0001094038
2013-01-01
2013-03-31
0001094038
2013-05-09
0001094038
tpiv:UnauditedMember
2013-03-31
0001094038
2012-12-31
0001094038
2012-01-01
2012-03-31
0001094038
1999-07-27
2013-03-31
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
TAPIMMUNE INC
0001094038
10-Q
2013-03-31
false
--12-31
No
No
Yes
Smaller Reporting Company
Q1
2013
92728474
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 1:	Nature
of Operations</u></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">TapImmune
Inc. (the “Company”), a Nevada corporation incorporated in 1992, is a development stage company which was formed for
the purpose of building a biotechnology business specializing in the discovery and development of immunotherapeutics aimed at
the treatment of cancer, and therapies for infectious diseases, autoimmune disorders and transplant tissue rejection.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Since
inception, the Company has been party to various Collaborative Research Agreements (“CRA”) working with universities
to carry out development of the licensed technology and providing TapImmune the option to acquire the rights to commercialize
any additional technologies developed within the CRA. The lead product candidate, now wholly owned and with no ongoing license
or royalty, resulting from these license agreements is an immunotherapy vaccine, on which the Company has been completing pre-clinical
work in anticipation of clinical trials. Specifically, the Company has obtained and expanded on three U.S. and international patents,
tested various viral vectors, licensed a viral vector and is working towards production of a clinical grade vaccine. The Company
plans to continue development of the lead product vaccine through to clinical trials in both oncology and infectious diseases
alone or in partnership with other vaccine developers.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">These
consolidated financial statements have been prepared on the basis of a going concern which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. As at March 31, 2013, the Company had a working capital
deficiency of $5,500,874 and has incurred significant losses since inception. Further losses are anticipated in the development
stage raising substantial doubt as to the Company’s ability to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on raising additional capital to fund ongoing research and development, maintenance and
protection of patents, accommodation from certain debt obligations and ultimately on generating future profitable operations.
Planned expenditures relating to future clinical trials of the Company’s immunotherapy vaccine will require significant additional
funding. The Company is dependent on future financings to fund ongoing research and development as well as working capital requirements.
The Company’s future capital requirements will depend on many factors including the rate and extent of scientific progress
in its research and development programs, the timing, cost and scope involved in clinical trials, obtaining regulatory approvals,
pursuing further patent protections and the timing and costs of commercialization activities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">Management
is addressing going concern remediation through seeking new sources of capital, restructuring and retiring debt through conversion
to equity and debt settlement arrangements with creditors, cost reduction programs and seeking possible joint venture participation.
Management’s plans are intended to return the Company to financial stability and improve continuing operations. The Company
is continuing initiatives to raise capital through private placements, related party loans and other institutional sources to
meet immediate working capital requirements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">Additional
funding was raised through equity and debt placements in 2013 and 2012, and management intends to continue restructuring outstanding
debt and equity instruments. Additional capital is required currently to expand programs including pre-clinical work and to establish
future manufacturing contracts necessary for clinical trials for the lead TAP (Transporters of Antigen Processing) vaccine and
infectious disease adjuvant technology. Strategic partnerships will be needed to continue the product development portfolio and
fund development costs. These measures, if successful, may contribute to reduce the risk of going concern uncertainties for the
Company over the next twelve months. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">There
is no certainty that the Company will be able to arrange sufficient funding to satisfy current debt obligations or to continue
development of products to marketability.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 2:	UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS FOR AN INTERIM PERIOD</u></b></font></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0"><font style="font: 10pt Times New Roman, Times, Serif">Basis
of Presentation</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
the opinion of management, the accompanying balance sheets and related interim statements of operations and cash flows include
all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting
principles generally accepted in the United States of America (“U.S. GAAP”). Preparing financial statements requires
management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses. Examples include:
valuation of the derivative liabilities and stock-based compensation. Actual results and outcomes may differ from management’s
estimates and assumptions.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Interim
results are not necessarily indicative of results for a full year. The information included in this quarterly report on Form 10-Q
should be read in conjunction with information included in the Company’s annual report on Form 10-K filed on May 15, 2013,
with the U.S. Securities and Exchange Commission.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 3:	Research
Agreements</u></b></font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Crucell
Holland B.V. (“Crucell”) – Research License and Option Agreement</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective
August 7, 2003, Crucell and the Company’s subsidiary GPI entered into a five-year research license and option agreement whereby
Crucell granted to GPI a non-exclusive worldwide license for the research use of its adenovirus technology. The Company was required
to make certain payments over the five-year term totaling Euro €450,000 (approximately $510,100).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
December 31, 2008, $243,598 (€172,801) was owing to Crucell under this agreement. During the year ended December 31, 2009,
management negotiated a settlement of the outstanding balance requiring a €17,000 cash payment (paid) and the issuance of
265,000 shares of the Company’s common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
addition, retroactively effective August 7, 2008, the Company negotiated an amended license agreement for the use of Crucell’s
adenovirus technology. The Company is required to make annual license payments on the anniversary of the effective date for the
three year term equal to €75,000 per annum. As at March 31, 2013, the Company had accrued $443,535 (€345,957) under
the amended agreement, inclusive of interest on outstanding amounts. The Company is currently delinquent on making its first annual
license payment under the amended license agreement. Crucell has the right to cancel the agreement however, to date, the Company
has not received any notice terminating the license agreement. Management plans to negotiate an amended payment structure with
Crucell that, if successful, would allow the Company to maintain the license agreement in good standing. However, there is no
certainty that the license agreement will be maintained or that Management will successfully negotiate new terms.</font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Mayo
Clinic –License Option Agreement</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
details regarding the license option agreement with Mayo Clinic, please refer to Note 11.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 4:	DERIVATIVE
WARRANT LIABILITY AND FAIR VALUE</u></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has evaluated the application ASC 480-10 <i>Distinguishing liabilities from equity</i>, ASC 815-40 <i>Contracts in an
Entity’s Own Equity</i> and ASC 718-10 <i>Compensation – Stock Compensation</i> to the issued and outstanding warrants
to purchase common stock that were issued with the convertible notes, private placements, consulting agreements, and various debt
settlements during 2009 through 2012. Based on the guidance, management concluded these instruments are required to be accounted
for as derivatives either due to a ratchet down protection feature available on the exercise price (Note 5) or a holder’s
right to put the warrants back to the Company for cash under certain conditions or a conversion option feature with conversion
into variable number of shares. Under ASC 815-40-25, the Company records the fair value of these warrants and conversion options
(derivatives) on its balance sheet, at fair value, with changes in the values reflected in the statements of operations as “Changes
in fair value of derivative liabilities”. The fair value of the share purchase warrants are recorded on the balance sheet
under ‘Derivative liability – warrants’ and the fair value of the conversion options are recorded on the balance
sheet under ‘Derivative liability – conversion option’.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">ASC
820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820-10 describes three levels of inputs that
may be used to measure fair value: Level 1 – Quoted prices in active markets for identical assets or liabilities; Level 2
– Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that
are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities;
and Level 3 – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose
values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments
for which the determination of fair value requires significant judgment or estimation. The Company’s Level 3 liabilities
consist of the derivative liabilities associated with the warrants issued with the convertible notes during the year ended December
31, 2011. At December 31, 2012, all of the Company’s derivative liabilities were categorized as Level 3 fair value liabilities.
If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization
is based on the lowest level input that is significant to the fair value measurement of the instrument.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Level
3 Valuation Techniques</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Financial
liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies
or similar techniques and at least one significant model assumption or input is unobservable. Level 3 financial liabilities consist
of the notes and warrants for which there is no current market for these securities such that the determination of fair value
requires significant judgment or estimation.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Determining
fair value of share purchase warrants and conversion options, given the Company’s stage of development and financial position,
is highly subjective and identifying appropriate measurement criteria and models is subject to uncertainty. There are several
generally accepted pricing models for warrants and options and derivative provisions. The Company has chosen to value the warrants
and conversion option on the notes that contain ratchet down provisions using the Binomial model under the following assumptions:</font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">December
31, 2012</font></td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">March
31, 2013</font></td></tr>
<tr>
<td style="vertical-align: top; width: 26%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 10%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Expected
Life (Years)</font></td>
<td style="vertical-align: bottom; width: 10%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Risk
free Rate</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Dividend
yield</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Volatility</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Expected
Life (Years)</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Risk
free Rate</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Dividend
yield</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Volatility</font></td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Share
purchase warrants</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.08
to 3.78</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.02%
to 0.36%</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.00%</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">199%</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.01
to 3.53</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.04%
to 0.36%</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.00%</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">199%</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">December
31, 2012</font></td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">March
31, 2013</font></td></tr>
<tr>
<td style="vertical-align: top; width: 24%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Expected
Life (Years)</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Risk
free Rate</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Dividend
yield</font></td>
<td style="vertical-align: bottom; width: 11%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Volatility</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Expected
Life (Years)</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Risk
free Rate</font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Dividend
yield</font></td>
<td style="vertical-align: bottom; width: 11%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Volatility</font></td></tr>
<tr style="vertical-align: top; background-color: rgb(204,238,255)">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Conversion
Option</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.003
to 0.89</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.05%
to 0.19%</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.00%</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">100.88%
to 141.21%</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.049
to 0.64</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.04%
to 0.17%</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">0.00%</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">108.00%
to 123.76%</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the
probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Financial
Assets and Liabilities Measured at Fair Value on a Recurring Basis</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Financial
assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheet under
Derivative liability – warrants and Derivative liability – conversion option:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-top: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b>As
of March 31, 2013</b></font></p></td>
<td colspan="2" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"></td>
<td colspan="2" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"></font></td>
<td style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="5" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Fair
Value Measurements</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Carrying
Value</font></td>
<td colspan="2" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Level
1</font></td>
<td colspan="2" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Level
2</font></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Level
3</font></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Derivative
liability - warrants</font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
462,293</font></td>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td colspan="2" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
462,293</font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
462,293</font></td></tr>
<tr style="background-color: White">
<td style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Derivative
liability – conversion option</font></td>
<td style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">531,600</font></td>
<td colspan="2" style="vertical-align: top; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td colspan="2" style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">531,600</font></td>
<td style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">531,600</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
993,893</font></td>
<td colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
993,893</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
993,893</font></td></tr>
<tr style="background-color: White">
<td style="width: 36%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 11%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 12%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr>
<td style="vertical-align: bottom; border-top: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="vertical-align: bottom; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As
of December 31, 2012 </b></font></p></td>
<td colspan="2" style="vertical-align: bottom; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Fair
Value Measurements Using</font></td>
<td colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Carrying
Value</font></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Level
1</font></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Level
2</font></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Level
3</font></td>
<td colspan="3" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Derivative
liability - warrants</font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
677,086</font></td>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
677,086</font></td>
<td colspan="3" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
677,086</font></td></tr>
<tr style="background-color: White">
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: -12.25pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Derivative
liability – conversion option</font></td>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">798,300</font></td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">798,300</font></td>
<td colspan="3" style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">798,300</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
1,475,386</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
1,475,386</font></td>
<td colspan="3" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
1,475,386</font></td></tr>
<tr style="background-color: White">
<td style="width: 35%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 11%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 11%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 12%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 11%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The table
below provides a summary of the changes in fair value, including net transfers, in and/or out, of financial assets and liabilities
measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March
31, 2013 and the year ended December 31, 2012:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 4pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Fair
Value Measurements Using Level 3 Inputs</b></font></td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 4pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Derivative
liability - warrants</font></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Derivative
liability – conversion option</font></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Balance, 
December 31, 2011</font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
1,317,834 </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$
-<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
1,317,834 </font></td></tr>
<tr style="background-color: White">
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Additions
during the year</font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">737,700 </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">737,700 </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Total
unrealized (gains) or losses included in net loss</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(597,127)</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">60,600 </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(536,527)</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Debt
settlement</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(43,621)</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(43,621)</font></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td colspan="2" style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Transfers
in and/or out of Level 3</font></td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: White">
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Balance, 
December 31, 2012</font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">677,086 </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">798,300<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,475,386 </font></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Additions
during the year</font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">44,700 </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">44,700 </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Total
unrealized (gains) or losses included in net loss</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(214,793)</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(311,400)</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(526,193)</font></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td colspan="2" style="vertical-align: bottom; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Transfers
in and/or out of Level 3</font></td>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 35%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Balance,
March 31, 2013</font></td>
<td style="width: 13%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 19%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
462,293 </font></td>
<td style="width: 20%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$
531,600<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="width: 13%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
993,893 </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
fair value of the warrants is determined using a Binomial option pricing model. The valuation of warrants is subjective and is
affected by changes in inputs to the valuation model including the price per share of common stock, the historical volatility
of the stock price, risk-free rates based on U.S. Treasury security yields, the expected term of the warrants and dividend yield.
Changes in these assumptions can materially affect the fair value estimate. The Company could ultimately incur amounts to settle
the warrant at a cash settlement value that is significantly different than the carrying value of the liability on the financial
statements. The Company will continue to classify the fair value of the warrants as a liability until the warrants are exercised,
expire, or are amended in a way that would no longer require these warrants to be classified as a liability. Changes in the fair
value of the common stock warrants liability are recognized as a component of other income (expense) in the statement of operations.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
net cash settlement value at the time of any future Fundamental Transaction will depend upon the value of the following inputs
at that time: the consideration value per share of the Company’s common stock, the volatility of the Company’s common
stock, the remaining term of the warrant from announcement date, the risk-free interest rate based on U.S. Treasury security yields,
and the Company’s dividend yield. The warrant requires use of a volatility assumption equal to the greater of 100% and the
100-day volatility function determined as of the trading day immediately following announcement of a Fundamental Transaction.
The fair value of the warrants is determined using the Black Scholes Option Pricing Model.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 5:	CONVERTIBLE
NOTES PAYABLE</u></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">The
following is a summary of debt instrument transactions that are relevant to the current year:</font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 43%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 12%; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Face
Value</b></font></p></td>
<td style="width: 15%; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Principal
Repayment/</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Settlement</b></font></p></td>
<td style="width: 15%; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Unamortized</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Discount</b></font></p></td>
<td style="width: 15%; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Balance
at</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>March
31,</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2013</b></font></p></td></tr>
<tr style="vertical-align: bottom">
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">February
2011 Secured Convertible Notes</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Senior Secured
Notes, due February 24, 2014</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$
1,184,694<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$        
203,836  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$   
120,496 </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$
860,362<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">April
2011 Secured Convertible Notes</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Senior Secured
Notes, due April 4, 2014</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">215,000<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">        
-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">34,681 </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">180,319<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">June
2011 Secured Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Senior Secured
Notes, due June 6, 2014</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">30,000<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">        
-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,271 </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">26,729<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">August
8, 2012 Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Note due August
8, 2013</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">111,430<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">65,970  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16,193 </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">29,267<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">August
12, 2012 Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Note became due
November 12, 2012</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">27,500<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">        
-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">27,500<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">August
20, 2012 Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Note due August
20, 2013</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">20,000<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">        
-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">7,780 </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,220<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">September
18, 2012 Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Note due October
1, 2013</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">82,500<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">61,750  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">10,072 </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">10,678<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">October
2012 Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Note due October
15, 2013</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">340,000<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">        
-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">184,438 </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">155,562<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">November
1, 2012 Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Note due April
30, 2013</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">31,471<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15,000  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,381  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">14,090<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">November
20, 2012 Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Note due November
20, 2013</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">55,710<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">        
-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">35,715 </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">19,995<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">December
14, 2012 Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Note due April
18, 2013</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">189,210<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">189,210  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">        
-</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">-</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">December
18, 2012 Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Note due December
14, 2013</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">50,000<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">        
-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">   
- </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">50,000<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">January
5, 2013 Convertible Notes</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">567,729<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">        
-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">   
- </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">567,729<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">February
27, 2013 Convertible Note</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Note due February
27, 2014</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">55,710<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">        
-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">45,990 </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,720<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$
2,960,954<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$        
535,766  </font></td>
<td style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$   
461,017 </font></td>
<td style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$
1,964,171<font style="letter-spacing: -0.1pt"> </font></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>February
2011 Secured Convertible Notes</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
February 24, 2011, the Company entered into a securities purchase agreement with accredited investors to place Senior Secured
Convertible Notes (the “February 2011 Notes”) with a maturity date of three years after the issuance thereof in the
aggregate principal amount of $1,184,694. Consideration under the notes consisted of $944,694 in cash proceeds, including accrued
interest, and $240,000 was subscribed for by two of the holders of outstanding and demandable 2010 secured convertible notes (the
“2010 Notes”). The holders of the 2010 Notes returned their Series A, Series B and Series C warrants to the Company
for cancellation. In connection with the issuance of the February 2011 Notes, the Company entered into a 2011 Security Agreement
with the note holders securing the February 2011 Notes with all of the Company’s assets. One year after the issuance of the
February 2011 Notes, the note holders have the option to convert a portion or all of the outstanding balance of the February 2011
Notes including any accrued interest into shares of the Company’s common stock at a conversion rate of $0.15 per share.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
February 2011 Notes bear interest at the rate of 10% per annum except in case of default, in which case they bear interest at
the rate of 20% per annum. The interest is due on the February 2011 Notes at the end of each three month period, starting three
months from their issuance. One year after the issuance of the February 2011 Notes, the Company may elect to prepay a portion
of the principal. If the Company makes such an election, the holders may elect to receive such prepayment in cash or in shares
of the Company’s common stock, at a conversion rate of $0.15 per share, or in a combination thereof.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company paid a finders’ fee of $41,500. The finder’s fee was accounted for as deferred financing costs, and is being
amortized over the term of the notes. At March 31, 2013, $11,597 of the $26,867 in deferred financing costs relates to the February
2011 Notes which remains unamortized, and is presented in the current assets on the Company’s Balance Sheet.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
connection with the issuance of the February 2011 Notes, the Company issued 2,369,388 warrants, exercisable into common stock
at $0.25 with five year terms. The Company may force the exercise of the warrants at any time that the average volume weighted
average price of the Company’s common stock over the prior ten trading days is greater than $0.50, the average daily dollar
volume of the Company’s common stock sold over those ten trading days is greater than $25,000 and there is an effective registration
statement covering the resale of the shares underlying the warrants.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated the net proceeds to the warrants based on the calculated fair value at the date of issuance. The fair value
of the warrants was recorded at $483,355 and recognized as derivative liabilities and the debt was recorded at $701,339. The fair
value of the warrants was calculated using the Binomial option pricing model under the following assumptions: estimated life of
five years, risk free rate of 2.06%, dividend yield of 0% and volatility of 199%. The debt discount is being accreted over the
three year term of the February 2011 Notes using the effective interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended December 31, 2012, one of the investors settled the principal amount of $203,836 and accrued interest of $16,419
of the February 2011 Notes in exchange for December 14, 2012 Convertible Note (the “December 14, 2012 Note”).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended March 31, 2013, accretion of the debt discount of $32,862 was recorded for the February 2011 Notes.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>April
2011 Secured Convertible Notes</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
April 4, 2011, the Company entered into a securities purchase agreement with accredited investors to place Senior Secured Convertible
Notes (the “April 2011 Notes”) with a maturity date of three years after the issuance thereof in the aggregate principal
amount of $215,000. Consideration under the notes consisted of $190,000 in cash proceeds, and $25,000 was subscribed for by a
holder of 2010 Notes in exchange for the extinguishment of the Series A, Series B and Series C warrants related to the 2010 Notes.
In connection with the issuance of the April 2011 Notes, the Company entered into a 2011 Security Agreement with the note holders
securing the April 2011 Notes with a secondary security interest in all of the Company’s assets. One year after the issuance
of the April 2011 Notes, the note holders have the option to convert a portion or all of the outstanding balance of the April
2011 Notes including any accrued interest into shares of the Company’s common stock at a conversion rate of $0.15 per share.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
April 2011 Notes bear interest at the rate of 10% per annum except in case of default, in which case they bear interest at the
rate of 20% per annum. The interest is due on the April 2011 Notes at the end of each three month period, starting three months
from their issuance. One year after the issuance of the April 2011 Notes, the Company may elect to prepay a portion of the principal.
If the Company makes such an election, the holders may elect to receive such prepayment in cash or in shares of the Company’s
common stock, at a conversion rate of $0.15 per share, or in a combination thereof.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company paid a finders’ fee of $4,550. The finder’s fee was accounted for as deferred financing costs, and is being
amortized over the term of the notes. At March 31, 2013, $1,517 of the $26,867 in deferred financing costs relates to the April
2011 Notes which remains unamortized, and is presented in the current assets on the Company’s Balance Sheet.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
connection with the issuance of the April 2011 Notes, the Company issued 430,000 warrants, exercisable into common stock at $0.25
with 2 year terms. The Company may force the exercise of the warrants at any time that the average volume weighted average price
of the Company’s common stock over the prior ten trading days is greater than $0.50, the average daily dollar volume of the
Company’s common stock sold over those ten trading days is greater than $25,000 and there is an effective registration statement
covering the resale of the shares underlying the warrants.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated the net proceeds to the warrants based on the calculated fair value. The fair value of the warrants was
recorded at $130,720 and recognized as derivative liabilities and the debt was recorded at $84,280. The fair value of the warrants
was calculated using the Binomial option pricing model under the following assumptions: estimated life of two years, risk free
rate of 0.77%, dividend yield of 0% and volatility of 199%. The debt discount is being accreted over the three year term of the
April 2011 Notes using the effective interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended March 31, 2013, accretion of the debt discount of $8,459 was recorded for the April 2011 Notes.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>June
2011 Secured Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
June 6, 2011, the Company entered into a securities purchase agreement with accredited investors to place Senior Secured Convertible
Note (the “June 2011 Note”) with a maturity date of three years after the issuance thereof in the aggregate principal
amount of $30,000. In connection with the issuance of the June 2011 Note, the Company entered into a 2011 Security Agreement with
the note holder securing the June 2011 Note with a secondary security interest in all of the Company’s assets. One year after
the issuance of the June 2011 Note, the note holder has the option to convert a portion or all of the outstanding balance of the
June 2011 Note including any accrued interest into shares of the Company’s common stock at a conversion rate of $0.15 per
share.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
June 2011 Note bears interest at the rate of 10% per annum except in case of default, in which case it bears interest at the rate
of 20% per annum. The interest is due on the June 2011 Note at the end of each three month period, starting three months from
its issuance. One year after the issuance of the June 2011 Note, the Company may elect to prepay a portion of the principal. If
the Company makes such an election, the holders may elect to receive such prepayment in cash or in shares of the Company’s
common stock, at a conversion rate of $0.15 per share, or in a combination thereof.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
connection with the issuance of the June 2011 Note, the Company issued 60,000 warrants, exercisable into common stock at $0.25
with two year terms. The Company may force the exercise of the warrants at any time that the average volume weighted average price
of the Company’s common stock over the prior ten trading days is greater than $0.50, the average daily dollar volume of the
Company’s common stock sold over those ten trading days is greater than $25,000 and there is an effective registration statement
covering the resale of the shares underlying the warrants.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated the net proceeds to the warrants based on the calculated fair value. The fair value of the warrants was
recorded at $8,280 and recognized as derivative liabilities and the debt was recorded at $21,720. The fair value of the warrants
was calculated using the Binomial option pricing model under the following assumptions: estimated life of two years, risk free
rate of 0.43%, dividend yield of 0% and volatility of 199%. The debt discount is being accreted over the three year term of the
June 2011 Note using the effective interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended March 31, 2013, accretion of the debt discount of $682 was recorded for the June 2011 Note.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>August
8, 2012 Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
August 8, 2012, the Company entered into a securities purchase agreement with an accredited investor to place a Convertible Note
(the “August 8, 2012 Note”) with a maturity date of one year after the issuance thereof in the aggregate principal amount
of $111,430. Consideration under the notes consisted of $92,000 in cash proceeds after $8,000 payment of finders’ fee and
an original issue discount of $11,430. The note holder has the option to convert a portion or all of the outstanding balance of
the August 8, 2012 Note including any accrued interest into shares of the Company’s common stock at a conversion rate of
$0.09 per share or 70% of the lowest traded price in the 25 trading days prior to conversion.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
August 8, 2012 Note carries no interest if the Company repays the note within 90 days from issuance. If the Company does not repay
the note within 90 days, a one-time interest of 5% shall apply to the principal sum.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
finder’s fee of $8,000 was accounted for as deferred financing costs, and is being amortized over the term of the note. At
March 31, 2013, $1,360 of the $26,867 in deferred financing costs relates to the August 8, 2012 Note which remains unamortized,
and is presented in current assets on the Company’s Balance Sheet.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated the net proceeds to the conversion option based on the calculated fair value. The fair value of the conversion
option was recorded at $155,700 and recognized as a derivative liability and the debt was recorded at $nil. The transaction resulted
in an accounting loss on debt financing of $55,700. The fair value of the conversion option was calculated using the Binomial
option pricing model under the following assumptions: estimated life of one year, risk free rate of 0.19%, dividend yield of 0%
and volatility of 139.77%. The debt discount is being accreted over the one year term of the August 8, 2012 Note using the effective
interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the three months ended March 31, 2013, the investor converted $65,970 and accrued interest of the August 8, 2012 Note into common
shares (Note 9). The balance remaining on the August 8, 2012 Note as on March 31, 2013 was $45,460.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended March 31, 2013, accretion of the debt discount of $11,209 was recorded for the August 8, 2012 Note.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>August
12, 2012 Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
August 12, 2012, the Company entered into a securities purchase agreement with accredited investors to place a Convertible Note
(the “August 12, 2012 Note”) with a maturity date of three months after the issuance thereof in the aggregate principal
amount of $27,500. Consideration under the notes consisted of $25,000 in cash proceeds after an original issue discount of $2,500.
The note holder has the option to convert a portion or all of the outstanding balance of the August 8, 2012 Note including any
accrued interest into shares of the Company’s common stock at a conversion rate of $0.09 per share or on similar terms as
of any future financings with more favorable terms. The agreement provides for the Company to issue 50,000 shares to the note
holder as risk premium. The 50,000 shares were valued at $6,250 and recorded as loss on debt financing and obligation to issue
shares.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
August 12, 2012 Note bears interest at the rate of 10% per annum.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company allocated the net proceeds to the conversion option based on the calculated fair value. The fair value of the conversion
option was recorded at $31,100 and recognized as a derivative liability and the debt was recorded at $nil. The transaction resulted
in an accounting loss on debt financing of $6,100. The fair value of the conversion option was calculated using the Binomial option
pricing model under the following assumptions: estimated life of three months, risk free rate of 0.11%, dividend yield of 0% and
volatility of 138.31%. The debt discount is being accreted over the three month term of the August 12, 2012 Note using the effective
interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has not repaid the August 12, 2012 Note as of March 31, 2013, which is in default.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>August
20, 2012 Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
August 20, 2012, the Company entered into a securities purchase agreement with accredited investors to place a Convertible Note
(the “August 20, 2012 Note”) with a maturity date of one year after the issuance thereof in the aggregate principal
amount of $20,000. The note holder has the option to convert a portion or all of the outstanding balance of the August 8, 2012
Note including any accrued interest into shares of the Company’s common stock at a conversion rate of $0.09 per share or
70% of the lowest traded price in the 25 trading days prior to conversion.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
August 20, 2012 Note bears interest at the rate of 8% per annum.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated the net proceeds to the conversion option based on the calculated fair value. The fair value of the conversion
option was recorded at $36,100 and recognized as a derivative liability and the debt was recorded at $nil. The transaction resulted
in an accounting loss on debt financing of $16,100. The fair value of the conversion option was calculated using the Binomial
option pricing model under the following assumptions: estimated life of one year, risk free rate of 0.19%, dividend yield of 0%
and volatility of 140.11%. The debt discount is being accreted over the one year term of the August 20, 2012 Note using the effective
interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended March 31, 2013, accretion of the debt discount of $4,932 was recorded for the August 20, 2012 Note.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>September
18, 2012 Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
September 18, 2012, the Company entered into a securities purchase agreement with accredited investors to place a Convertible
Note (the “September 18, 2012 Note”) with a maturity date of one year after the issuance thereof in the aggregate principal
amount of $82,500. Consideration under the notes consisted of $69,000 in cash proceeds after $6,000 payment of finders’ fee
and an original issue discount of $7,500. The note holder has the option to convert a portion or all of the outstanding balance
of the September 18, 2012 Note including any accrued interest into shares of the Company’s common stock at a conversion rate
of $0.09 per share or 70% of the lowest traded price in the 20 trading days prior to conversion.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
September 18, 2012 Note carries no interest other than the amortization of the original issue discount.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
finder’s fee of $6,000 was accounted for as deferred financing costs, and is being amortized over the term of the note. At
March 31, 2013, $755 of the $26,867 in deferred financing costs relates to the September, 2012 Note which remains unamortized,
and is presented in current assets on the Company’s Balance Sheet.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated the net proceeds to the conversion option based on the calculated fair value. The fair value of the conversion
option was recorded at $76,400 and recognized as a derivative liability and the debt was recorded at $nil. The transaction resulted
in an accounting loss on debt financing of $1,400. The fair value of the conversion option was calculated using the Binomial option
pricing model under the following assumptions: estimated life of one year, risk free rate of 0.20%, dividend yield of 0% and volatility
of 141.43%. The debt discount is being accreted over the one year term of the September, 2012 Note using the effective interest
rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the three months ended March 31, 2013, the investor converted $61,750 and accrued interest of the September 18, 2012 Note into
common shares (Note 9). The balance remaining on the September 18, 2012 Note as on March 31, 2013 was $20,750.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended March 31, 2013, accretion of the debt discount of $4,954 was recorded for the September, 2012 Note.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>October
2012 Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
October 15, 2012, the Company entered into a securities purchase agreement with an accredited investor to place a Convertible
Note (the “October 2012 Note”) with a maturity date of one year after the issuance thereof in the aggregate principal
amount of $340,000. Consideration under the notes consisted of $310,000 in cash proceeds after $10,000 payment of legal fee and
an original issue discount of $30,000. The note holder has the option to convert a portion or all of the outstanding balance of
the October 2012 Note including any accrued interest into shares of the Company’s common stock at a conversion rate of $0.12
per share or to a new lower issuance price if the Company issues shares (or reduces the conversion or exercise price for outstanding
debt or warrants) for less than $0.12.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
October 2012 Note carries an interest rate of 8%. There are seven installment payments due on the note beginning on the seventh
month after its issuance and each month thereafter until maturity.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
legal fee of $10,000 was accounted for as deferred financing costs, and is being amortized over the term of the note. At March
31, 20132, $5,425 of the $26,867 in deferred financing costs relates to the October 2012 Note which remains unamortized, and is
presented in current assets on the Company’s Balance Sheet.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Provided
that there is sufficient volume in the trading of the Company’s common stock and other criteria are met, the Company may
elect to make any payment due on an installment date in shares of common stock. If the Company elects to make a payment in shares
of common stock, the number of shares that the Company issues will be equal to the amount to be converted divided by the lesser
of the conversion price or 70% of the average of the three lowest closing bid prices of the shares of common stock during the
prior twenty consecutive trading days. If the Company elects to pay the full amount of the note in common shares (excluding any
interest that becomes due thereon), the holder shall receive at a minimum 2,833,333 shares of the Company’s common stock,
but this amount could be substantially higher. Unless otherwise agreed in writing by both parties, at no time will the holder
convert any amount of the debenture into common stock that would result in the holder owning more than 4.99% of the common stock
outstanding.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
part of the agreement, the Company also issued 3,000,000 warrants to the note holder exercisable at $0.25/share expiring on October
31, 2016.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
warrants include price adjustment provisions whereby the exercise price will be adjusted downwards based on future grants, which
results in a share issuance at a per share amount less than $0.25 per share, or repricing of any existing warrants to a lower
price. During the three months ended March 31, 2013, the investor converted 1,898,588 share warrants into shares at a price of
$0.0572 per share (Note 9).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated the net proceeds to the conversion option and equity based on the calculated fair value. The fair value
of the conversion option was recorded at $248,000 and recognized as a derivative liability and the equity was recorded at $62,000.
The fair value of the conversion option was calculated using the Binomial option pricing model under the following assumptions:
estimated life of one year, risk free rate of 0.19%, dividend yield of 0% and volatility of 139.16%. The debt discount is being
accreted over the one year term of the October 2012 Note using the effective interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended March 31, 2013, accretion of the debt discount of $83,836 was recorded for the October 2012 Note.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>November
1, 2012 Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the year, the Company converted a promissory note of $100,000 (Note 7) with an accredited investor into three convertible notes
of $105,000 cumulatively. The three convertible notes were assigned to a third party, of which, two notes were converted into
equity. In November and December 2012, the Note holder converted $73,737 of principal and interest into 1,262,727 shares. The
fair value of the shares was determined to be $140,538 based on the quoted market prices. The Company recorded $66,801 as loss
on settlement of debt (Note 9).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
third Convertible Note (the “November 1, 2012 Note”) was issued with a maturity date of six months in the aggregate
principal amount of $31,471. The note holder has the option to convert a portion or all of the outstanding balance of the November
1, 2012 Note including any accrued interest into shares of the Company’s common stock at a conversion rate of $0.09 per share
or 65% of the lowest bid price in the 20 trading days prior to conversion.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
November 1, 2012 Note bears interest at the rate of 10% per annum starting on November 15, 2012. If the Company is in default
under certain events, the November 1, 2012 Note shall incur interest at the rate of 20% per annum retroactively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated $31,471 of the balance of the November 1, 2012 Note to the conversion option and debt based on the calculated
fair value. The fair value of the conversion option was recorded at $27,300 and recognized as a derivative liability and the debt
was recorded at $4,171. The fair value of the conversion option was calculated using the Binomial option pricing model under the
following assumptions: estimated life of 0.49 year, risk free rate of 0.09%, dividend yield of 0% and volatility of 127.26%. The
debt discount is being accreted over the 0.49 year term of the November 1, 2012 Note using the effective interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the three months ended March 31, 2013, the investor converted $15,000 and accrued interest of the November 1, 2012 Note into common
shares (Note 9). The balance remaining on the November 1, 2012 Note as on March 31, 2013 was $16,471.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended March 31, 2013, accretion of the debt discount of $7,144 was recorded for the November 1, 2012 Note.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>November
20, 2012 Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
November 20, 2012, the Company entered into a securities purchase agreement with an accredited investor to place a Convertible
Note (the “November 20, 2012 Note”) with a maturity date of one year after the issuance thereof in the aggregate principal
amount of $55,710. Consideration under the notes consisted of $50,000 in cash proceeds after $4,000 payment of finder’s fee
and an original issue discount of $5,710. The note holder has the option to convert a portion or all of the outstanding balance
of the November 20, 2012 Note including any accrued interest into shares of the Company’s common stock at a conversion rate
of $0.09 per share or 70% of the lowest traded price in the 25 trading days prior to conversion.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
August 8, 2012 Note carries no interest if the Company repays the note within 90 days from issuance. If the Company does not repay
the note within 90 days, a one-time interest of 5% shall apply to the principal sum.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
finder’s fee of $4,000 was accounted for as deferred financing costs, and is being amortized over the term of the note. At
March 31, 2013, 2,564 of the $26,867 in deferred financing costs relates to the November 20, 2012 Note which remains unamortized,
and is presented in current assets on the Company’s Balance Sheet.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated the net proceeds to the conversion option based on the calculated fair value. The fair value of the conversion
option was recorded at $69,000 and recognized as a derivative liability and the debt was recorded at $nil. The transaction resulted
in an accounting loss on debt financing of $19,000. The fair value of the conversion option was calculated using the Binomial
option pricing model under the following assumptions: estimated life of one year, risk free rate of 0.16%, dividend yield of 0%
and volatility of 134.71%. The debt discount is being accreted over the one year term of the November 20, 2012 Note using the
effective interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended March 31, 2013, accretion of the debt discount of $13,889 was recorded for the November 20, 2012 Note.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>December
14, 2012 Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
December 14, 2012, the Company converted part of the February 2011 Notes in the amount of $220,255 into a Convertible Note (the
“December 14, 2012 Note”) with a maturity date of four months after the issuance thereof in the aggregate principal
amount of $252,280. Consideration under the notes consisted of $220,255 from February 2011 Notes, $10,000 payment of legal fee
and an original issue discount of $22,025. The December 14, 2012 Note is repayable in four equal installments with accrued interest,
starting on January 18, 2013 and subsequently, the same day on each of the following calendar months. The Company can elect to
pay the installments in cash or shares of Company’s common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
December 14, 2012 Note bears interest at the rate of 8% per annum. In the event of default under certain conditions, the interest
will accrue at the rate of 18% per annum.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
note holder has the option to convert a portion or all of the outstanding balance of the December 14, 2012 Note including any
accrued interest into shares of the Company’s common stock at a conversion rate of 70% of the three lowest closing bid prices
in the 20 trading days prior to conversion.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
December 2012, the December 14, 2012 Note was assigned to a third party and the Company paid the first installment of $65,032
consisting of principal and interest in 1,078,477 shares. The fair value of the shares was determined to be $96,523 based on the
quoted market price of $0.09 per share. The Company recorded $31,491 as loss on settlement of debt (Note 9).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated $189,210 of the balance of the December 14, 2012 Note to the conversion option and debt based on the calculated
fair value. The fair value of the conversion option was recorded at $94,100 and recognized as a derivative liability and the debt
was recorded at $95,110. The fair value of the conversion option was calculated using the Binomial option pricing model under
the following assumptions: estimated life of 0.35 year, risk free rate of 0.06%, dividend yield of 0% and volatility of 100.88%.
The debt discount is being accreted over the 0.45 year term of the December 14, 2012 Note using the effective interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the three months ended March 31, 2013, the investor converted the remaining balance of the note of $189,210 and accrued interest
on the December 14, 2012 Note into common shares (Note 9).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>December
18, 2012 Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
December 18, 2012, the Company entered into a securities purchase agreement with accredited investors to place convertible notes
(the “December 18, 2012 Notes”) with a maturity date of one year after the issuance thereof in the aggregate principal
amount of $50,000. The note holders have the option to convert a portion or all of the outstanding balance of the November 20,
2012 Note including any accrued interest into shares of the Company’s common stock at a conversion rate of $0.10 per share.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
December 18, 2012 Notes carry an interest rate of 9%, due and payable on the maturity date.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>January
5, 2013 Convertible Notes</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
January 5, 2013, the Company exchanged payable due to related parties into convertible notes (the “January 5, 2013 Notes”)
with no terms of repayment and no interest charges in the aggregate principal amount of $567,729. The related parties have the
option to convert a portion or all of the outstanding balance of the January 5, 2013 Notes into shares of the Company’s common
stock at a conversion rate of $0.08 per share.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>February
27, 2013 Convertible Note</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
February 27, 2013, the Company entered into a securities purchase agreement with an accredited investor to place a Convertible
Note (the “February 27, 2013 Note”) with a maturity date of one year after the issuance thereof in the aggregate principal
amount of $55,710. Consideration under the notes consisted of $46,000 in cash proceeds after $4,000 payment of finders’ fee
and an original issue discount of $5,710. The note holder has the option to convert a portion or all of the outstanding balance
of the February 27, 2013 Note including any accrued interest into shares of the Company’s common stock at a conversion rate
of $0.09 per share or 70% of the lowest traded price in the 25 trading days prior to conversion.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
February 27, 2013 Note carries no interest if the Company repays the note within 90 days from issuance. If the Company does not
repay the note within 90 days, a one-time interest of 5% shall apply to the principal sum.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
finder’s fee of $4,000 was accounted for as deferred financing costs, and is being amortized over the term of the note. At
March 31, 2013, $3,649 of the $26,867 in deferred financing costs relates to the February 27, 2013 Note which remains unamortized,
and is presented in current assets on the Company’s Balance Sheet.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company has allocated the net proceeds to the conversion option based on the calculated fair value. The fair value of the conversion
option was recorded at $44,700 and recognized as a derivative liability and the debt was recorded at $5,300. The fair value of
the conversion option was calculated using the Binomial option pricing model under the following assumptions: estimated life of
one year, risk free rate of 0.17%, dividend yield of 0% and volatility of 123.76%. The debt discount is being accreted over the
one year term of the February 27, 2013 Note using the effective interest rate method.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the three months ended March 31, 2013, accretion of the debt discount of $4,420 was recorded for the February 27, 2013 Note.</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 6:	Loans
payable</u></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
at March 31, 2013, there were unsecured loan advances from third parties in the amount of $10,000 (December 31, 2012 - $10,000),
which is due on demand. The loan is accruing interest of 10% per annum.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 7:	Promissory
note</u></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended December 31, 2011, the Company issued a note in the amount of $100,000 towards future legal services, which matured
July 24, 2011. As of December 31, 2012, the Company had received legal services in the amount of $100,000 against the note. The
note bears interest at 10% per annum and may be converted into shares at equal to lower of $0.09 or 65% of the arithmetic average
of the lowest closing bid prices of the Company’s shares during the consecutive twenty day trading period prior to notice
of conversion.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended December 31, 2012, the Company issued 500,000 shares to the holder of the note in exchange for the note holder’s
agreement to forbear from pursuing collections actions on the outstanding note (Note 9) and converted the promissory note into
three convertible notes (Note 5).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended December 31, 2012, the Company issued additional promissory notes in the amount of $67,942, of which $38,000 of
promissory notes were issued to an officer and a director of the Company (Note 8). The promissory notes had no interest charges
and no fixed repayment terms.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 8:	Related
Party Transactions</u></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">During
the </font>three months ended March 31, 2013<font style="letter-spacing: -0.1pt">, the Company entered into transactions with
certain officers and directors of the Company as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0 0.75in; text-align: justify; text-indent: -0.5in"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">(a)                
incurred $88,500 (March 31, 2012 - $80,100) in management, consulting and directors’fees and $33,000 (March 31, 2011 - $22,500)
in research and development services paid or accrued to officers and directors during the period;</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.5in"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">(b)                
recorded $25,643 (March 31, 2012 - $29,562) in stock based compensation for the fair value of options granted to management and
consultants that were granted and or vested during the period;</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.5in"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">(c)                
converted $nil (March 31, 2012 - $50,000) of debt due to related parties during the period, which were settled with shares. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.5in"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">(d)                
converted $567,729 (2012 - $nil) of payable into convertible notes to officers, consultant and a director of the Company (Note
7).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">All
related party transactions (other than stock based consideration) involving provision of services were recorded at the exchange
amount, which is the amount established and agreed to by the related parties as representing fair value. The Company accounted
for the debt settlement transactions with related parties at management’s estimate of fair value, using amounts similar to
arm’s length settlements for debt settled.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">At
March 31, 2013, the Company had amounts owing to directors, consultants and officers of $755,925 (December 31, 2012 - $293,805).
Amounts due to related parties are unsecured, non-interest bearing and have no specific terms of repayment.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 9:	Capital
Stock</u></b></font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Share
Capital</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">Prior
to March 27, 2007, the authorized capital of the Company consisted of 50,000,000 common shares with $0.001 par value and 5,000,000
non-voting preferred shares with $0.001 par value. On March 27, 2007, the Company’s Articles of Incorporation were amended
to increase the authorized shares of common stock from 50,000,000 shares of common stock to 200,000,000 shares. On June 28, 2007,
the Company completed a reverse stock split thereby issuing 1 new share for each 2.5 outstanding shares of the Company’s
common stock. Accordingly, the Company’s authorized share capital was decreased from 200,000,000 common shares to 80,000,000
common shares. On January 22, 2009 the authorized shares of common stock increased from 80,000,000 shares to 500,000,000 shares.
</font>Effective July 10, 2009, the Company executed a further 1 for 10 reverse stock split while simultaneously reducing the
authorized shares of common stock to 50,000,000 common shares with a $0.001 par value. Effective February 21, 2010, the Company
increased its authorized shares of common stock from 50,000,000 shares to 150,000,000 common shares. The Company maintained its
authorized shares of preferred stock at 5,000,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">All
prior period share transactions included in the Company’s stock transactions and balances have been retroactively restated
for the transactions described above.</font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>2013
Share Transactions</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
January 2013, the Company issued </font>231,332 shares of its restricted common stock for conversion of one of the two November
1, 2012 Note (Note 5) at a conversion price of $.0662 per share. The fair value of the shares was determined to be $36,550 based
on the quoted market price of $0.158 per share. The Company recorded $21,230 as loss on settlement of debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2013, the Company issued 250,000 common shares to a consultant pursuant to a consulting agreement. The fair value of
the shares was determined to be $28,925 based on the quoted market price of $0.116 per share.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2013, the Company issued 1,898,588 common shares on conversion of warrants at an exercise price of $0.0572. The fair
value of the shares was determined to be $246,816 based on the quoted market price of $0.13 per share. The Company recorded $138,217
as loss on settlement of debt.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
March 2013, the Company issued 100,000 common shares to a consultant pursuant to a consulting agreement. The fair value of the
shares was determined to be $10,010 based on the quoted market price of $0.1001 per share.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February and March 2013, the Company received subscription proceeds of $242,950. The subscribers purchased 3,470,709 share units
at $0.07 per unit. Each unit consists of one share of Company’s common stock and one warrant exercisable at $0.07, which
expires in two years. The fair value of these warrants was determined to be $245,000.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">During
the period ended March 31, 2013, the Company issued </font>3,176,334 shares of its restricted common stock for conversion of December
14, 2012 Note (Note 5) at a conversion price of $.0603 per share. The fair value of the shares was determined to be $404,849 based
on the average quoted market price of $0.1245 per share. The Company recorded $213,316 as loss on settlement of debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">During
the period ended March 31, 2013, the Company issued </font>992,063 shares of its restricted common stock for partial conversion
of September 18, 2012 Note (Note 5) at an average conversion price of $.0695 per share. The fair value of the shares was determined
to be $125,179 based on the average quoted market price of $0.1228 per share. The Company recorded $55,179 as loss on settlement
of debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">During
the period ended March 31, 2013, the Company issued </font>1,050,000 shares of its restricted common stock for partial conversion
of August 8, 2012 Note (Note 5) at an average conversion price of $.0681 per share. The fair value of the shares was determined
to be $110,700 based on the average quoted market price of $0.1063 per share. The Company recorded $39,160 as loss on settlement
of debt.</p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>2012
Share Transactions</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">On
March 15, 2012, the Company issued 333,334 shares of its restricted common stock to related parties, pursuant to debt settlement
agreements to settle $50,000 of outstanding trade payable. </font>At the time of issuance the fair value of the shares was determined
to be $50,000 based on the quoted market price of $0.15 per share.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">On
March 15, 2012, the Company issued </font>400,000 shares of its restricted common stock pursuant to a debt settlement and a consulting
agreement. At the time of issuance the fair value of the shares was determined to be $71,200 based on the quoted market price
of $0.15 per share. The Company recorded $9,930 as gain on settlement of debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">On
March 15, 2012, the Company issued </font>789,778 shares of its restricted common stock in settlement of accrued interest on the
outstanding 2011 Notes. At the time of issuance the fair value of the shares was determined to be $118,467 based on the quoted
market price of $0.15 per share. No gain or loss was recorded on settlement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
March 2012, the Company received subscription proceeds of $85,000. The subscribers purchased 733,334 share units at $0.15 per
unit. Each unit consists of 1 share of Company’s common stock and half a warrant exercisable at $0.40, which expires in two
years. The fair value of these warrants was determined to be $5,133.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
April 2012, the Company received subscription proceeds of $345,000. The subscribers purchased 2,300,000 share units at $0.15 per
unit. Each unit consists of 1 share of Company’s common stock and half a warrant exercisable at $0.40, which expires in two
years. The fair value of these warrants was determined to be $123,000.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
April, 2012, the Company issued 1</font>00,000 shares of its restricted common stock pursuant to a debt settlement and a consulting
agreement. At the time of issuance the fair value of the shares was determined to be $18,500 based on the quoted market price
of $0.185 per share. The Company recorded $18,758 as gain on settlement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0"><font style="font: 10pt Times New Roman, Times, Serif">In
April 2012, the Company issued 933,333 restricted common shares, at $0.15 per share, for proceeds of $140,000 received in October
2011, in a private placement.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
April 2012, the Company issued 1,000,000 common shares to a consultant pursuant to a consulting agreement effective October 1,
2011.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
April, 2012, the Company issued </font>163,334 shares of its restricted common stock in settlement of accrued interest on the
outstanding 2011 Notes. At the time of issuance the fair value of the shares was determined to be $24,500 based on the quoted
market price of $0.15 per share. No gain or loss was recorded on settlement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
May 2012, the Company issued 14,000,000 common shares to consultants pursuant to a consulting agreement (Note 12). At the time
of issuance the fair value of the shares was determined to be $1,918,000 based on the quoted market price of $0.137 per share.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
June 2012, the Company issued </font>35,179 shares of its restricted common stock pursuant to a consulting agreement. The fair
value of the shares was determined to be $6,000 based on the quoted market price of $0.17 per share.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
August 2012, the Company issued </font>500,000 shares of its restricted common stock pursuant to a consulting agreement. The fair
value of the shares was determined to be $74,000 based on the quoted market price of $0.148 per share.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
September 2012, the Company issued </font>500,000 shares of its restricted common stock to the holder of a promissory note in
exchange for the note holder’s agreement to forebear from pursuing collection action on that note (Note 7). The fair value
of the shares was determined to be $72,750 based on the quoted market price of $0.146 per share.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
November 2012, the Company issued </font>437,063 shares of its restricted common stock on election by the holder to convert part
of a convertible debt (Note 5) at a conversion price of $.0572 per share. The fair value of the shares was determined to be $55,944
based on the quoted market price of $0.128 per share. The Company recorded $30,944 as loss on settlement of debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
November 2012, the Company issued </font>597,185 shares of its restricted common stock on election by the holder to convert part
of a convertible debt (Note 5) at a conversion price of $.0586 per share. The fair value of the shares was determined to be $63,003
based on the quoted market price of $0.106 per share. The Company recorded $28,003 as loss on settlement of debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
November 2012, the Company issued </font>228,479 shares of its restricted common stock on election by the holder to convert part
of a convertible debt (Note 5) at a conversion price of $.0601 per share. The fair value of the shares was determined to be $21,591
based on the quoted market price of $0.095 per share. The Company recorded $7,854 as loss on settlement of debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
December 2012, the Company issued </font>1,078,477 shares of its restricted common stock as payment of installment of $65,032
for a convertible debt (Note 5) at a conversion price of $.0603 per share. The fair value of the shares was determined to be $96,523
based on the quoted market price of $0.09 per share. The Company recorded $31,491 as loss on settlement of debt.</p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Stock
Compensation Plan</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
October 14, 2009, the Company adopted the 2009 Stock Incentive Plan (the “2009 Plan”) which supersedes and replaces
the 2007 Stock Plan. The 2009 Plan allows for the issuance of up to 10,000,000 common shares. <font style="letter-spacing: -0.1pt">Options
granted under the Plan shall be at prices and for terms as determined by the Board of Directors.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
April 30, 2012, the Company granted 250,000 stock options to a management at an exercise price of $0.18 per share, vesting monthly
over thirty six month period. <font style="letter-spacing: -0.1pt">The aggregate fair value of the grant was estimated at $45,000,
or $0.18 per option, using the Black-Scholes Option Pricing Model with weighted average assumptions as follows: a risk free interest
rate of 1.95%, a dividend yield of 0%, an expected volatility of 199.0%, and an expected life of 10 years. </font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
May 8, 2012, the Company granted 250,000 stock options to a consultant at an exercise price of $0.17 per share, vesting monthly
over twelve month period. <font style="letter-spacing: -0.1pt">The aggregate fair value of the grant was estimated at $40,000,
or $0.17 per option, using the Black-Scholes Option Pricing Model with weighted average assumptions as follows: a risk free interest
rate of 1.71%, a dividend yield of 0%, an expected volatility of 199.0%, and an expected life of 10 years. </font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">The
expensed portion of the value of the vesting options during the three months ended March 31, 2013 was $29,894 (March 31, 2012
- $43,482) which was recorded as stock based consulting and management fees. During the periods, stock-based consulting and management
fees also includes share and warrant based compensation.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"><b>Share
purchase options</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">A
summary of the Company’s stock options as of March 31, 2013 and changes during the period is presented below:</font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="width: 47%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 17%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Number
of</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Options</font></p></td>
<td style="width: 18%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Weighted
Average</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Exercise
Price</font></p></td>
<td style="width: 18%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Weighted
Average</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Remaining
Life</font></p></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">Balance,
December 31, 2011</font></td>
<td style="vertical-align: bottom; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,278,000 </font></td>
<td style="vertical-align: bottom; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
0.18</font></td>
<td style="vertical-align: bottom; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6.85</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">  Issued</font></td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">500,000 </font></td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.17</font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9.35</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> 
Cancelled</font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(250,000)</font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.35</font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">Balance,
December 31, 2012</font></td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,528,000 </font></td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
0.18</font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6.05</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">  Issued</font></td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">  Cancelled/Forfeited</font></td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">- </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">Balance,
March 31, 2013</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,528,000 </font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
0.18</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5.80</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">At
March 31, 2013, the intrinsic value of the vested options was equal to $nil (March 31, 2012 - $nil).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">A
summary of the status of the Company’s unvested options as of December 31, 2012 is presented below:</font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="width: 47%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 17%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 18%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Number
of</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Shares</font></p></td>
<td style="width: 18%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Weighted
Average</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Grant-Date</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Fair
Value</font></p></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">Unvested,
December 31, 2012</font></td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">379,575 </font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
0.18</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">  Granted</font></td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">  Vested</font></td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(171,336)</font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.18</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> 
Cancelled</font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.3pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-<font style="letter-spacing: -0.1pt"> </font></font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">Unvested,
March 31, 2013</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.3pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">208,239 </font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
0.17</font></td></tr>
</table>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Share
Purchase Warrants</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
March, 2012, the Company issued 366,668 share purchase warrants to acquire an equivalent number of common shares of the Company,
at an exercise price of $0.40 per share for an exercise period of up to two years from the issuance date. The warrants were issued
pursuant to the private placement of $110,000 and included within equity. The fair value of these warrants was determined to be
$5,133, using the Black-Scholes Option Pricing Model with an expected life of 2 years, a risk free interest rate of 0.37%, a dividend
yield of 0%, and an expected volatility of 63%.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
April, 2012, the Company issued 1,150,000 share purchase warrants to acquire an equivalent number of common shares of the Company,
at an exercise price of $0.40 per share for an exercise period of up to two years from the issuance date. The warrants were issued
pursuant to a private placement and included within equity. The fair value of these warrants was determined to be $123,000, using
the Black-Scholes Option Pricing Model with an expected life of 2 years, a risk free interest rate of 0.27%, a dividend yield
of 0%, and an expected volatility of 146.6%.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
October, 2012, the Company issued 3,000,000 share purchase warrants to acquire an equivalent number of common shares of the Company,
at an exercise price of $0.25 per share for an exercise period of up to four years from the issuance date. The warrants were issued
pursuant to a convertible debt and included within equity. The residual fair value of these warrants was determined to be $62,000.
</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
December, 2012, the Company issued 1,000,000 share purchase warrants to acquire an equivalent number of common shares of the Company,
at an exercise price of $0.10 per share for an exercise period of up to five years from the issuance date. The warrants were issued
pursuant to a private placement and included within equity. The fair value of these warrants was determined to be $178,000, using
the Black-Scholes Option Pricing Model with an expected life of 5 years, a risk free interest rate of 0.87%, a dividend yield
of 0%, and an expected volatility of 199.0%.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
March, 2013, the Company issued 3,470,709 share purchase warrants to acquire an equivalent number of common shares of the Company,
at an exercise price of $0.07 per share for an exercise period of up to two years from the issuance date. The warrants were issued
pursuant to a private placement and included within equity. The fair value of these warrants was determined to be $245,000, using
the Black-Scholes Option Pricing Model with an expected life of 2 years, a risk free interest rate of 0.24%, a dividend yield
of 0%, and an expected volatility of 131.02%.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">A
summary of the Company’s share purchase warrants as of March 31, 2013 and changes during the period is presented below:</font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="width: 47%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 17%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Number
of</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Warrants</font></p></td>
<td style="width: 18%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Weighted
Average</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Exercise
Price</font></p></td>
<td style="width: 18%; border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Weighted
Average</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Remaining
Life</font></p></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">Balance,
December 31, 2011</font></td>
<td style="vertical-align: bottom; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,106,355 </font></td>
<td style="vertical-align: bottom; border-top: windowtext 1pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
0.56</font></td>
<td style="vertical-align: bottom; border-top: windowtext 1pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.81</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">  Issued</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,516,668 </font></td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.26</font></td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3.32</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> 
Exercised, cancelled or expired</font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(714,400)</font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.33</font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">Balance,
December 31, 2012</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16,908,623 </font></td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
0.39</font></td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.19</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">  Issued</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,470,709 </font></td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.07</font></td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.00</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">  Exercised</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1,898,588)</font></td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.06</font></td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> 
Extinguished or expired</font></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1,950,000)</font></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.53</font></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif">Balance,
March 31, 2013</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16,530,744 </font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
0.32</font></td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.57</font></td></tr>
</table>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 10:	Supplemental
Cash Flow Information AND NON-CASH INVESTING AND FINANCING ACTIVITIES </u></b></font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="3" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="4" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif">Three
Months Ended</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif">March
31, 2013</font></p></td>
<td style="border-bottom: windowtext 0.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Shares/warrants</font></td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Amount</font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">      
$</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Shares issued
pursuant to consulting arrangements</font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">350,000</font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">38,935</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Shares issued
pursuant to notes conversion</font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,476,848</font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">348,845</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p></td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="3" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: White">
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="vertical-align: top; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="vertical-align: top; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="vertical-align: top; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Three
Months
Ended</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">March
31, 2012</font></p></td>
<td nowrap="nowrap" colspan="3" style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Shares/warrants</font></td>
<td nowrap="nowrap" colspan="3" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Amount</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">    
$</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Shares
issued pursuant to debt settlement agreements</font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,363,112</font></td>
<td nowrap="nowrap" colspan="3" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">  
$211,187</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="width: 50%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 5%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 5%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 18%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 7%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">See
Notes 5 and 9 for additional disclosure on non-cash transactions.</font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td rowspan="2" style="border-top: windowtext 1.5pt solid; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p></td>
<td colspan="2" style="border-top: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">                     
Period Ended March 31,</font></td></tr>
<tr style="vertical-align: top">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2012</font></td></tr>
<tr>
<td style="vertical-align: top; width: 64%; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 18%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 18%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Interest
paid in cash</font></td>
<td style="vertical-align: bottom; padding-right: 12.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
-</font></td>
<td style="vertical-align: bottom; padding-right: 15.9pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
-</font></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">Income
taxes paid</font></td>
<td style="vertical-align: bottom; border-bottom: windowtext 1.5pt solid; padding-right: 12.4pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
-</font></td>
<td style="vertical-align: bottom; border-bottom: windowtext 1.5pt solid; padding-right: 15.9pt; padding-left: 5.4pt; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">$ 
-</font></td></tr>
</table>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 11:	ContingencIES
AND COMMITMENTs</u></b></font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Contingencies</u></font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Tax
Filings</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">The
Company has not filed income tax returns for several years in certain operating jurisdictions (Note 10), and may be subject to
possible compliance penalties and interest. Management is currently not able to make a reliably measurable provision for possible
liability for penalties and interest, if any, at this time, and the Company may be liable for such amounts upon assessment. Penalties
and interest, if assessed in the future, will be recorded in the period such amounts are determinable.</font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Commitments</u></font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Combined
Research and Operating Obligations</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">Effective
May 25, 2010, the Company entered into a research and license Option Agreement with the Mayo Clinic for the development and possible
commercial use of a cancer vaccine. Subject to the approval and guidance of the United States Food and Drug Administration (“FDA”)
the Mayo Clinic plans to conduct a Phase I human clinical trial (“Phase I Trial”) to test and develop the Company’s
technology. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">The
Company has agreed that, during the period of the option and upon approval of FDA to conduct Phase I Trials, will pay all the
costs incurred by the Mayo Clinic, not to exceed a total of $841,000, of which, $500,000 has been accrued as of December 31, 2012.
Both Parties agree that within 30 days after the Mayo Clinic informs the Company in writing about the receipt of FDA approval,
the parties shall enter into an a formal research agreement. Management anticipates that Phase 1 Trials will begin in the second
quarter of 2013. An initial payment of $250,000 will be required within 30 days of receiving notice from the Mayo</font> Clinic
that the Phase 1 Trial will commence.</p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Management
Services Agreement</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
February 2011, the Company approved an employment agreement with Dr. Wilson with an initial term of 2 years, which may be automatically
extended for successive one-year terms. This employment agreement provides for annual compensation of $180,000 and the grant of
an option to acquire 2,000,000 shares of the Company’s common stock at $0.19 per share, 50% of which vested on March 16,
2011, while the remainder will vest monthly over a period of two years (41,667 per month). The options shall be exercisable for
at least five years.</font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Consultant
Agreements</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
April 2012, the Company entered into an investors’ relation consulting agreement for a one year term, with a one-time right
to terminate the agreement at its six month anniversary. The consulting agreement provides for the Company to issue 620,690 shares
to the consultant and a monthly payment of $7,500.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
April 2012, the Company entered into financial consulting service agreements, which included compensation of 14,000,000 shares
of common stock, whereby the Company agreed to issue additional shares to the consultants to restore their holdings to 24.8% of
fully diluted capitalization of the Company if the Company completes a re-organization, re-capitalization or a liquidity event
during the eighteen months commencing with the signing of these agreements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
May 2012, the Company entered into a one year consulting services agreement superseding the previous management consulting agreement
with Mr. Corin to provide expertise in the areas of finance and corporate development to the Management and Board of TapImmune.
The consulting services agreement provides for a consulting fee of $12,000 per month from May 2012 to December 2012 and $10,000
for the following four months. The Company also granted 250,000 options to Mr. Corin, vesting equally over twelve months at an
exercise price of $0.17 with a ten year term.</font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><u>Rental
Lease Agreement</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">In
December 2011, the Company entered into a lease agreement, to start in January 2012 for a two year period. The Company will pay
a monthly basic rent of $7,152 and additional rent for operating costs of 2.20% of total operating expenses of the property.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt">The
Company has obligations under various research and consulting agreements through December 31, 2014. The aggregate minimum annual
payments for the years ending December 31 are as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"></font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="width: 73%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 5%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 20%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td><font style="font: 10pt Times New Roman, Times, Serif">2013</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">638,316</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 10pt Times New Roman, Times, Serif">2014</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">22,284</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: windowtext 1.5pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: windowtext 1.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">660,599</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Refer to
Note 13 Subsequent Events.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 12:	accounts
payable and accrued liabilities</u></b></font></p>
<p style="font: 10pt Times New Roman Bold; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b> </b></font></p>
<p style="font: 10pt Times New Roman Bold; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b></b></font><u>Accounts
Payable and Accrued Liabilities</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> March
31, 2013</font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> December
31, 2012</font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="width: 18%; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="width: 8%; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="width: 16%; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="width: 22%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td nowrap="nowrap" style="width: 7%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="width: 27%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"> $</font></td>
<td nowrap="nowrap" style="width: 2%; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> Trade
accounts payable</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">              
1,680,155</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">              
1,680,155</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> Accrued
liabilities</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">                 
242,245</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">                 
242,245</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> Employee
payroll</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">                   
61,458</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">                   
61,458</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> Accrued
interest</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">                   
74,698</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">                   
74,698</font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">               
2,058,556</font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif">               
2,058,556</font></td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif; text-transform: uppercase"><b><u>Note 13:	SUBSEQUENT
EVENTS</u></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company is in default of the secured notes issued in February 2011. No second year amortization payments have been made to the
holders as of the anniversary of the notes in February 2013 and April 2013. Interest charges will be accrued at 20% per year.
The note holders have not made any demands other than the interest rate penalty and are in discussions with the Company to resolve
the matter.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company is in default of the October 2012 note to a note holder due to the late filing of this annual report. Concurrent with
the filing, this default will be cured. The lender has not made any claims under their default provisions and management is working
closely with them to mitigate or negate any such claims.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
May 2013, the Company recovered 2,800,000 of 14,000,000 common shares issued to a consultant during the year ended December 31,
2012, under a settlement agreement.</font></p>
<p style="margin: 0pt"></p>
4436
50679
1099
1077
26867
37452
443534
415998
531600
798300
462293
677086
1964171
1376230
10000
10000
67942
67942
117197
366697
87573
76404
44763651
43545947
50656413
49580159
-63090
-61648
-5500874
-5666597
151356
104212
118954
15004
151356
104212
151356
104212
2055493
2058556
5652230
5770809
367405
352859
213227
207318
141890
4136670
58500
80100
3126154
83660
74129
5499769
242980
115465
7211575
612000
1040721
671781
42532615
-1040721
-671781
-42532615
12533
-7783
58220
526193
71062
5137860
-574259
9930
-12265060
290500
33344
-5399
30000
2251500
67812
133908
8106184
334888
96726
6910975
-1373263
-1076254
-598572
-50656413
-0.01
-0.01
80694680
52470198
-1076254
-598572
-50656413
213228
-1373263
-574259
9930
-12265060
290500
-5399
96726
5468499
83375
163471
13198995
24
1055
103950
-15152
142954
-10585
-3827
1618
539348
24268
6153469
27536
43761
661665
-471294
-332383
-16890822
235951
85000
11096526
2123906
428000
919845
140000
218626
423373
204747
-46243
-226483
4436
80500
20900
1873634
108600
108600
50679
250234
4436
23751
4436
425051
105900
16690511
0.001
0.001
150000000
150000000
87571984
76402958
87571984
76402958
15563
29563
4464561