equity awards granted including stock options based on the fair market value of the award as of the grant date. SFAS 123R supersedes Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123) and Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). The Company has adopted SFAS 123R using the modified prospective method. Accordingly, prior period amounts have not been restated. Under the modified prospective method, stock options awards that are granted, modified or settled after December 31, 2005 will be valued at fair value in accordance with provisions of SFAS 123R and recognized on a straight line basis over the service period of the entire award. At December 31, 2005, all outstanding stock options were fully vested.

Prior ~~components~~to January ~~are~~1, ~~supplied~~2006, wethe ~~are~~Company ~~paid~~accounted afor ~~royalty~~stock ~~per~~based ~~switch manufactured.~~compensation Weunder ~~support~~the recognition ~~our~~and ~~licensees~~measurement ~~with~~provisions ~~engineering,~~of ~~design,~~APB ~~testing, specification~~25 ~~materials,~~and ~~training~~related ~~programs~~interpretations, ~~marketing assistance, customer~~as ~~leads,~~allowed ~~and~~by ~~patent~~SFAS ~~protection~~123. The ~~Every~~Company ~~licensee~~had ~~has~~adopted ~~strict~~the ~~qualitative~~disclosure-only ~~standards~~provisions ~~to maintain as part~~ of ~~their~~SFAS ~~licensing~~123 ~~agreement.~~as ~~Our non-exclusive~~amended ~~licensees~~by ~~pay~~SFAS ~~between $0~~No.10 ~~and~~148, ~~$0.78~~“Accounting ~~per~~for ~~switch depending~~Stock-Based onCompensation ~~the~~– ~~type~~Transition ~~of switch~~ and ~~volume~~Disclosure”. Prior ~~The terms of some of our license agreements require prepayment of royalties~~ to ~~Duraswitch.~~2006, ~~The~~the ~~prepayments~~Company ~~are~~accounted ~~recorded~~for asstock-based ~~deferred~~compensation ~~revenue~~in ~~and~~accordance ~~licensing~~with ~~revenue~~APB is25 ~~recognized~~using ~~when~~ the ~~royalties are earned under the licensing agreements. Royalties are~~ ~~considered~~intrinsic ~~earned~~value ~~when the licensee purchases component parts from Duraswitch or~~method, ~~when~~which ~~component~~did ~~parts are~~ not ~~supplied~~require bycompensation ~~Duraswitch, royalties~~cost ~~are~~to ~~considered~~be ~~earned~~recognized for ~~when~~ the ~~licensee~~Company’s ~~manufactures~~stock aoptions ~~switch utilizing~~as ~~Duraswitch~~all ~~technology.~~options ~~The~~previously ~~deferred~~granted ~~revenue~~had ~~received from~~an ~~Delphi~~exercise inprice ~~2000~~equal isto ~~being~~the ~~amortized~~market ~~over~~value of the ~~initial~~underlying ~~seven-year~~common ~~term~~stock ofon the ~~exclusive~~date ~~license~~of ~~agreement~~the grant.

~~Income~~Compensation cost ~~Taxes~~recognized –as ~~Deferred~~part ~~taxes~~of ~~are~~the ~~provided~~Company’s onselling, ~~temporary~~general ~~differences~~and administrative ~~between~~expenses in the ~~tax~~year ~~basis~~ended ofDecember ~~assets~~31, 2008 and ~~liabilities~~2007 ~~for~~was ~~financial~~$238,080 ~~reporting~~and $178,165, ~~purposes~~respectively, ~~and~~net ~~income~~of $0 tax ~~purposes~~benefit and is the same as would have been recognized had the provisions of SFAS 123R been applied from its original effective date. As ~~The~~of ~~valuation~~December ~~allowance~~31, ~~reduces~~2008, ~~deferred~~$170,472 of compensation ~~tax~~cost ~~assets~~related to anunvested ~~amount~~stock ~~that~~options ~~represents~~is ~~management’s~~expected ~~best~~to ~~estimate~~be ofrecognized in the years ~~amount~~2009 ofthrough ~~such~~2011 ~~deferred~~at ~~tax~~the ~~assets~~rate ~~that~~of $122,338, ~~more~~$46,248 ~~likely~~and ~~than~~$1,885 ~~not~~during 2009, ~~will~~2010 and be2011, respectively. The estimated value of the options granted ~~realized~~during 2008 was calculated using the Black-Scholes option pricing model with the following assumptions: an expected risk-free interest rate of 1.51% to 2.51%, 3.13% to 4.69% for options granted in 2008 and 2007, respectively; an expected life of three years; an expected volatility rate of 78% to 98% and 83% to 91% for options granted in 2008 and 2007, respectively; and an expected dividend rate of zero percent.

Loss Per Common Share – Basic earnings or loss per share is computed by dividing the loss attributable to the stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings or loss per share is computed using the weighted average number of shares of common stock outstanding plus the effect of any stock options or warrants if they are dilutive. 25

~~Impairment~~Income Taxes. Deferred oftaxes ~~Long-Lived~~are ~~Assets~~provided ~~and~~on ~~Long-Lived~~temporary ~~Assets to be Disposed~~differences ofbetween –the ~~The~~tax ~~Company~~basis ~~reviews~~of ~~its long-lived~~ assets and ~~identifiable intangibles~~liabilities for ~~impairment~~financial ~~whenever~~reporting ~~events or changes in circumstances~~purposes ~~indicate~~and ~~that~~income ~~the~~tax ~~carrying~~purposes. The ~~amount~~valuation ofallowance ~~the~~reduces ~~asset~~deferred ~~may not be recoverable. If~~tax ~~such~~ assets ~~were~~to ~~considered~~an toamount bethat ~~impaired,~~represents the ~~impairment~~Company’s tobest ~~be recognized~~estimate ~~would~~of ~~be measured by~~ the amount ~~by which the carrying amount~~ of ~~the~~such ~~assets~~deferred ~~exceeds~~tax ~~the~~assets ~~fair~~that, ~~market~~more ~~value~~likely ofthan ~~the~~not, ~~assets.~~will ~~Assets to~~ be ~~disposed of are reported at the lower of the carrying amount or fair value less costs to sell~~realized.

WeIncome ~~evaluate~~(Loss) ~~the recoverability of property and equipment and~~Per ~~intangibles~~Common ~~not~~Share. Basic ~~held~~income ~~for~~(loss) ~~sale~~per byshare ~~comparing~~is ~~the~~computed ~~carrying amount of the~~by ~~asset~~dividing ~~or group of assets against~~ the ~~estimated undiscounted future~~ net ~~cash~~ ~~flows~~income ~~expected~~(loss) toby ~~result from~~ the ~~use~~weighted ofaverage ~~the~~number ~~asset or group~~ of ~~assets.~~ ~~Goodwill~~common ~~from acquisitions related to a group of assets being~~shares ~~evaluated~~outstanding ~~for~~during ~~impairment is included in~~ the ~~evaluation~~period. Diluted Ifincome ~~the undiscounted~~(loss) ~~estimated~~per ~~cash~~share ~~flows are less than the carrying value of the~~is ~~asset~~computed orusing ~~group of assets being reviewed, an impairment loss would be recorded. The loss would be measured based on~~ the ~~estimated~~weighted ~~fair~~average ~~value~~number of ~~the~~ ~~asset~~shares ~~or group~~ of ~~assets~~common ~~compared~~stock ~~to cost. The estimated fair value~~outstanding ~~would~~plus ~~be based on~~ the ~~best~~effect ~~information available under the circumstances, including prices for similar assets and the results~~ of ~~valuation techniques,~~any ~~including~~stock ~~the~~options ~~present~~or ~~value~~warrants ofif ~~expected~~they ~~future cash flows~~are ~~using a discount rate commensurate with the risks involved~~dilutive.

~~Fair~~In ~~Value of Financial Instruments – The carrying values of cash and~~2008, ~~cash~~all ~~equivalents,~~stock ~~accounts~~options ~~receivable~~ and ~~accounts~~warrants ~~payable~~were ~~approximate fair values due to the short~~anti-~~term~~dilutive ~~maturities of these instruments. The fair value of notes payable~~ and ~~capital leases approximate the carrying~~totaled ~~value~~2,060,121. Accordingly, of these ~~instruments~~securities ~~because~~have ~~the~~been ~~terms~~excluded ~~are~~from ~~similar to those in~~ the ~~market~~diluted ~~place~~loss ~~under~~per ~~which~~share ~~they could be replaced~~calculation.

~~New Accounting Standards –~~ In ~~June 2001~~2007, ~~the Financial Accounting~~ ~~Standards Board (“FASB”) issued SFAS No. 141~~1, ~~Business Combinations~~643,784 ~~and SFAS~~shares ~~No. 142,~~were ~~Goodwill~~excluded ~~and~~from ~~Other Intangibles. SFAS No. 141 requires~~ the ~~purchase~~ ~~method~~computation of ~~accounting~~diluted ~~for~~earnings ~~business combinations initiated after~~per ~~June 30~~share, ~~2001,~~as ~~for which~~ the ~~date~~exercise ofprice ~~acquisition is July 1, 2001 or later, eliminates the pooling-~~of~~-interests~~ ~~method,~~those ~~and~~options identifies criteria for the establishment of identifiable intangible assets separate from goodwill resulting from a business combination. SFAS No. 142 requires companies to cease amortizing goodwill. SFAS No. 142 also establishes a new method of testing goodwill and ~~other~~warrants ~~intangibles~~was ~~for~~greater ~~impairment~~than ~~on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce~~ the ~~fair value of a reporting unit below its carrying value.~~ ~~The~~average ~~standard~~share isprice ~~effective~~ for the ~~Company’s fiscal year beginning January 1, 2002~~period. Management does not expect the adoption of these standards to have a material effect on the Company’s financial position or results of operation. Total goodwill amortization was $72,966 in 2001, 2000 and 1999.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 requires that long-lived assets be measured at the lower of carrying amount or fair value for long-lived assets to be held and used or fair value less cost to sell for long-lived assets to be disposed of, whether reported in continuing operations or in discontinued operations. The standard is effective for the Company’s fiscal year beginning January 1, 2002. Management does not expect the adoption of this standard to have a material effect on the Company’s financial position or results of operations.

	2008		2007
Weighted average shares outstanding – Basic		11,613,022		11,530,233
Effect of dilutive stock options		-		-
Weighted average shares outstanding – Fully diluted		11,613,022		11,530,233

~~Use~~Impairment of Long-Lived ~~Estimates~~Assets –and ~~The~~Long-Lived ~~preparation~~Assets to be Disposed of. The Company ~~financial~~reviews ~~statements~~its long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the ~~conformity~~carrying ~~with~~amount ~~accounting~~of ~~principles~~the ~~generally~~asset ~~accepted~~may innot be recoverable. If such assets were considered to be impaired, the ~~United~~impairment to be recognized would be ~~States~~measured by the amount by which the carrying amount of ~~America~~the ~~necessarily~~assets ~~requires~~exceeds ~~management~~the fair market value of the assets. Assets to ~~make~~be ~~estimates~~disposed ~~and~~of are ~~assumptions~~reported ~~that~~at ~~affect~~the lower of the ~~reported~~carrying amount or fair value less costs to sell.

23The Company evaluates the recoverability of property and equipment and intangibles not held for sale by comparing the carrying amount of the asset or group of assets against the estimated undiscounted future net cash flows expected to result from the use of the asset or group of assets. If the undiscounted estimated cash flows are less than the carrying value of the asset or group of assets being reviewed, an impairment loss would be recorded. The loss would be measured based on the estimated fair value of the asset or group of assets compared to cost. The estimated fair value would be based on the best information available under the circumstances, including prices for similar assets and the results of valuation techniques, including the present value of expected future cash flows using a discount rate commensurate with the risks involved. The Company’s long-lived assets were tested for impairment at December 31, 2008 and no impairment was found. As discussed in Note 17, the Company’s management and Board of directors elected to wind down operations and liquidate that net assets of the Company. The Company believes that the pending agreement to sell the intellectual property provides evidence that such carrying value is not impaired at December 31, 2008. The Company was fully utilizing its property and equipment at December 31, 2008 and through the first quarter of fiscal 2009. As such, the Company does not believe an impairment charge is appropriate at December 31, 2008. However, upon liquidation, the realizable value of those assets will likely be significantly less than the December 31, 2008 carrying value.

~~Table~~New Accounting Pronouncements. In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159), which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 will be effective for us on January 1, 2008. The Company is currently evaluating the impact of ~~Contents~~adopting SFAS 159 on the Company’s financial position, cash flows, and results of operations but does not believe it will have any impact on its financial condition and results of operations.

In December ~~amounts~~2007, ofthe ~~assets~~FASB ~~and~~issued ~~liabilities~~SFAS ~~and~~No. ~~disclosure~~141(R), of“Business ~~contingent~~Combinations” ~~assets~~(“FAS 141 (R)”), to replace ~~and~~FAS ~~liabilities~~141, at“Business Combinations”. FAS 141(R) requires use of the ~~date~~acquisition method of accounting, defines the ~~financial~~acquirer, establishes ~~statements~~the acquisition date and broadens the ~~reported amounts~~scope ofto ~~revenue~~all transactions and other ~~expenses~~events ~~during~~in ~~the~~which ~~reporting~~one ~~period~~entity obtains control over one or more other businesses. This ~~Actual~~statement is effective for financial statements ~~results~~issued ~~could~~for ~~differ~~fiscal ~~from~~years ~~those~~beginning ~~estimates~~on or after December 15, 2008 with earlier adoption prohibited. While the Company does not expect that the adoption of FAS 141 (R) to have a material impact to its consolidated financial statements for transactions completed prior to December 31, 2008, the impact of the accounting change could be material for business combinations which may be consummated subsequent thereto.

~~Reclassifications – Certain reclassifications were made to the 2000 and 1999 amounts to conform to the 2001 presentation.~~ 26

3In December 2007, the FASB issued Statement of FAS No. ~~CONCENTRATIONS~~ 160, “Non controlling Interests in Consolidated Financial Statements”—an amendment of ARB No. 51, (“FAS 160”). FAS 160 establishes accounting and reporting standards for the non controlling interest in a subsidiary and for the retained interest and gain or loss when a subsidiary is deconsolidated. This statement is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 with earlier adoption prohibited. The Company is currently evaluating the impact of FAS 160 on its consolidated financial statements.

Fair Value of Financial Instruments. The ~~Company~~carrying ~~maintained~~values ~~its~~of cash and cash equivalents, inaccounts ~~three~~receivable and accounts payable and notes payable ~~financial~~approximate ~~institutions~~fair atvalues ~~December 31,~~due ~~2001~~to the short-term maturities of these instruments. The Atfair ~~December 31,~~value ~~2001,~~of capital leases approximates the ~~Company~~carrying ~~maintained~~value ~~cash~~of ~~and~~these ~~cash~~instruments ~~equivalents~~because atthe ~~financial~~terms ~~institutions~~are similar to those in ~~excess~~the ofmarketplace ~~federal~~under ~~depository~~which ~~insurance~~they could be replaced.

InUse ~~2001,~~of Estimates. The ~~Delphi~~preparation ~~represented 42 percent~~ of ~~net~~financial ~~revenue~~statements ~~and Siemens~~in ~~Cerberus~~conformity ~~represented~~with ~~11 percent~~accounting ofprinciples ~~net~~generally ~~revenue.~~accepted Inin ~~2000,~~the ~~Delphi represented~~United ~~12 percent~~States of America ~~net~~necessarily ~~revenue~~requires ~~and~~the ~~Ericsson,~~Company ~~Inc.~~to ~~represented~~make 19estimates and assumptions that ~~percent~~affect ofthe ~~net~~reported ~~revenue.~~amounts Inof ~~1999,~~assets noand ~~customer~~liabilities ~~exceeded~~and ~~10 percent~~disclosure of ~~net~~ ~~revenue.~~contingent ~~Net~~assets ~~revenue~~and ~~from~~liabilities ~~Delphi~~at ~~resulted~~the ~~primarily~~date ~~from~~of ~~amortization~~the offinancial statements and ~~deferred~~the ~~licensing~~reported amounts of revenue ~~which~~and ~~was~~expenses ~~received~~during inthe ~~2000~~reporting period. Actual results could differ from those estimates.

4. ~~INVENTORY~~ CONCENTRATIONS

~~Inventory~~The Company ~~consists~~maintained ofits ~~the~~cash ~~following~~and atcash equivalents in one financial institution at December 31:, 2008. Deposits with this bank may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.

	2001			2000
Raw materials	$	263,987		$	179,130
Work in process		31,924			77,088
Finished goods		12,708			14,765
Less reserve for obsolete inventory		(32,700	)		(20,000	)
Total inventory	$	275,919		$	250,983

Sales to Gateway represented 51% and 95% of net revenue in 2008 and 2007, respectively. Net revenue from Gateway was $248,246 and $2,585,168 in 2008 and 2007, respectively. Panasonic represented 37% and 0% of net revenue in 2008 and 2007, respectively. As discussed in Note 2, the Company does not anticipate future material revenue from Gateway related business.

~~The~~At December ~~Company~~31, ~~recorded a charge of $12~~2008,~~700~~ toone ~~increase~~customer ~~the~~represented ~~reserve~~99% ~~for obsolete~~of ~~inventory in 2001. No charge was recorded in 2000 or 1999.~~accounts receivable.

5. ~~LOAN~~ ~~TO CAMPLEX~~ INVENTORY

~~During~~The Company’s ~~the~~inventory ~~first~~is ~~six~~primarily ~~months~~comprised of ~~1999,~~certain ~~the~~raw ~~Company~~materials ~~advanced $150,000 to Camplex/Concept W Corporation (“Camplex”), an entity~~ that ~~the Company had~~are ~~considered~~used asin ~~a possible acquisition candidate. On May 14, 1999,~~ the ~~Company~~ ~~determined~~manufacture ~~that~~of itdigital ~~would~~pens ~~not~~and ~~acquire~~digitizers ~~Camplex.~~and ~~The~~licensed ~~$150~~components,~~000~~ ~~unsecured~~and ~~loan~~finished togoods ~~Camplex~~which ~~was~~are ~~due~~primarily ~~December 31,~~pens ~~2000~~ and ~~bore interest at 9 percent per annum~~digitizers. ~~During 1999, the Company received partial cash payments~~ Inventory ~~and~~consists ~~services~~of ~~performed by Camplex, which reduced~~ the ~~amount~~following ~~owed~~at ~~by Camplex. At~~ December ~~31,~~ ~~1999, the outstanding balance was $41,578. During 2000, Camplex repaid this loan in full through services rendered by Camplex and cash payments by Camplex.~~ 31:

6. PROPERTY AND EQUIPMENT

	2008
Raw materials	$	13,838
Finished goods		-
Subtotal	$	13,838

~~Property~~6. ~~and~~PROPERTY ~~equipment~~AND ~~consists of the following at December 31:~~ EQUIPMENT

	2001			2000
Computer equipment and software	$	669,207		$	487,508
Other machinery and equipment		660,648			452,057
Leasehold improvements		294,314			251,597
Office furniture and fixtures		113,151			110,823
Total		1,737,320			1,301,985
Less accumulated depreciation		(684,717	)		(398,835	)
Property & equipment – net	$	1,052,603		$	903,150

Property and equipment consists of the following at December 31:

24 27

	2008
Computer equipment and software	$	533,561
Tooling		65,783
Other machinery and equipment		64,466
Leasehold improvements		19,400
Office furniture and fixtures		149,170
Total		832,380
Accumulated depreciation		(557,353	)
Property and equipment - net	$	275,027

~~7. DEFERRED~~Depreciation expense ~~LICENSING~~for ~~REVENUE~~property and equipment was $132,168 and, $196,529 for the years ended December 31, 2008 and 2007, respectively.

~~In April 2000, the Company entered into a license agreement with~~The ~~Delphi that gives Delphi the exclusive right to utilize and manufacture the~~ Company’s ~~patented~~was ~~switch~~fully ~~technologies~~utilizing ~~for~~these ~~the~~assets ~~automotive industry. In connection with the license agreement, the Company also issued a warrant to Delphi to purchase 225,000 shares of common stock~~ at ~~$7.00~~December ~~per share and a short-term option to purchase 1~~31,~~651,846 shares of common stock at~~ $72008.~~00 per share. In exchange~~ However, ~~Delphi~~due ~~paid the Company a nonrefundable payment of $4.0 million and agreed~~ to ~~pay a royalty fee for each switch sold by Delphi. The term of~~ the ~~exclusive~~decision ~~license agreement is seven years. The agreement also requires Delphi~~ to ~~make~~liquidate ~~minimum royalty payments totaling $12 million during~~ the ~~initial~~Company ~~seven-year term ending June 30,~~discussed ~~2007.~~in ~~Delphi~~Note ~~can maintain exclusivity for the automotive industry through June 30~~2, ~~2012 by making additional minimum annual royalty payments during that period. After June 30, 2012 either Delphi or~~ the Company ~~may~~believes ~~convert the~~liquidation ~~agreement~~value toof athese ~~nonexclusive~~assets ~~agreement~~will ~~through 2020.~~be nominal.

~~The estimated fair value of the warrant and the option was $1,134,338, as determined using the Black-Scholes valuation model~~7. ~~The remaining value of the nonrefundable payment totaling $2,865,662 was recorded as deferred revenue and is being amortized over the initial seven-year term of the exclusive license agreement.~~ PATENTS

The ~~licensing agreement with Delphi generated licensing revenue of~~gross ~~$411,362~~carrying ~~and~~amount ~~$277,860 for the years ended December 31, 2001~~ and ~~2000, respectively,~~accumulated ~~which primarily resulted from the~~ amortization of ~~deferred revenue~~patents ~~which~~are ~~was received in 2000.~~as follows:

8. CAPITAL LEASES

	2008
Patents	$	694,222
Accumulated amortization		(283,015	)
Patents - net	$	411,207

~~The~~Amortization expense ~~Company~~for ~~has~~patents ~~capital~~was ~~leases~~$132,738 and $138,968, for ~~property~~the ~~and~~years ~~equipment~~ended ~~with~~December a31, ~~gross~~2008 ~~value~~and ~~of $182~~2007,~~680~~ ~~and~~respectively. The aestimated ~~net~~amortization ~~book~~expense ~~value~~for existing ofpatents ~~$64,967~~is atapproximately ~~December 31~~$87, ~~2001.~~000 ~~The~~for ~~amortization~~each of ~~fixed~~the ~~assets~~next ~~acquired~~four ~~with~~years ~~capital leases is~~and ~~included~~$63,000 in ~~depreciation~~year ~~expense~~five. See AtNote ~~December 31,~~16 ~~2001,~~for ~~the~~discussion ~~present~~relative ~~values~~to the disposition of ~~future~~the ~~minimum~~underlying ~~capital~~technology ~~lease~~related ~~payments~~to ~~are~~these patents. These aspatents ~~follows:~~support the technology being sold.

2002	$	22,924
2003		20,825
2004		8,766
Total		52,515
Less interest at rates ranging from 13% to 24%		8,735
Present value of minimum capital lease obligations		43,780
Less current portion of capital lease obligations		17,457
Long-term portion of capital lease obligations	$	26,323

8.	STOCKHOLDERS’ EQUITY

9Common Stock. ~~STOCKHOLDERS~~ During 2008, 27,430 shares of common stock were issued through the Company’s ~~EQUITY~~stock plans as exercised options and restricted stock grants.

~~Common~~ Preferred Stock. As –of ~~The~~December ~~Company~~31, ~~sold 2~~2008,~~000,000~~ ~~shares~~no ofpreferred ~~common~~ stock ~~for~~is ~~net~~outstanding. The ~~proceeds~~Company’s Board of $8Directors is authorized,~~196,312~~ insubject to ~~its~~any ~~1999~~limitations ~~public~~prescribed ~~offering.~~by OnNevada ~~April 20~~law, ~~2000,~~but without further action by the stockholders, to provide for the ~~Company~~issuance ~~sold~~of aserial ~~short-term~~preferred ~~option~~stock in one or more series; to ~~Delphi~~establish from time to ~~purchase~~time ~~1,651,846~~the ~~shares~~number of ~~non-registered~~shares ~~common~~to ~~stock~~be atincluded in ~~$7.00~~these ~~per~~series; ~~share~~to ~~(Note~~fix ~~7).~~the Ondesignations, ~~June 19~~powers, ~~2000~~preferences, ~~Delphi~~and ~~exercised~~rights ~~this~~of ~~purchase~~the shares ~~option~~of toeach ~~acquire~~such 1series and any qualifications,~~651~~ limitations,~~846~~ or restrictions thereof; and to increase or decrease the number of shares of ~~common~~any ~~stock~~such atseries, but ~~$7.00~~not ~~per~~below ~~share,~~the ~~representing~~number ~~approximately~~of ~~18 percent~~shares of such series then outstanding, ~~shares~~without any further vote or action by the stockholders. The Board of Directors may authorize and issue serial preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of common stock.

~~Series A~~Warrants. In ~~Convertible~~connection with ~~Preferred~~the ~~Stock~~private –offering Asthat ofclosed in December ~~31,~~ ~~2001~~2005, ~~no preferred~~the ~~stock~~buyers iswere ~~outstanding.~~granted warrants ~~The~~to ~~Series A~~purchase ~~convertible~~381,818 ~~preferred~~shares ~~stock is~~of ~~convertible into~~ common stock at aan ~~rate~~exercise price of $3.44 ~~one~~per ~~for~~share. These ~~one~~warrants ~~and~~expire ~~has~~on ~~the~~December ~~same~~27, ~~voting~~2010. The ~~rights~~underwriters aswere ~~the~~granted warrants to purchase 127,273 shares of common stock at an exercise price of $4.22 ~~Dividends~~per ~~accumulate~~share. These warrants asexpire ~~declared~~on byDecember 27, 2010. In the ~~Board~~ event the closing price of ~~Directors~~our ~~and~~common ~~none~~stock ~~have~~equals ~~been~~or ~~declared~~exceeds $5.50 ~~Preferred~~per ~~stockholders would~~share ~~have~~for ~~preferences~~a inperiod of 60 consecutive trading days, the ~~event~~Company ofmay ~~liquidation~~redeem ~~and~~the ~~would~~warrants ~~receive~~issued to the ~~dividends~~investors ~~prior~~for to$0.01 ~~common~~per ~~stockholders~~warrant ifupon ~~dividends~~notice ~~were~~to ~~declared~~the warrant holders.

~~Warrants~~A ~~– On March 1, 1999, the Company sold to two stockholders~~summary ~~warrants to purchase 23,530 shares~~ of ~~common~~changes ~~stock~~in atoutstanding ~~a price of $3.19 per share. The stockholders purchased these~~ warrants ~~for~~is ~~$5,000.~~as ~~The warrants were exercised on June 30, 1999 for a $75,000 reduction in principal of promissory notes executed with the Company on April 30, 1999.~~ follows:

On April 30, 1999, a shareholder exercised warrants to purchase 252,155 shares of common stock at a price of $1.98 per share. As payment for the exercise price, the shareholder paid approximately $250,000 in cash, agreed to cancel our $100,000 loan and executed a note payable to us in the amount of $147,263. This note bore interest at 8 percent per annum and was payable 28

	Warrants		Price Range
Balance, December 31, 2007		509,091	$	3.44 - $4.22
Issued		-
Exercised		-
Expired		-
Balance, December 31, 2008		509,091	$	3.44 - $4.22

~~Table~~9. ofSTOCK ~~Contents~~OPTION PLANS

Effective May ~~December 31~~1, ~~1999~~1997, the Board of Directors approved a stock option plan (the “1997 Option Plan”). This Onplan ~~December 30,~~provides ~~1999,~~for the ~~Company~~granting ~~agreed~~of toincentive ~~extend~~and ~~the~~nonqualified ~~due~~stock ~~date~~options to ~~March 1~~officers, ~~2000~~directors and employees of the Company. The Onplan ~~February 24,~~also ~~2000~~provides for the granting of nonqualified stock options to any director, ~~this~~consultant ~~note~~or ~~was~~other ~~paid~~individual whose participation the Board of Directors determines to be in the best interest of ~~full~~the Company. The number of shares authorized for options under the 1997 Option Plan is 823,535.

InThe Company’s ~~connection~~1999 ~~with~~Stock Option Plan (the ~~public~~“1999 ~~offering~~Option ~~that~~Plan”) ~~closed~~was inadopted ~~September~~by ~~1999,~~ the Company’s ~~underwriter~~Board ~~was~~of ~~granted~~Directors ~~warrants~~and towas ~~purchase~~ratified ~~200,000~~by ~~shares~~the ofstockholders ~~common stock~~on atMarch an8, 1999. The ~~exercise~~number ~~price~~ of ~~$8.25~~shares ~~per~~of ~~share.~~common Ifstock ~~not~~authorized ~~exercised,~~subject ~~these~~to ~~warrants~~options ~~will~~under ~~expire~~the on1999 ~~August 26~~Option Plan is 235,294 ~~2004~~shares.

OnThe Company’s ~~April 20,~~ 2000, ~~the~~Stock ~~Company~~Option ~~sold~~Plan a(the ~~warrant~~“2000 toOption ~~Delphi~~Plan”) towas ~~purchase~~adopted by the ~~225,000~~Company’s ~~shares~~Board of ~~common~~Directors ~~stock~~and atwas ~~$7.00~~ratified ~~per~~by ~~share.~~the Ifstockholders ~~not~~on ~~exercised,~~June ~~this~~19, ~~warrant~~2000 ~~will~~and ~~expire~~was amended on ~~April~~ May 20, ~~2004~~2002. The ~~(Note~~number ~~7).~~of shares of common stock authorized subject to options under the 2000 Option Plan is 500,000 shares.

AThe Company’s ~~summary~~2005 Stock Award Plan (the “2005 Option Plan”) was adopted by the Company’s Board of ~~changes~~Directors inand ~~outstanding~~was ~~warrants~~ratified isby asthe ~~follows:~~stockholders on May 20, 2005. On May 31, 2007, stockholders approved The First Amendment to InPlay Technologies, Inc. 2005 Stock Award Plan. On December 19, 2008, stockholders approved The Second Amendment to InPlay Technologies, Inc. 2005 Stock Award Plan. The number of shares of common stock authorized subject to options under the 2005 Option Plan is 2,000,000 shares.

	Warrants			Price Range
Balance, January 1, 1999		342,084		$	1.98 - $3.19
Issued		223,530		$	3.19 - $8.25
Exercised		(275,685	)	$	1.98 - $3.19
Balance, December 31, 1999		289,929		$	1.98 - $8.25
Issued		225,000		$	7.00
Exercised		(42,870	)	$	1.98
Balance, December 31, 2000		472,059		$	3.19 - $8.25
Issued		—
Exercised		—
Balance, December 31, 2001		472,059		$	3.19 - $8.25

The total number of shares available for grant under all four plans is 1,360,657 at December 31, 2008.

~~Common Stock Reverse Split – Effective August 16, 1999, the Company’s~~Options ~~Board~~granted ofunder ~~Directors declared a 1 for 4.25 reverse stock split for~~ all ~~common~~ ~~shares~~plans ~~outstanding,~~expire ~~which~~up ~~became~~to ~~effective~~ten ~~August 19,~~years ~~1999.~~from ~~All references in~~ the ~~financial~~date ~~statements to number~~ of ~~shares, per share~~ ~~amounts~~grant. Options ~~and~~that ~~stock~~expire ~~option~~or ~~data~~terminate ofprior ~~the~~to ~~Company’s~~exercise ~~common~~are ~~stock have been~~added ~~restated~~ to ~~reflect~~ the ~~effect~~shares ofavailable ~~the~~for ~~reverse~~future ~~stock split~~grants.

~~10. STOCK~~A ~~OPTION PLANS~~summary of changes in stock options is as follows:

Effective May 1, 1997, the Board of Directors approved a stock option plan (“1997 Option Plan”). This plan provides for the granting of incentive and nonqualified stock options to officers, directors and employees of the Company. The plan also provides for the granting of nonqualified stock options to any director, consultant or other individual whose participation the Board of Directors determines to be in the best interest of the Company. The number of shares authorized for options under the 1997 Option Plan is 823,535.

	Option Shares			Weighted Average Exercise Price
Balance, December 31, 2006		1,468,473		$	6.62
Granted		430,000		$	1.52
Exercised		(90,000	)	$	1.18
Expired or terminated		(32,600	)	$	2.73
Balance, December 31, 2007		1,775,873		$	5.73
Granted		620,000		$	0.50
Exercised		-			-
Expired or terminated		(844,843	)	$	8.71
Balance, December 31, 2008		1,551,030		$	2.02

The Company’s 1999 Stock Option Plan (the “1999 Option Plan”) was adopted by the Company’s Board of Directors and was ratified by the stockholders on March 8, 1999. The number of shares of common stock authorized subject to options under the 1999 Option Plan is 235,294 shares. 29

The Company’s 2000 Stock Option Plan (the “2000 Option Plan”) was adopted by the Company’s Board of Directors and was ratified by the stockholders on June 19, 2000. The number of shares of common stock authorized subject to options under the 2000 Option Plan is 250,000 shares.

	2008		2007

Exercisable at the end of the year		944,695		1,350,873
Weighted average fair value of options
granted during the year	$	0.29	$	0.90

~~The~~A ~~Company accounts for the fair value~~ summary of ~~the~~ options ~~issued~~outstanding ~~to non-employees~~and inexercisable ~~accordance~~as ~~with~~of ~~SFAS~~December ~~No. 123~~31, ~~Accounting~~2008 ~~for Stock-Based Compensation. The compensation cost that has been charged against income for 2001, 2000 and 1999 for the plan options~~ is ~~$0, $0 and $13,965, respectively. Options granted to non-employees were for services performed such~~ as ~~engineering, consulting and public relations.~~ follows:

As permitted by SFAS No. 123, the Company has elected to continue to measure cost for its stock-based compensation plans with employees and Directors using the intrinsic value method of accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation cost has been recognized, as the option prices are equal to or greater than fair market value of the stock on the grant dates. The fair value of all stock option grants is estimated on the date of grant in accordance with SFAS No. 123 using the Black-Scholes option pricing model with the following assumptions: an expected risk-free interest rate of 4 percent, 6.5 percent, and 5 percent for options granted in 2001, 2000 and 1999, respectively, an expected life of three years, an expected volatility rate of 56 percent, 48 percent, and 45 percent for options

	Options Outstanding						Options Exercisable
Range of Exercise Price	Options Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Options Exercisable		Weighted Average Exercise Price
$ 0.18 - $ 0.97		580,000		9.3	$	0.47		153,333	$	0.60
$ 1.06 - $ 1.96		483,500		7.6	$	1.56		303,832	$	1.56
$ 2.05 - $ 3.38		319,000		5.9	$	2.65		319,000	$	2.65
$ 6.00 - $ 10.85		168,530		2.1	$	7.50		168,530	$	7.50
$ 0.18 - $ 10.85		1,551,030		7.3	$	2.02		944,695	$	2.83

Years Ended December 31,	2008		2007

Options exercisable at end of period		944,695		1,350,873

Options available for future grant		1,360,657		163,244

Intrinsic value of options exercised	$	-	$	94,740

Aggregate intrinsic value of options outstanding	$	-	$	26,790

Aggregate intrinsic value of options exercisable	$	-	$	24,580

~~Table~~The aggregate intrinsic values in the preceding table represents the total pretax intrinsic value, based on the Company’s closing stock price as of ~~Contents~~December 31, which was $0.1698 and $1.32 for the years 2008 and 2007, respectively. These values would have been received by the option holders had all option holders exercised their in-the-money options as of that date.

~~granted in 2001, 2000 and 1999, respectively, and an expected dividend rate of zero percent~~10. ~~Had~~INCOME compensation for the Company’s stock options granted to employees been determined based upon the fair value at the grant date for awards consistent with a methodology prescribed in SFAS No. 123, the Company’s net loss and net loss per share for the years ended December 31, 2001, 2000 and 1999 would have been increased to the pro forma amounts indicated below: TAXES

		2001			2000			1999
Net loss:
	As reported	$	(5,390,154	)	$	(4,109,877	)	$	(3,474,918	)
	Pro forma		(6,024,817	)		(4,592,995	)		(3,673,313	)
Basic and diluted net loss per share:
	As reported		(0.57	)		(0.49	)		(0.58	)
	Pro forma		(0.64	)		(0.54	)		(0.61	)

Net deferred tax assets consist of the following at December 31:

Options granted under all plans expire up to ten years from the date of grant. Options that expire or terminate prior to exercise are added to the shares available for future grants.

	2008
Deferred tax assets:
Operating loss carryforwards	$	8,563,321
Capitalized research and development		3,064,195
Inventory reserve		21,367
Accruals		237,259
Other		156,481
Total		12,042,623
Less valuation allowance		(11,819,248	)
Total		223,375
Deferred tax liabilities:
Patents		(158,408	)
Other		(64,967	)
Total	$	-

~~A summary of changes in stock options is as follows:~~ 30

				Weighted
				Average
	Option			Exercise
	Shares			Price
Balance, January 1, 1999		733,530		$	11.60
Granted		173,139		$	4.01
Exercised		—		$	—
Expired or terminated		(3,523	)	$	3.47
Balance, December 31, 1999		903,146		$	10.17
Granted		170,976		$	6.48
Exercised		(76,386	)	$	1.57
Expired or terminated		(23,944	)	$	13.50
Balance, December 31, 2000		973,792		$	10.13
Granted		131,100		$	10.55
Exercised		(261,999	)	$	4.50
Expired or terminated		(31,194	)	$	15.62
Balance, December 31, 2001		811,699		$	11.80

During the year ended December 31, 2008 the Company increased the valuation allowance by $2,373,577. In 2007, the Company decreased the valuation allowance by $1,990,403. The amount of the valuation allowance for deferred tax assets associated with excess tax deductions from stock based compensation arrangements that is allocated to contributed capital if the future tax benefits are subsequently recognized is $1,004,793. The valuation allowance reduces deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that, more likely than not, will be realized. Realization of the deferred tax assets is dependent upon generating sufficient future taxable income in the period that temporary differences and carry forwards are expected to be available to reduce taxable income.

	2001		2000		1999
Exercisable at the end of the year		786,699		872,851		620,914
Weighted average fair value of options granted during the year	$	4.29	$	2.52	$	0.99

In 2007, the Company eliminated its deferred tax asset related to R&D credit carry forwards. The majority of these R&D credit carry forwards arose prior to current management joining the Company. At present, management cannot be assured, without undertaking substantial efforts, that the facts and circumstances surrounding the build-up of these credit carry forwards result in a more-likely-than-not tax position. The Company would not utilize these R&D credits to reduce future taxes payable unless and until it was able to determine the amount of such credits that satisfy the more-likely-than-not threshold. As a result, the Company has eliminated both the deferred tax asset and an equal amount of valuation allowance.

AThe Company ~~summary~~has net operating loss carry forwards for federal income tax purposes of $24.5 ~~options~~million ~~outstanding~~which expire in 2019 through 2028 and ~~exercisable~~net asoperating ofloss ~~December 31,~~carry ~~2001~~forwards isfor asstate ~~follows:~~income tax purposes of $7.4 million which expire 2009 through 2013.

	Options Outstanding						Options Exercisable
			Weighted Average		Weighted				Weighted
	Options		Remaining Contractual		Average		Options		Average
Range of Exercise Price	Outstanding		Life		Exercise Price		Exercisable		Exercise Price
$ 0.02 - $ 1.32		8,696		5.7	$	1.31		8,696	$	1.31
$ 3.13 - $ 3.50		20,200		7.8	$	3.33		20,200	$	3.33
$ 6.00 - $10.85		528,915		7.8	$	7.50		503,915	$	7.49
$13.01 - $22.31		253,888		6.1	$	21.81		253,888	$	21.81
$ 0.02 - $22.31		811,699		7.2	$	11.80		786,699	$	11.94

Current federal and Arizona tax laws include substantial restrictions on the utilization of net operating losses and tax credits in the event of an ownership change of a corporation. Accordingly, the Company’s ability to utilize net operating loss and tax credit carry forwards may be limited as a result of such ownership changes. Such a limitation could result in the expiration of carry forwards before they are utilized.

27The Company recognizes interest and penalties related to uncertain tax positions as part of income tax expense. For the year ended December 31, 2007 and 2008, the Company did not accrue any interest or penalties into income tax expense.

~~Table~~The oftax years ~~Contents~~1996 through 2008 remain open to examination for federal income tax purposes and from 2002 to 2008 for state taxing jurisdictions to which the Company is subject.

11 The income tax provision differs from the amount of income tax determined by applying the U. ~~INCOME~~S. ~~TAXES~~federal income tax rate to pretax income for 2008 and 2007 due to the following:

Net deferred tax assets consist of the following at December 31:

	2008			2007
Benefit calculated at statutory rate	$	(2,472,741	)	$	524,125
Increase (decrease) in income resulting from:
Research and development and other tax credits		-			1,398,235
State income taxes, net		(334,547	)		70,911
Permanent differences		342,873			(25,903	)
Expiration of state net operating loss carryforwards		92,766			-
Other, net		(1,928	)		(2,894	)
Valuation allowance		2,373,577			(1,990,403	)
Adjustment for change in state income tax rate		-			25,929
Total	$	-		$	-

		2001			2000
Deferred tax assets:
	Operating loss carryforwards	$	5,955,008		$	2,517,856
	Deferred licensing revenue		892,853			1,064,497
	Research and development credits		190,090			78,000
	Other		261,062			95,325
Total			7,299,013			3,755,678
Less valuation allowance			(6,977,284	)		(3,540,441	)
Total			321,729			215,237
Deferred tax liabilities:
	Patents		(247,861	)		(132,345	)
	Other		(73,868	)		(82,892	)
Total		$	—		$	—

In June 2006, the FASB issued Interpretation 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (FIN 48), which became effective for years beginning on January 1, 2007. FIN 48 addressed the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, the Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company’s assessments of its tax positions in accordance with FIN 48 did not result in changes that had a material impact on results of operations, financial condition or liquidity. The Company has no unrecognized income tax benefits at December 31, 2008.

~~During the years ended December~~ 31, 2001, 2000 and 1999, the Company increased the valuation allowance by $3,436,843, $1,083,000 and $1,301,000, respectively, against deferred tax assets. The increase in the valuation allowance recorded in 2001 includes $1,121,965 for net operating loss carryforwards related to stock compensation. The benefit of the utilization of these net operating loss carryforwards would be recorded as a credit to additional paid-in capital. The valuation allowance reduces deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that, more likely than not, will be realized. Realization of the deferred tax assets is dependent upon generating sufficient future taxable income in the period that temporary differences and carryforwards are expected to be available to reduce taxable income.

~~The Company’s net operating loss carryforwards of approximately $14,890,000 for federal and state income tax purposes expire in 2011 through 2021~~11. SEGMENTS

The Company ~~income~~has ~~tax~~one ~~provision~~reportable ~~differs~~segment ~~from~~at ~~the~~December ~~amount~~31, ~~of income tax~~2008. All ~~determined~~operations byfor ~~applying~~ the ~~U.S.~~Duraswitch ~~federal~~segment ~~income~~have ~~tax~~been ~~rate~~reclassified toas ~~pretax income~~discontinued ~~for 2001, 2000 and 1999 due to the following:~~ operations.

		2001			2000			1999
Benefit calculated at statutory rate		$	1,832,652		$	1,397,358		$	1,181,472
Increase (decrease) in income resulting from:
	State income taxes, net		323,409			246,593			208,495
	Permanent differences		159,290			(560,951	)		(88,967	)
	Valuation allowance		(2,315,352	)		(1,083,000	)		(1,301,000	)
Total		$	—		$	—		$	—

12.	SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

12The following table presents unaudited operating results for each quarter within the two most recent years. ~~SELECTED~~ The ~~QUARTERLY~~Company ~~FINANCIAL~~believes ~~DATA~~that ~~(Unaudited)~~all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts stated below to present fairly the following quarterly results when read in conjunction with the financial statements included elsewhere in this report. Results of operations for any particular quarter are not necessarily indicative of results of operations for a full fiscal year:

The following table presents unaudited operating results for each quarter within the two most recent years. The Company believes that all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts stated below to present fairly the following quarterly results when read in conjunction with the financial statements included elsewhere in this report. Results of operations for any particular quarter are not necessarily indicative of results of operations for a full fiscal year:

	2008 - Quarter Ended,
	December 31			September 30			June 30			March 31
Net revenue	$	120,189		$	291,659		$	63,176		$	8,951
Gross profit		(354,671	)		264,859			58,998			(667	)
Income (loss) from discontinued
Duraswitch Segment		(23,028	)		110,127			21,206			103,733
Net income (loss)		(3,017,558	)		(1,278,848	)		(1,379,881	)		(1,596,481	)
Net income (loss) per common share,
basic and diluted	$	(0.26	)	$	(0.11	)	$	(0.12	)	$	(0.14	)

	2007 - Quarter Ended,
	December 31			September 30			June 30			March 31
Net revenue	$	123,140		$	1,019,423		$	403,982		$	1,168,034
Gross profit		28,205			(11,746	)		127,386			310,661
Income (loss) from discontinued
Duraswitch Segment		18,836			(39,473	)		(72,309	)		7,019,628
Net income (loss)		(1,969,437	)		(1,070,913	)		(1,649,921	)		6,231,814
Net income (loss) per common share,
basic and diluted	$	(0.17	)	$	(0.09	)	$	(0.14	)	$	0.54

~~Table~~13. ofGEOGRAPHIC ~~Contents~~CONCENTRATION

	2001 - Quarter Ended,
	December 31			September 30			June 30			March 31
Net revenue	$	297,837		$	228,681		$	197,218		$	261,576
Gross profit		236,850			202,164			148,300			141,160
Net loss		(1,871,456	)		(1,292,302	)		(1,286,728	)		(939,668	)
Net loss per common share, basic and diluted (1)	$	(0.20	)	$	(0.14	)	$	(0.14	)	$	(0.10	)

Substantially all of the Company’s assets are located in the United States but there is some tooling held by suppliers in foreign countries, primarily China. Revenue by geographic area is determined based upon the location of the licensee or customer. The United States and China are the only countries with net revenue in excess of 10% of total net revenue. Net revenue by geographic region for the years ended December 31, 2008 and 2007 is as follows:

	2000 - Quarter Ended,
	2008			2007
	December 31			September 30			June 30			March 31
United States	$	166,830		$	2,654,579
Net revenue	$	486,581		$	602,371		$	504,933		$	724,851
Japan		179,727			60,000
Gross profit (loss)		89,835			172,975			65,794			(64,523	)
China		135,000			-
Net loss		(1,227,755	)		(796,050	)		(1,051,380	)		(1,034,692	)
Other		2,418			-
Net loss per common share, basic and diluted (1)	$	(0.13	)	$	(0.09	)	$	(0.14	)	$	(0.14	)
Total	$	483,975		$	2,714,579

(1) Earnings per share are computed independently for each quarter and the full year based upon respective average shares outstanding. Therefore, the sum of the quarterly net earnings per share may not equal the annual amounts reported32

1314. COMMITMENTS

Management Services Agreement. Until –the ~~The~~sale of the Duraswitch segment, the Company ~~has~~had a management services agreement with a company owned and operated by the founders~~, two major stockholders~~. This management agreement ~~requires~~required the Company to pay a management service fee equal to 1.1 ~~percent~~% of the invoiced sales ~~price~~ price for all ~~Company~~Duraswitch-patented technology component switches and integrated switch panels sold by the Company. Also, the Company ~~has~~paid ~~agreed to pay~~ an equivalent percentage of any license or sublicense fees received from the Duraswitch patented ~~technologies. This agreement remains in effect until the expiration of the last patent, which may be issued on the~~ switch technologies. During ~~2001,~~2008 ~~2000~~ and ~~1999~~2007, the Company paid approximately $9,~~200,~~702 ~~$67,000~~ and $894,~~900~~250, respectively, under this agreement.

Employment ~~and Separation Agreements – The Company has employment and~~ ~~separation agreements with key members of management~~Agreements. ~~These agreements call for a base salary and bonuses based upon the performance of the Company. These agreements also provide for salary and benefits in the event of separation.~~

~~Effective December 31, 2001, the Chairman of the Board resigned his~~Robert ~~CEO position and remained as Chairman~~J. His employment agreement provided for salary and benefits in the event of termination or resignation. As such, the company has recorded a charge of $397,431 for the year ended December 31, 2001 to be paid over an 18-month period. Brilon

~~Lease~~On ~~Agreements~~July 31, –2007, ~~Rent~~the ~~expense~~Company ~~for~~entered ~~the~~into ~~periods~~a ~~ended~~severance ~~December 31,~~and release agreement with Robert ~~2001~~J. Brilon, ~~2000~~its former Chief Executive Officer and ~~1999~~Chief ~~approximated~~Financial Officer. Pursuant ~~$199~~to the settlement and release agreement,~~000~~ Mr. Brilon’s employment with the Company terminated effective July 27, ~~$199~~2007,~~000~~ and ~~$187,000,~~he ~~respectively.~~resigned ~~Future~~from ~~minimum~~the ~~rental~~Board ~~payments~~of ~~are~~Directors aseffective ~~follows:~~ July 27, 2007.

2002	$	211,829
2003		222,094
Total	$	433,923

Pursuant to the settlement and release agreement, Mr. Brilon released the Company from, among other things, any and all claims or liabilities through July 31, 2007 arising out of his employment agreement and any option agreements with the Company, his employment, or the termination of his employment. In addition, Mr. Brilon released the Company from claims or charges relating to violations of certain employment laws.

29In consideration for the release and in accordance with the provisions of his employment agreement, the Company paid, or will pay, Mr. Brilon (a) approximately $541,200, which is equal to two times his current gross annual salary as a severance benefit, to be paid to Mr. Brilon over a two-year period in equal installments; (b) approximately $125,500 representing Mr. Brilon’s unpaid accrued vacation benefits; (c) $250,000 representing an agreed upon amount relating to a bonus payment obligation; (d) approximately $6,700 representing one-half of the remaining amount due under the automobile leased by the Company and Mr. Brilon; and (e) Mr. Brilon’s and his family’s medical and dental insurance premiums to maintain coverage under the Company’s group medical and dental insurance plans, only to the extent such premiums are not covered by any subsequent employer during the two-year period following the separation date. In addition, all of Mr. Brilon’s stock options or other rights provided to him under any of the Company’s long-term incentive plans immediately vested on the day prior to the effective date of the settlement and release agreement.

~~Table~~Van H. ~~of Contents~~Potter

~~Item 9~~In September 2008, the Company entered into an employment agreement with Van H. Potter, ~~Changes~~granting inhim an annual base salary of $200,000 and ~~Disagreements~~an ~~With~~option ~~Accountants~~grant onof 200,000 ~~Accounting~~shares. Until the Company has secured additional funding and ~~Financial~~established a ~~Disclosure~~sufficient cash position to continue ongoing operations, $75,000 of Mr. Potter’s base salary will be deferred on a semi-monthly basis. Upon his appointment as Chief Executive Officer, his agreement was amended to reflect an annual salary of $250,000. Beginning in 2009, Mr. Potter will be eligible for a performance bonus of up to 100% of his base salary, as decided by the Board of Directors. Additionally, Mr. Potter will be eligible for all medical, dental and vacation benefits per the standard Company Policy.

~~None~~The Company also entered into a Change of Control Severance Agreement Mr. Potter. Under the Agreement, upon a change of control or at any time during the twelve months following a change in control, Mr. Potter’s employment with the Company is terminated for any reason other than for “cause” or by the Mr. Potter for “good reason,” then the Company will pay the Mr. Potter, within 10 days following the termination of his employment, the following:

~~Part~~- ~~III~~an amount equal to the his annual base salary, and

The information required to be presented in Item 10. Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act, Item 11. Executive Compensation, Item 12. Security Ownership of Certain Beneficial Owners and Item 13. Certain Relationships and Related Transactions of Part III of this report is hereby incorporated by reference from our definitive Proxy Statement for our 2002 Annual Meeting to be prepared in accordance with Schedule 14A and filed with the Securities and Exchange Commission within 120 days of the end of the fiscal year covered by this report. 33

30- an amount equal to the greater of all cash incentive compensation payable to him on account of the current fiscal year as if he had achieved 100% of all of his targets or goals for that fiscal year, or all cash incentive compensation actually paid to him on account of the immediately preceding fiscal year.

~~Table~~Mr. Potter, or his family, will be eligible for participation under the Company’s benefit plans for a period of ~~Contents~~12 months. Any stock options granted to Mr. Potter that remain unvested as of the effective date of the his termination shall become fully vested.

~~Part~~Lease Agreements. Rent IVexpense for the periods ended December 31, 2008 and 2007 approximated $277,000 and $225,000, respectively. In May 2007, the Company entered into a five year lease for new corporate headquarters located in Scottsdale, Arizona and transferred operations there in June 2007. Future minimum rental payments will be approximately $255,000 in 2009 through 2011, and $190,000 in 2012. In April 2009, the company vacated the property, and subsequently agreed to pay the landlord $209,749 to terminate the lease if payment is received by landlord by October 5, 2009.

~~Item 14~~Litigation. The Company ~~Exhibits~~is involved in various claims and ~~Reports~~legal onactions ~~Form 8-K~~arising from the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

	(a)		Exhibits.
			See attached exhibit list.
	(b)		Reports on Form 8-K.
			None.

In May 2007, Stephen Caldwell, the former president of FinePoint Innovations, Inc. filed a Demand for Arbitration with the American Arbitration Association alleging various claims against InPlay. He alleged that InPlay terminated his employment in violation of his employment agreement, and that InPlay breached the terms of a 2005 Merger Agreement between InPlay, FinePoint, and him, for which he sought compensatory and other damages. In March 2008, pending final documentation, the Company entered into a Settlement and Release of Claims Agreement whereby the Company paid a cash settlement of $330,000 to resolve all of Mr. Caldwell's claims and dismiss his case in its entirety.

31 15. EMPLOYEE BENEFIT PLANS

~~Table~~The Company has offered eligible employees a comprehensive employee benefits plan that includes health, dental, life and accidental death, short-term disability, and long-term disability. Additionally, the Company has offered a Simple IRA plan that enables eligible employees to save on a tax-deferred basis up to the limits allowable under the Internal Revenue Service Code and that requires the Company to offer matching contributions up to 3% of ~~Contents~~participating employee salaries. Matching contributions provided by the Company totaled $60,084 and $45,782 for fiscal 2008 and 2007, respectively.

~~SIGNATURES~~ 16. DISCONTINUED OPERATIONS

In October ~~accordance~~2008, ~~with~~the ~~Section 13~~Company orsold ~~15(d)~~its ofDuraswitch ~~the~~electronic ~~Exchange~~switch operations. The ~~Act,~~Company ~~the registrant~~sold ~~has~~these ~~caused~~assets ~~this~~to ~~report~~provide cash to beenable it ~~signed~~to focus on its ~~behalf~~pen bytechnology products. On October 28, 2008, Company entered into an agreement with a licensee of the Duraswitch technology ~~undersigned,~~to ~~thereunto~~sell ~~duly~~substantially ~~authorized~~all of the operating assets for $1.6 million in cash. The agreement calls for the potential for the Company to earn an additional $800,000 if certain operating milestones are met by the acquirer within the Duraswitch business.

Duraswitch Industries, Inc.
Dated: March 22, 2002	By:	/s/ R. Terren Dunlap R. Terren Dunlap, Chairman of the Board
Dated: March 22, 2002	By:	/s/ Robert J. Brilon Robert J. Brilon, President, Chief Executive Officer, Chief Financial Officer, Treasurer & Secretary
Dated: March 22, 2002	By:	/s/ Anthony J. Van Zeeland Anthony J. Van Zeeland, Director & Chief Operating Officer
Dated: March 22, 2002	By:	/s/ Michael A. Van Zeeland Michael A. Van Zeeland, Director
Dated: March 22, 2002	By:	/s/ John W. Hail John W. Hail, Director
Dated: March 22, 2002	By:	/s/ William E. Peelle William E. Peelle, Director
Dated: March 22, 2002	By:	/s/ Lothar J. Veeser Lothar J. Veeser, Director

Therefore, pursuant to the criteria established by SFAS No. 144, Accounting for the Impairment of Disposal of Long-Lived Assets, the Company has determined that all of its electronic switch operations for the years ended December 31, 2008 and 2007 should be reclassified as income from discontinued operations.

32 34

~~Table~~A summary of ~~Contents~~the results from discontinued operations are as follows:

Exhibit Index

	December 31
	2008			2007

Duraswitch revenues	$	1,003,396		$	8,623,195
Cost of Duraswitch revenues		327,795			395,883
Gross profit		675,601			8,227,312
Operating expenses and other		405,839			1,300,630
Income from discontinued operations		269,762			6,926,682
(Loss) on sale of Duraswitch		(57,724	)		—
Net income from discontinued operations	$	212,038		$	6,926,682

Exhibit.		Incorporated by
No.	Description	Reference to:	Filed Herewith:
3.1	Amended and Restated Articles of Incorporation	Form SB-2 filed with the SEC on August 26, 1999
3.2	Amended and Restated Bylaws	Form 10-KSB filed with SEC on March 30, 2001
4.1	Articles 3, 4, 5, and 7 of the Amended and Restated Articles of Incorporation of Duraswitch Industries, Inc. (included in Exhibit 3.1)	Form SB-2 filed with the SEC on August 26, 1999
4.2	Articles II, III, and VII of the Amended and Restated Bylaws of Duraswitch Industries, Inc. (included in Exhibit 3.2)	Form 10-KSB filed with SEC on March 30, 2001
4.3	Specimen Common Stock Certificate	Form SB-2 filed with the SEC on August 26, 1999
10.1	Employment and Separation Agreement dated May 1, 1997 by and between Duraswitch Industries, Inc. and R. Terren Dunlap	Form SB-2 filed with the SEC on August 26, 1999
10.1.1	July 30, 1999 Amendment to R. Terren Dunlap Employment and Separation Agreement	Form SB-2 filed with the SEC on August 26, 1999
10.2	Employment and Separation Agreement dated May 1, 1997 by and between Duraswitch Industries, Inc. and Anthony J. Van Zeeland	Form SB-2 filed with the SEC on August 26, 1999
10.2.1	July 30, 1999 Amendment to Anthony J. Van Zeeland Employment and Separation Agreement	Form SB-2 filed with the SEC on August 26, 1999
10.3	Employment and Separation Agreement dated November 20, 1998 by and between Duraswitch Industries, Inc. and J. Thomas Webb	Form SB-2 filed with the SEC on August 26, 1999
10.4	Employment and Separation Agreement dated November 20, 1998 by and between Duraswitch Industries, Inc. and Robert J. Brilon	Form SB-2 filed with the SEC on August 26, 1999

There was no tax effect within the discontinued operations.

33 17. SUBSEQUENT EVENTS

~~Table~~On March 10, 2009, the Company executed a binding Letter of ~~Contents~~Intent (LOI) to enter into a merger agreement with U.S. Rental Housing REIT, Inc. (USRHR). Under the terms of the LOI, USRHR had agreed to provide funding to InPlay for audit and consulting fees and working capital. As of May 5, 2009, USRHR had not provided the agreed upon funding. On May 7, 2009, InPlay announced that it had terminated pursuit of the merger.

Exhibit.		Incorporated by
No.	Description	Reference to:	Filed Herewith:
10.4.1	Addendum #1 to Employment and Separation Agreement dated November 20, 1998 by and between Duraswitch Industries, Inc.	Form 10-KSB filed with the SEC on March 30, 2000
	and Robert J. Brilon
10.5	1997 Stock Option Plan	Form SB-2 filed with the SEC on August 26, 1999
10.6	Form of Grant Letter pursuant to 1997 Stock Option Plan	Form SB-2 filed with the SEC on August 26, 1999
10.7	1999 Stock Option Plan	Form SB-2 filed with the SEC on August 26, 1999
10.8	Form of Representative’s Warrants	Form SB-2 filed with the SEC on August 26, 1999
10.9	Standard Sublease dated October 15, 1998, as amended February 2, 1999, by and between 234 South Extension, L.L.C. and Duraswitch Industries, Inc.	Form SB-2 filed with the SEC on August 26, 1999
10.10	Management Services Agreement dated May 1, 1997 by and between Total Switch, Inc. and VanDun, LLC	Form SB-2 filed with the SEC on August 26, 1999
10.11	Agreement for Assignment of Present and Future Inventions in Certain Subject Matter dated May 1, 1997 by and between Total Switch, Inc. and Anthony J. Van Zeeland	Form SB-2 filed with the SEC on August 26, 1999
10.12	Licensing Agreement between Delphi Automotive Systems LLC and Duraswitch Industries, Inc. dated April 20, 2000	Form 8-K filed with the SEC on April 26, 2000
10.13	2000 Stock Option Plan	Proxy Statement filed with the SEC on May 12, 2000
10.14	2000 Stock Option Plan Amendment		X
23.1	Consent of Deloitte & Touche		X

As a result of a lack of funding, the Company significantly wound down operations during the first quarter of 2009, and focused its attention on the sale of assets. The Company’s goal is to negotiate outstanding obligations with creditors, satisfy legal and regulatory requirements associated with any sale and wind down of the company, and close operations with the approval of stockholders.

34In April 2009, the Nasdaq Stock Market notified the Company that its shares were subject to delisting due to non-payment of annual listing fees, among other deficiencies. The Company did not appeal the delisting and trading of its common shares on Nasdaq was suspended on April 27, 2009. Nasdaq subsequently filed a Form 25 with the Securities and Exchange Commission to complete the delisting.

On May 18, 2009, the Company filed a Form 15 with the SEC, deregistering its common shares and suspending reporting requirements under the Securities Exchange Act of 1934. The Company anticipates that the deregistration will become effective approximately 90 days after the filing.

On June 26, 2009, the Company executed an asset purchase agreement (APA) with Wacom Co. Ltd. pursuant to which it has agreed to sell all of its ownership right, title and interest in and to the intellectual property pertaining to the digital computer pen and digitizer segment of its business, including, without limitation, the human interface device technology used in the Magic Point Pen and the Write Sense products, which represents substantially all of the Company’s remaining assets, for a price of $2.0 million. This transaction is conditioned on, among other things, stockholder approval of the APA. Upon completion of the transaction, the Company intends to negotiate settlements for amounts owed to creditors, cease business operations, and dissolve the company and its subsidiaries, including FinePoint Innovations. If the Company is able to successfully negotiate settlements of its obligations, the Company believes it will be able to avoid bankruptcy. In connection with the dissolution, if any proceeds remain following the payment of transaction costs and the settlement and payment of its outstanding liabilities, the Company intends to distribute any remaining proceeds to its stockholders and dissolve the company in accordance with the plan of liquidation and dissolution. Wacom may terminate the APA if, among other reasons, the transaction is not consummated by October 5, 2009.

During July 2009, the Company entered into amendments to our Change of Control Severance Agreements with Mr. Potter and Mark Sokolowski, its Chief Financial Officer. The Company entered into these agreements to incent Messrs. Potter and Sokolowski to remain employed with the Company to assure the successful wind down of its operations and the payment and settlement of outstanding payables and liabilities. Under the agreements, as amended, each of Messrs. Potter and Sokolowski will be paid closing bonuses of $215,000 subsequent to the closing of the asset purchase transaction with Wacom. The closing payments will be paid in three installments, with (a) $161,250 due within three business days following the closing date of the asset purchase transaction, (b) $43,000 due within three business days after the Company’s board of directors approves a plan providing for the settlement of all of the outstanding creditors’ claims and the creditors’ approval of such plan, and (c) $10,750 due within three business days after the Company’s board of directors approves a plan to terminate business affairs and dissolve the Company. The Company will also provide each of Messrs. Potter and Sokolowski lump sum payment amounts equal to the amount of premium necessary as of the date the last closing bonus installment is paid to continue all medical, dental, vision, life, accidental death and dismemberment, and short-term and long-term disability insurance as is presently provided by the Company, for the period commencing on the date the last closing bonus installment is paid through and until December 31, 2009. In the event the Company files for bankruptcy protection, all remaining closing bonus payments that have not been paid to Messrs. Potter and Sokolowski as of the date of that filing, as well as the payment for continued group insurance benefits, shall accelerate and become immediately due.

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A(T). Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance that material information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.

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. Because of the inherent limitations in all control systems no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Such limitations include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures, such as simple errors or mistakes or intentional circumvention of the established process.

Management’s Report on Internal Control Over Financial Reporting; Changes in Internal Controls Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that are intended to:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the preparation of this Annual Report on Form 10-K for the fiscal year ended December 31, 2008, our management, with the participation of our Chief Executive Officer and Chief Financial Officer and the assistance of external advisors and our audit committee, has assessed the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our management has concluded that the design and operation of our internal control over financial reporting are ineffective as of December 31, 2008 due to the identification of a material weakness, as defined in Public Company Accounting Oversight Board Standard No. 2, related to a lack of segregation of duties over our financial reporting function.

Management is aware that there is a lack of segregation of duties due to the small number of employees dealing with general administrative and financial matters. However, at this time, management has decided that considering the employees involved, the control procedures in place, the outsourcing of certain financial functions, and our plans to dissolve our company following the consummation of the asset purchase transaction with Wacom, the risks associated with such lack of segregation are low and the potential benefits of adding additional employees to clearly segregate duties do not justify the expenses associated with such increases. Our management will periodically review this situation.

There were no significant changes in our internal controls over financial reporting that occurred during the fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The following table sets forth certain information regarding our directors and executive officers:

Name	Age	Position

Steven P. Hanson	60	Chairman

Van H. Potter	50	Director, President and Chief Executive Officer

Mark R. Sokolowski	49	Chief Financial Officer, Treasurer

Dino D. Farfante	46	Director

John W. Hail	78	Director

P. Robert Moya	64	Director

William E. Peelle	59	Director

Steven P. Hanson has served as Chairman since April 2005 and as a Director since July 2004. From June 2007 to November 2008, he served as Chief Executive Officer. Mr. Hanson has served as a partner at Southwest Value Acquisitions, a private equity firm, since September 2004. From 2003 to 2007, Mr. Hanson served as a partner at Knowledge Capital Alliance, a consulting firm in leadership development and organizational performance. Mr. Hanson has over 32 years of senior executive experience in the high technology industry, including 28 years at Motorola and three years as President and Chief Executive Officer of ON Semiconductor. Mr. Hanson holds a BSEE degree from the College of Engineering at Arizona State University. Mr. Hanson also serves as a director for Vitesse Semiconductor Corporation (Pink Sheets: VTSS).

Van H. Potter has served as Director and Chief Executive Officer since November 2008. Mr. Potter served as President and Chief Operating Officer since September 2008. Prior to his employment with us, Mr. Potter served as Vice President, Business Development of Pixtronix, an emerging provider of portable display technologies. Previously, Mr. Potter served as Senior Vice President of Marketing for International Display Works, which had acquired Three-Five Systems’ small form-factor display business. From 2002-2005, Mr. Potter held senior management positions with Three-five Systems, including Senior Vice President, Electronic Manufacturing Services; Senior Vice President, Business Groups and heading up the Display Products division. From 1994 to 2002, Mr. Potter held management, marketing and new business development posts at Rogers Corp. and Durel Corp. Mr. Potter holds a B.S. in mechanical engineering from Northeastern University and an M.B.A. from Arizona State University.

Mark R. Sokolowski was named Chief Financial Officer in October 2007. Mr. Sokolowski joined InPlay from Isola Group S.a.r.l., a privately held circuit board laminate manufacturer where he was Corporate Treasurer. Prior, he was with ON Semiconductor where he held positions as Division Controller and Assistant Treasurer, Read-Rite Corp. where he was Treasurer, and Maxtor Corp. where he was Director of Accounting. Mr. Sokolowski holds a bachelor of science in accounting from Central Michigan University. He is a Certified Public Accountant.

Dino D. Farfante has served as an independent director since November 2007. Mr. Farfante is President and Chief Operating Officer for American Barcode and RFID, Inc. (AB&R), a provider of automatic identification and data collection solutions for the manufacturing, healthcare and distribution markets. Before joining AB&R in 2006, Mr. Farfante consulted for various companies developing go-to-market strategies. Prior, Mr. Farfante was President, Insight Direct Worldwide, a wholly owned subsidiary of Insight Enterprises. He joined Insight in 1996, serving in a progression of senior management positions during his nine-year tenure with the Fortune 1000 company. Mr. Farfante began his career at Merisel, Inc., a Fortune 500 worldwide hardware and software technology distributor. Mr. Farfante holds a B.S. in computer engineering from the University of Florida.

John W. Hail has served as an independent director since March 1999. From 1988 to 2006, Mr. Hail served as Chief Executive Officer and Chairman of the Board of Directors of AMS Health Services, Inc., a publicly held provider of health and beauty products. Mr. Hail also serves on the Board of Directors of Pre-Paid Legal Services, Inc., a publicly held company engaged in the sale of legal services contracts. Mr. Hail received an honorary doctorate degree from Oklahoma City University.

P. Robert Moya has served as an independent director since 2005. Mr. Moya is an Executive Vice President and the General Counsel and Secretary of Apollo Group, Inc. and also serves as Of Counsel to Quarles & Brady LLP. From 2002 through 2004, Mr. Moya served as Executive Vice President, and General Counsel of Insight Enterprises, Inc. He was also designated Insight’s Chief Administrative Officer in 2003. Prior to joining Insight, Mr. Moya served as a partner in the Phoenix, Arizona office of Quarles & Brady LLP where he specialized in corporation and securities law and mergers/acquisitions for middle-market and emerging growth companies. He also served as a member of Quarles & Brady’s National Executive Committee and Arizona Management Committee and as Co-Chairman of the Corporate and Securities Law Group. Between 2003 and 2007 he served on the board of PlusNet plc, one of the U.K.’s leading Internet providers. From 2000 until 2005, he also served on the board of BIGe Realestate, Inc. which provides software and services relating to the management of real property Mr. Moya served two years as chairman of the securities law section of the State Bar of Arizona and one year as chairman of the law practice management section. He is a member of the American Bar Association and Hispanic Bar Association. Mr. Moya received a B.A. in History from Princeton University and has a J.D. degree from Stanford Law School.

William E. Peelle has served as an independent director since 1999. Mr. Peelle founded Peelle Law Offices Co. in 1977 and has practiced law and represented a number of businesses since 1975. Mr. Peelle has also served as the elected prosecuting attorney of Clinton County, Ohio, since 1993. Mr. Peelle has served as counsel or as a member of the board of several community organizations. Mr. Peelle received his J.D. degree from Ohio Northern University and has a B.S. degree in Business Administration from Ohio State University.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires our officers and directors and persons who beneficially own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors, and greater than 10% stockholders are required by Exchange Act regulations to furnish us with copies of all Section 16(a) forms they file.

Based solely on the review of the copies of such forms received by us, or written representations from certain reporting persons that no forms were required for such persons, we believe that during the fiscal year ended December 31, 2008, our officers, directors, and greater than 10% beneficial owners have complied with all filing requirements applicable to them with the exception of the following: Mr. Farfante filed two late filings, with one transaction each; Mr. Hail filed two late filings, with one transaction each; Mr. Moya filed two late filings, with one transaction each; and Mr. Peelle filed two late filings with one transaction each. All transactions were subsequently reported on Form 4.

Information Relating to Our Audit Committee of the Board of Directors

The purpose of the Audit Committee is to oversee the accounting and financial reporting processes of our company and the audits of our financial statements. The Audit Committee provides assistance to our Board of Directors with respect to its oversight of (a) the integrity of our financial statements, (b) our compliance with legal and regulatory requirements, (c) the independent registered public accountant’s qualifications and independence, and (d) the performance of our independent registered public accountants. The primary responsibilities of the Audit Committee are set forth in its charter, which is reviewed annually, and includes various matters with respect to the oversight of our company’s accounting and financial reporting process and audits of the financial statements of our company on behalf of our Board of Directors.

The Audit Committee also selects the independent registered public accountants to conduct the annual audit of the financial statements of our company; reviews the proposed scope of such audit, reviews accounting and financial controls of our company with the independent registered public accountants and our financial accounting staff; and reviews and approves transactions between us and our directors, officers, and their affiliates.

The Audit Committee currently consists of Messrs. Farfante, Hail, Moya and Peelle, each of whom is an independent director of our company under rules adopted by the Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002. The Board of Directors has determined that Mr. Hail qualifies as an “audit committee financial expert” in accordance with applicable rules and regulations of the SEC. Mr. Hail serves as Chair of the Audit Committee.

Code of Ethics

Our Board of Directors has adopted a Code of Conduct and a Code of Ethics for the CEO and Senior Financial Officers. Our corporate governance materials including our Audit Committee Charter, Code of Conduct, and Code of Ethics for the CEO and Senior Financial Officers. These documents are also available in print to any stockholder requesting a copy in writing from our corporate secretary at our executive offices.

Item 11. Executive Compensation

Summary Compensation Table

The table below sets forth total compensation earned for services in all capacities to our company for the fiscal year ended December 31, 2008 and 2007, by our Chief Executive Officer, former Chief Executive Officer and two other executive officers as of December 31, 2008, whose total annual salary and bonus exceeded $100,000 during fiscal 2008.

				Non-Equity				All Other
				Incentive Plan		Option		Compensation
				Compensation		Awards ($)		($)
Name and Principal Position	Year	Salary ($)		($)		(5)		(6)			Total ($)

Steven P. Hanson, Chairman (1)	2008	$	186,577	$	-	$	-	$	866	(1)	$	187,443
	2007	$	98,462	$	-	$	-	$	43	(1)	$	98,505

Van H. Potter, President and Chief Executive Officer (2)	2008	$	37,058	$	-	$	5,279	$	86	(2)	$	42,423
	2007	$	-	$	-	$	-	$	-		$	-

Mark R. Sokolowski, Chief Financial Officer and Treasurer (3)	2008

Filing Compare · InPlay Technologies, Inc.