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TAPIMMUNE INC
0001094038
10-Q
2013-03-31
false
--12-31
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<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 1:	Nature
of Operations</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">TapImmune Inc. (the “Company”),
a Nevada corporation incorporated in 1992, is a clinical 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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, a set of Class II HER2/neu antigens is in Phase I clinical trials in breast cancer
patients at the Mayo Clinic. This product will be combined with a novel Class I HER2/neu antigen in further clinical trials and
with TapImmune’s expression vector technology containing TAP in a “boost” strategy. TapImmune has a license and
an exclusive option to license the HER2/neu antigen technologies from the Mayo Clinic. The TAP technology is 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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 $5,488,793 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="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="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: 0"><font style="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"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 2:	UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS FOR AN INTERIM PERIOD</u></font></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0">Basis of Presentation</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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. Significant areas requiring management’s estimates and assumptions
include deferred taxes and related tax balances and disclosures, determining the fair value of stock-based compensation and stock
based transactions, the fair value of the components of the convertible notes payable, foreign exchange gains and losses, allocation
of costs to research and development and accrued liabilities. Matters impacting the company’s ability to continue as a going
concern and contingencies also involve the use of estimates and assumptions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0">Basis of Presentation</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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. Significant areas requiring management’s estimates and assumptions
include deferred taxes and related tax balances and disclosures, determining the fair value of stock-based compensation and stock
based transactions, the fair value of the components of the convertible notes payable, foreign exchange gains and losses, allocation
of costs to research and development and accrued liabilities. Matters impacting the company’s ability to continue as a going
concern and contingencies also involve the use of estimates and assumptions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 3:	Research
Agreements</u></font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><u>Crucell Holland B.V. (“Crucell”)
– Research License and Option Agreement</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><u>Mayo Clinic –License
Option Agreement</u></p>
<p style="margin: 0">For details regarding the license option agreement with Mayo Clinic, please refer to Note 11.</p>
<p style="margin: 0pt"></p>
510100
243598
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443535
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 4:	DERIVATIVE
WARRANT LIABILITY AND FAIR VALUE</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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’.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><i>Level 3 Valuation Techniques</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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:</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="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">December 31, 2012</td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">March 31, 2013</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"> </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">Expected Life (Years)</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">Risk free Rate</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">Dividend yield</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">Volatility</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">Expected Life (Years)</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">Risk free Rate</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">Dividend yield</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">Volatility</td></tr>
<tr style="vertical-align: top">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Share purchase warrants</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.08 to 3.78</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.02% to 0.36%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.00%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">199%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.01 to 3.53</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.04% to 0.36%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.00%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">199%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"> </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"> </td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">December 31, 2012</td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">March 31, 2013</td></tr>
<tr>
<td style="vertical-align: top; width: 21%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </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">Expected Life (Years)</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">Risk free Rate</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">Dividend yield</td>
<td style="vertical-align: bottom; width: 12%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Volatility</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">Expected Life (Years)</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">Risk free Rate</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">Dividend yield</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">Volatility</td></tr>
<tr style="vertical-align: top">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Conversion Option</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.003 to 0.89</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.05% to 0.19%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.00%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">100.88% to 141.21%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.049 to 0.64</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.04% to 0.17%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.00%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">108.00% to 123.76%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><i>Financial Assets and Liabilities Measured
at Fair Value on a Recurring Basis</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"> </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"> </td>
<td colspan="3" 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"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><b>As of March 31, 2013</b></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 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 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></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"> </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: 10pt Times New Roman, Times, Serif; margin: 0"> </p></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </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">Fair Value Measurements</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </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"> </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"> </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">Carrying Value</td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Level 1</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">Level 2</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">Level 3</td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Total</td></tr>
<tr>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">Derivative liability - warrants</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 462,293</td>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td colspan="2" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td colspan="2" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 462,293</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 462,293</td></tr>
<tr>
<td style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Derivative liability – conversion option</td>
<td style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">329,900</td>
<td style="vertical-align: top; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </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">- </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">329,900</td>
<td style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">329,900</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Total</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 792,193</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 792,193</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 792,193</td></tr>
<tr>
<td style="width: 41%"> </td>
<td style="width: 13%"> </td>
<td style="width: 9%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%"> </td>
<td style="width: 1%"> </td>
<td style="width: 13%"> </td>
<td style="width: 13%"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"> </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"> </td>
<td colspan="3" 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"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>As of December 31, 2012 </b></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 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></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"> </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: 10pt Times New Roman, Times, Serif; margin: 0"> </p></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </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">Fair Value Measurements Using</td>
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </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"> </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"> </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">Carrying Value</td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Level 1</td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Level 2</td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Level 3</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">Total</td></tr>
<tr>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">Derivative liability - warrants</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 977,086</td>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 977,086</td>
<td colspan="2" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 977,086</td></tr>
<tr>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: -12.25pt; padding-left: 5.4pt">Derivative liability – conversion option</td>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">867,575</td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">867,575</td>
<td colspan="2" style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">867,575</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Total</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 1,844,661</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 1,844,661</td>
<td colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 1,844,661</td></tr>
<tr>
<td style="width: 37%"> </td>
<td style="width: 13%"> </td>
<td style="width: 10%"> </td>
<td style="width: 12%"> </td>
<td style="width: 13%"> </td>
<td style="width: 1%"> </td>
<td style="width: 14%"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </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"> </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: 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"> </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"><b>Fair Value Measurements Using Level 3 Inputs</b></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"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Derivative liability - warrants</td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Derivative liability – conversion option</td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Total</td></tr>
<tr>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Balance,  December 31, 2011</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$  1,317,834 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ -<font style="letter-spacing: -0.1pt"> </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$  1,317,834 </td></tr>
<tr>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Additions during the year</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">300,000 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">737,700 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,037,700 </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt">Total unrealized (gains) or losses included in net loss</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">(597,127)</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">129,875 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">(467,252)</font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt">Debt settlement</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(43,621)</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(43,621)</td></tr>
<tr>
<td colspan="2" style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Transfers in and/or out of Level 3</td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td></tr>
<tr>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Balance,  December 31, 2012</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">977,086 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">867,575<font style="letter-spacing: -0.1pt"> </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,844,661 </td></tr>
<tr>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Additions during the year</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">44,700 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">44,700 </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt">Total unrealized (gains) or losses included in net loss</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">(514,793)</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(582,375)</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">(1,097,168)</font></td></tr>
<tr>
<td colspan="2" style="vertical-align: bottom; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Transfers in and/or out of Level 3</td>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 37%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Balance, March 31, 2013</td>
<td style="width: 10%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="width: 20%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 462,293 </td>
<td style="width: 19%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 329,900<font style="letter-spacing: -0.1pt"> </font></td>
<td style="width: 14%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 792,193 </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="margin: 0pt"></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="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">December 31, 2012</td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">March 31, 2013</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"> </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">Expected Life (Years)</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">Risk free Rate</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">Dividend yield</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">Volatility</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">Expected Life (Years)</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">Risk free Rate</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">Dividend yield</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">Volatility</td></tr>
<tr style="vertical-align: top">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Share purchase warrants</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.08 to 3.78</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.02% to 0.36%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.00%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">199%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.01 to 3.53</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.04% to 0.36%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.00%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">199%</td></tr>
</table>
<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"> </td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">December 31, 2012</td>
<td colspan="4" style="border-bottom: windowtext 1pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">March 31, 2013</td></tr>
<tr>
<td style="vertical-align: top; width: 21%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </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">Expected Life (Years)</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">Risk free Rate</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">Dividend yield</td>
<td style="vertical-align: bottom; width: 12%; border-bottom: windowtext 1.5pt solid; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Volatility</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">Expected Life (Years)</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">Risk free Rate</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">Dividend yield</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">Volatility</td></tr>
<tr style="vertical-align: top">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Conversion Option</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.003 to 0.89</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.05% to 0.19%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.00%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">100.88% to 141.21%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.049 to 0.64</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.04% to 0.17%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">0.00%</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">108.00% to 123.76%</td></tr>
</table>
<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"> </td>
<td colspan="3" 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"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><b>As of March 31, 2013</b></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 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 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></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"> </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: 10pt Times New Roman, Times, Serif; margin: 0"> </p></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </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">Fair Value Measurements</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </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"> </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"> </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">Carrying Value</td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Level 1</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">Level 2</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">Level 3</td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Total</td></tr>
<tr>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">Derivative liability - warrants</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 462,293</td>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td colspan="2" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td colspan="2" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 462,293</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 462,293</td></tr>
<tr>
<td style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Derivative liability – conversion option</td>
<td style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">329,900</td>
<td style="vertical-align: top; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </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">- </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">329,900</td>
<td style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">329,900</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Total</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 792,193</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 792,193</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 792,193</td></tr>
<tr>
<td style="width: 41%"> </td>
<td style="width: 13%"> </td>
<td style="width: 9%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%"> </td>
<td style="width: 1%"> </td>
<td style="width: 13%"> </td>
<td style="width: 13%"> </td></tr>
</table>
<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"> </td>
<td colspan="3" 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"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>As of December 31, 2012 </b></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 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></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"> </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: 10pt Times New Roman, Times, Serif; margin: 0"> </p></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </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">Fair Value Measurements Using</td>
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </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"> </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"> </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">Carrying Value</td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Level 1</td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Level 2</td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Level 3</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">Total</td></tr>
<tr>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt">Derivative liability - warrants</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 977,086</td>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 977,086</td>
<td colspan="2" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 977,086</td></tr>
<tr>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: -12.25pt; padding-left: 5.4pt">Derivative liability – conversion option</td>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">867,575</td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">867,575</td>
<td colspan="2" style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">867,575</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Total</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 1,844,661</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 1,844,661</td>
<td colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 1,844,661</td></tr>
<tr>
<td style="width: 37%"> </td>
<td style="width: 13%"> </td>
<td style="width: 10%"> </td>
<td style="width: 12%"> </td>
<td style="width: 13%"> </td>
<td style="width: 1%"> </td>
<td style="width: 14%"> </td></tr>
</table>
<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"> </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: 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"> </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"><b>Fair Value Measurements Using Level 3 Inputs</b></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"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p></td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Derivative liability - warrants</td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Derivative liability – conversion option</td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Total</td></tr>
<tr>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Balance,  December 31, 2011</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$  1,317,834 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ -<font style="letter-spacing: -0.1pt"> </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$  1,317,834 </td></tr>
<tr>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Additions during the year</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">300,000 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">737,700 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,037,700 </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt">Total unrealized (gains) or losses included in net loss</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">(597,127)</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">129,875 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">(467,252)</font></td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt">Debt settlement</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(43,621)</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(43,621)</td></tr>
<tr>
<td colspan="2" style="vertical-align: bottom; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Transfers in and/or out of Level 3</td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: top; border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td></tr>
<tr>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Balance,  December 31, 2012</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">977,086 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">867,575<font style="letter-spacing: -0.1pt"> </font></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,844,661 </td></tr>
<tr>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Additions during the year</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">44,700 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">44,700 </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt">Total unrealized (gains) or losses included in net loss</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">(514,793)</font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(582,375)</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">(1,097,168)</font></td></tr>
<tr>
<td colspan="2" style="vertical-align: bottom; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Transfers in and/or out of Level 3</td>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 37%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Balance, March 31, 2013</td>
<td style="width: 10%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="width: 20%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 462,293 </td>
<td style="width: 19%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 329,900<font style="letter-spacing: -0.1pt"> </font></td>
<td style="width: 14%; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 792,193 </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 5:	CONVERTIBLE
NOTES PAYABLE</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="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"> </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"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Face Value</b></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"><b>Principal Repayment/</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Settlement</b></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"><b>Unamortized</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Discount</b></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"><b>Balance at</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2013</b></p></td></tr>
<tr style="vertical-align: bottom">
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">February 2011 Secured Convertible Notes</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Senior Secured Notes, due February 24, 2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 1,184,694<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$         203,836  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$    120,496 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 860,362<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">April 2011 Secured Convertible Notes</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Senior Secured Notes, due April 4, 2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">215,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">34,681 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">180,319<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">June 2011 Secured Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Senior Secured Notes, due June 6, 2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">30,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">3,271 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">26,729<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">August 8, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due August 8, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">111,430<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">65,970  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">16,193 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">29,267<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">August 12, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note became due November 12, 2012</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">27,500<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">27,500<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">August 20, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due August 20, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">20,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">7,780 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">12,220<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">September 18, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due October 1, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">82,500<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">61,750  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">10,072 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">10,678<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">October 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due October 15, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">340,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">184,438 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">155,562<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><b>October 9, 2012 Convertible Notes</b></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">100,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">- </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">100,000<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">November 1, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due April 30, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">31,471<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">15,000  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">2,381  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">14,090<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">November 20, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due November 20, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">55,710<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">35,715 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">19,995<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">December 14, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due April 18, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">189,210<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">189,210  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">-</font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">December 18, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due December 14, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">50,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">    - </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">50,000<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">January 5, 2013 Convertible Notes</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">567,729<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">    - </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">567,729<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">February 27, 2013 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due February 27, 2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">55,710<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">45,990 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">9,720<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<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">Total</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">$ 3,060,954<font style="letter-spacing: -0.1pt"> </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">$         535,766  </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">$    461,017 </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">$ 2,064,171<font style="letter-spacing: -0.1pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>February 2011 Secured Convertible Notes</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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”).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">For the three months ended March 31, 2013,
accretion of the debt discount of $32,862 was recorded for the February 2011 Notes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>April 2011 Secured Convertible Notes</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">For the three months ended March 31, 2013,
accretion of the debt discount of $8,459 was recorded for the April 2011 Notes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>June 2011 Secured Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">For the three months ended March 31, 2013,
accretion of the debt discount of $682 was recorded for the June 2011 Note.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>August 8, 2012 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">For the three months ended March 31, 2013,
accretion of the debt discount of $11,209 was recorded for the August 8, 2012 Note.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>August 12, 2012 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">The August 12, 2012 Note bears interest
at the rate of 10% per annum.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">The Company has not repaid the August
12, 2012 Note as of March 31, 2013, which is in default.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>August 20, 2012 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">The August 20, 2012 Note bears interest
at the rate of 8% per annum.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">For the three months ended March 31,
2013, accretion of the debt discount of $4,932 was recorded for the August 20, 2012 Note.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>September 18, 2012 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">The September 18, 2012 Note carries no
interest other than the amortization of the original issue discount.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">For the three months ended March 31, 2013,
accretion of the debt discount of $4,954 was recorded for the September, 2012 Note.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>October 2012 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">For the three months ended March 31, 2013,
accretion of the debt discount of $83,836 was recorded for the October 2012 Note.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>October 9, 2012 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">On October 9, 2012, the Company converted
accounts payable of $100,000 into convertible notes (the “October 9, 2012 Note”). The note holder has the option to
convert a portion or all of the outstanding balance of the October 9, 2012 Note into shares of the Company’s common stock
at a conversion rate of $0.09 per share. The note has no terms of repayment and no interest charges. Only under certain events
of default the note will incur an interest rate of 20% per year.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>November 1, 2012 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">For the three months ended March 31,
2013, accretion of the debt discount of $7,144 was recorded for the November 1, 2012 Note.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>November 20, 2012 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">For the three months ended March 31, 2013,
accretion of the debt discount of $13,889 was recorded for the November 20, 2012 Note.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>December 14, 2012 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>December 18, 2012 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">The December 18, 2012 Notes carry an
interest rate of 9%, due and payable on the maturity date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>January 5, 2013 Convertible Notes</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">On January 5, 2013, the Company exchanged
amounts 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><b>February 27, 2013 Convertible Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">For the three months ended March 31, 2013,
accretion of the debt discount of $4,420 was recorded for the February 27, 2013 Note.</p>
<p style="margin: 0pt"></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"> </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"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Face Value</b></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"><b>Principal Repayment/</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Settlement</b></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"><b>Unamortized</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Discount</b></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"><b>Balance at</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2013</b></p></td></tr>
<tr style="vertical-align: bottom">
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">February 2011 Secured Convertible Notes</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Senior Secured Notes, due February 24, 2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 1,184,694<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$         203,836  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$    120,496 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">$ 860,362<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">April 2011 Secured Convertible Notes</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Senior Secured Notes, due April 4, 2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">215,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">34,681 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">180,319<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">June 2011 Secured Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Senior Secured Notes, due June 6, 2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">30,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">3,271 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">26,729<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">August 8, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due August 8, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">111,430<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">65,970  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">16,193 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">29,267<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">August 12, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note became due November 12, 2012</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">27,500<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">27,500<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">August 20, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due August 20, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">20,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">7,780 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">12,220<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">September 18, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due October 1, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">82,500<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">61,750  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">10,072 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">10,678<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">October 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due October 15, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">340,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">184,438 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">155,562<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold"><b>October 9, 2012 Convertible Notes</b></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">100,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">-  </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">- </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">100,000<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">November 1, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due April 30, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">31,471<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">15,000  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">2,381  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">14,090<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">November 20, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due November 20, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">55,710<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">35,715 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">19,995<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">December 14, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due April 18, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">189,210<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">189,210  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><font style="letter-spacing: -0.1pt">-</font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">December 18, 2012 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due December 14, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">50,000<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">    - </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">50,000<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">January 5, 2013 Convertible Notes</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">567,729<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">    - </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">567,729<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">February 27, 2013 Convertible Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Note due February 27, 2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">55,710<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">         -  </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">45,990 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">9,720<font style="letter-spacing: -0.1pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<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">Total</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">$ 3,060,954<font style="letter-spacing: -0.1pt"> </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">$         535,766  </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">$    461,017 </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">$ 2,064,171<font style="letter-spacing: -0.1pt"> </font></td></tr>
</table>
1184694
6250
944694
240000
0.15
0.15
41500
11597
26867
2369388
0.25
25000
483355
701339
203836
16419
32862
215000
190000
25000
0.15
0.15
4550
1517
26867
430000
25000
130720
84280
8459
30000
111430
0.15
0.15
0.09
60000
0.25
8280
21720
682
92000
8000
11430
8000
1360
26867
155700
55700
11209
27500
25000
2500
50000
50000
31100
6100
20000
0.09
36100
16100
4932
82500
69000
7500
0.09
6000
755
26867
76400
1400
61750
4954
340000
310000
10000
30000
10000
5425
26867
2833333
3000000
0.0572
248000
62000
83836
100000
0.09
100000
105000
73737
1262727
140538
66801
31471
0.09
31471
27300
4171
15000
16471
7144
55710
50000
4000
5710
0.09
4000
26867
69000
19000
13889
220255
252280
220255
10000
22025
1078477
96523
0.09
31491
189210
94100
95110
189210
50000
0.10
567729
0.08
55710
46000
4000
5710
0.09
4000
3649
26867
44700
5300
4420
65970
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 6:	Loans
payable</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="margin: 0pt"></p>
10000
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 7:	Promissory
note</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">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). These promissory notes were fully outstanding as at March 31, 2013 and had no interest
charges and no fixed repayment terms.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">During the year ended December 31, 2012,
the Company converted accounts payable into a promissory note in the amount of $100,000. The note incurs interest at 8% per year
and can be converted into shares at the option of the note holder at a conversion price of $0.09 per share. If the Company defaults
under certain conditions, the note shall incur interest at 20% per year. These promissory notes were fully outstanding as at March
31, 2013 and had no fixed repayment terms.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">During the three months ended March 31,
2013, the Company converted $210,000 of accounts payable into a promissory note, payable on a preset schedule of payments starting
in April 2013. Any of the late payments will incur interest at the rate of 9%.</p>
<p style="margin: 0pt"></p>
100000
100000
500000
67942
38000
100000
0.09
210000
-441432
-598572
-50335515
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 8:	Related
Party Transactions</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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="letter-spacing: -0.1pt">(a)<font style="font: 7pt Times New Roman, Times, Serif">                
</font>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="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="letter-spacing: -0.1pt">(b)<font style="font: 7pt Times New Roman, Times, Serif">                
</font>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="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="letter-spacing: -0.1pt">(c)<font style="font: 7pt Times New Roman, Times, Serif">                
</font>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="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="letter-spacing: -0.1pt">(d)<font style="font: 7pt Times New Roman, Times, Serif">                
</font>converted $567,729 (2012 - $nil) of payable into convertible notes to officers, consultant and a director of the Company
(Note 5).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify"><font style="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="letter-spacing: -0.1pt">All related party transactions
(other than stock based consideration) involving provision of services were recorded at the </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: -0.1pt">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="margin: 0">At March 31, 2013, the Company had amounts owing to directors, consultants and officers of $762,574 (December
31, 2012 - $373,345). Amounts due to related parties are unsecured, non-interest bearing and have no specific terms of repayment.</p>
<p style="margin: 0pt"></p>
88500
80100
33000
22500
25643
29562
50000
567729
762574
373345
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 10:	Supplemental
Cash Flow Information AND NON-CASH INVESTING AND FINANCING ACTIVITIES </u></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"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td nowrap="nowrap" colspan="3" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </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">Three Months Ended</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">March 31, 2013</p></td>
<td style="border-bottom: windowtext 0.5pt solid"> </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"> </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"> </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"> </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"> </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"> </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">Shares/warrants</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">Amount</td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">       $</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Shares issued pursuant to consulting arrangements</td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">350,000</td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">38,935</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Shares issued pursuant to notes conversion</td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">5,476,848</td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">348,845</td></tr>
<tr style="vertical-align: bottom">
<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"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </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"> </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"> </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"> </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"> </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"> </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"> </td></tr>
<tr>
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </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"> </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"> </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"> </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">Three Months Ended</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2012</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"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Shares/warrants</td>
<td nowrap="nowrap" colspan="3" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Amount</td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">     $</td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Shares issued pursuant to debt settlement agreements</td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,363,112</td>
<td nowrap="nowrap" colspan="3" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">   $211,187</td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr>
<td style="width: 50%"> </td>
<td style="width: 2%"> </td>
<td style="width: 2%"> </td>
<td style="width: 2%"> </td>
<td style="width: 2%"> </td>
<td style="width: 2%"> </td>
<td style="width: 5%"> </td>
<td style="width: 5%"> </td>
<td style="width: 2%"> </td>
<td style="width: 18%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%"> </td>
<td style="width: 2%"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify">See Notes 5 and 9 for additional disclosure
on non-cash transactions.</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"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p></td>
<td colspan="2" style="border-top: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">                      Period Ended March 31,</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">2013</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">2012</td></tr>
<tr>
<td style="vertical-align: top; width: 64%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="vertical-align: bottom; width: 18%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="vertical-align: bottom; width: 18%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Interest paid in cash</td>
<td style="vertical-align: bottom; padding-right: 12.4pt; padding-left: 5.4pt; text-align: right">$  -</td>
<td style="vertical-align: bottom; padding-right: 15.9pt; padding-left: 5.4pt; text-align: right">$  -</td></tr>
<tr>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Income taxes paid</td>
<td style="vertical-align: bottom; border-bottom: windowtext 1.5pt solid; padding-right: 12.4pt; padding-left: 5.4pt; text-align: right">$  -</td>
<td style="vertical-align: bottom; border-bottom: windowtext 1.5pt solid; padding-right: 15.9pt; padding-left: 5.4pt; text-align: right">$  -</td></tr>
</table>
<p style="margin: 0pt"></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"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr>
<td nowrap="nowrap" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td colspan="2" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td nowrap="nowrap" colspan="3" style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </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">Three Months Ended</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">March 31, 2013</p></td>
<td style="border-bottom: windowtext 0.5pt solid"> </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"> </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"> </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"> </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"> </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"> </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">Shares/warrants</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">Amount</td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">       $</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Shares issued pursuant to consulting arrangements</td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">350,000</td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">38,935</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Shares issued pursuant to notes conversion</td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">5,476,848</td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">348,845</td></tr>
<tr style="vertical-align: bottom">
<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"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </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"> </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"> </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"> </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"> </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"> </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"> </td></tr>
<tr>
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="vertical-align: bottom; border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </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"> </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"> </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"> </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">Three Months Ended</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31, 2012</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"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Shares/warrants</td>
<td nowrap="nowrap" colspan="3" style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Amount</td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">     $</td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Shares issued pursuant to debt settlement agreements</td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">1,363,112</td>
<td nowrap="nowrap" colspan="3" style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">   $211,187</td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="3" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr>
<td style="width: 50%"> </td>
<td style="width: 2%"> </td>
<td style="width: 2%"> </td>
<td style="width: 2%"> </td>
<td style="width: 2%"> </td>
<td style="width: 2%"> </td>
<td style="width: 5%"> </td>
<td style="width: 5%"> </td>
<td style="width: 2%"> </td>
<td style="width: 18%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%"> </td>
<td style="width: 2%"> </td></tr>
</table>
<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"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p></td>
<td colspan="2" style="border-top: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">                      Period Ended March 31,</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">2013</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">2012</td></tr>
<tr>
<td style="vertical-align: top; width: 64%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="vertical-align: bottom; width: 18%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="vertical-align: bottom; width: 18%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">Interest paid in cash</td>
<td style="vertical-align: bottom; padding-right: 12.4pt; padding-left: 5.4pt; text-align: right">$  -</td>
<td style="vertical-align: bottom; padding-right: 15.9pt; padding-left: 5.4pt; text-align: right">$  -</td></tr>
<tr>
<td style="vertical-align: top; border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">Income taxes paid</td>
<td style="vertical-align: bottom; border-bottom: windowtext 1.5pt solid; padding-right: 12.4pt; padding-left: 5.4pt; text-align: right">$  -</td>
<td style="vertical-align: bottom; border-bottom: windowtext 1.5pt solid; padding-right: 15.9pt; padding-left: 5.4pt; text-align: right">$  -</td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 11:	ContingencIES
AND COMMITMENTs</u></font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><u>Contingencies</u></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><u>Tax Filings</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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"><u>Commitments</u></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><u>Combined Research and
Operating Obligations</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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="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, $618,823 has been accrued as of March 31, 2013. 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"><u>Management Services Agreement</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="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"><u>Consultant Agreements</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="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="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="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="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="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"><u> </u></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><u>Rental Lease Agreement</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="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="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="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="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1.5in">2013	$	638,316</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1.5in">2014	<u>	22,284</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1.5in">	<u>$	660,599</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u> </u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Refer to Note 13 Subsequent Events.</p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u> </u></font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 12:	accounts
payable and accrued liabilities</u></font></p>
<p style="font: 10pt Times New Roman Bold; margin: 0"><font style="text-transform: uppercase"><b> </b></font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><u>Accounts Payable and Accrued
Liabilities</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </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"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> March 31, 2013</td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> December 31, 2012</td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="width: 18%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="width: 8%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="width: 16%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="width: 22%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> $</td>
<td nowrap="nowrap" style="width: 7%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td nowrap="nowrap" style="width: 27%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> $</td>
<td nowrap="nowrap" style="width: 2%; padding-right: 5.4pt; padding-left: 5.4pt"> </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"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> Trade accounts payable</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">1,459,469 </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">1,663,315 </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> Accrued liabilities</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">183,245 </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">                  242,245</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> Employee payroll</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">132,916 </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">                    61,458</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> Accrued interest</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">122,833 </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">                    74,698</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </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">1,898,463 <font style="font-size: 8pt; letter-spacing: 0pt"> </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"> </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">2,041,716 </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"> </td></tr>
</table>
<hr class="msocomoff" align="left" size="1" style="width: 33%" />
<p style="margin: 0pt"></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"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> March 31, 2013</td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" colspan="2" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> December 31, 2012</td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="width: 18%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="width: 8%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="width: 16%; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="width: 22%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> $</td>
<td nowrap="nowrap" style="width: 7%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td nowrap="nowrap" style="width: 27%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> $</td>
<td nowrap="nowrap" style="width: 2%; padding-right: 5.4pt; padding-left: 5.4pt"> </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"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="border-top: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> Trade accounts payable</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">1,459,469 </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">1,663,315 </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> Accrued liabilities</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">183,245 </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">                  242,245</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> Employee payroll</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">132,916 </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">                    61,458</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt"> Accrued interest</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">122,833 </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt">                    74,698</td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt"> </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">1,898,463 <font style="font-size: 8pt; letter-spacing: 0pt"> </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"> </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">2,041,716 </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"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 13:	SUBSEQUENT
EVENTS</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company was in default of the October 2012
note to a note holder due to the late filing of its 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="margin: 0">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.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><font style="text-transform: uppercase"><u>Note 9:	Capital
Stock</u></font></p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><u>Share Capital</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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">All prior period share transactions included
in the Company’s stock transactions and balances have been retroactively restated for the transactions described above.</p>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><u>2013 Share Transactions</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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 Notes (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">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">In February 2013, the Company issued
1,898,588 common shares on a cashless conversion of 3,000,000 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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="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="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"><u>2012 Share Transactions</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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="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="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">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="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">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">In April 2012, the Company issued 1,000,000
common shares to a consultant pursuant to a consulting agreement effective October 1, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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="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="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="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="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="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="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"><u>Stock Compensation Plan</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify">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></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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 period, stock-based consulting and management
fees also includes share based compensation.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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="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"> </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">Number of</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Options</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">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Exercise Price</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">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Remaining Life</p></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, December 31, 2011</td>
<td style="vertical-align: bottom; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">6,278,000 </td>
<td style="vertical-align: bottom; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">$  0.18</td>
<td style="vertical-align: bottom; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">6.85</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Issued</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">500,000 </td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">0.17</td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">9.35</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">  Cancelled</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">(250,000)</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">0.35</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, December 31, 2012</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">6,528,000 </td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">$  0.18</td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">6.05</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Issued</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">- </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Cancelled/Forfeited</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">- </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, March 31, 2013</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">6,528,000 </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">$  0.18</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">5.80</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="letter-spacing: -0.1pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="letter-spacing: -0.1pt">At
March 31, 2013, the intrinsic value of the vested options was equal to $nil (December 31, 2012 - $nil).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: justify"><font style="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"> </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"> </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">Number of</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Shares</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">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Grant-Date</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Fair Value</p></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Unvested, December 31, 2012</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right">379,575 </td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">$  0.18</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Granted</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right">-<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Vested</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right">(171,336)</td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">0.18</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">  Cancelled</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.3pt; padding-left: 5.4pt; text-align: right">-<font style="letter-spacing: -0.1pt"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Unvested, March 31, 2013</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.3pt; padding-left: 5.4pt; text-align: right">208,239 </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">$  0.17</td></tr>
</table>
<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><u>Share Purchase Warrants</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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="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="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 with price adjustment features. The residual fair value of these warrants was determined to be $300,000
and recognized as a derivative liability. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0 0; text-align: justify"><font style="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="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="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"> </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">Number of</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Warrants</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">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Exercise Price</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">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Remaining Life</p></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td></tr>
<tr>
<td style="vertical-align: top; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, December 31, 2011</td>
<td style="vertical-align: bottom; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">12,106,355 </td>
<td style="vertical-align: bottom; border-top: windowtext 1pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">$  0.56</td>
<td style="vertical-align: bottom; border-top: windowtext 1pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">2.81</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Issued</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">5,516,668 </td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">0.26</td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">3.32</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">  Exercised, cancelled or expired</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(714,400)</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">2.33</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, December 31, 2012</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">16,908,623 </td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">$  0.39</td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">2.19</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Issued</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">3,470,709 </td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">0.07</td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">2.00</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Exercised</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(1,898,588)</td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">0.06</td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt">  Extinguished or expired</td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(1,950,000)</td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">0.53</td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, March 31, 2013</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">16,530,744 </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">$  0.32</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">2.57</td></tr>
</table>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 12pt 0 0"><u> </u></p>
<p style="margin: 0pt"></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"> </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">Number of</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Options</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">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Exercise Price</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">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Remaining Life</p></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, December 31, 2011</td>
<td style="vertical-align: bottom; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">6,278,000 </td>
<td style="vertical-align: bottom; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">$  0.18</td>
<td style="vertical-align: bottom; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">6.85</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Issued</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">500,000 </td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">0.17</td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">9.35</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">  Cancelled</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">(250,000)</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">0.35</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, December 31, 2012</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">6,528,000 </td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">$  0.18</td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">6.05</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Issued</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">- </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Cancelled/Forfeited</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">- </td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">- </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, March 31, 2013</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right">6,528,000 </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 18.8pt; padding-left: 5.4pt; text-align: right">$  0.18</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">5.80</td></tr>
</table>
<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"> </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"> </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">Number of</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Shares</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">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Grant-Date</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Fair Value</p></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Unvested, December 31, 2012</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right">379,575 </td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">$  0.18</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Granted</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right">-<font style="letter-spacing: -0.1pt"> </font></td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Vested</td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right">(171,336)</td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">0.18</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">  Cancelled</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.3pt; padding-left: 5.4pt; text-align: right">-<font style="letter-spacing: -0.1pt"> </font></td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td>
<td style="padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 5.3pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="padding-right: 21.95pt; padding-left: 5.4pt; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Unvested, March 31, 2013</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 6.45pt; padding-left: 5.4pt; text-align: right"> </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.3pt; padding-left: 5.4pt; text-align: right">208,239 </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 21.95pt; padding-left: 5.4pt; text-align: right">$  0.17</td></tr>
</table>
<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"> </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">Number of</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Warrants</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">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Exercise Price</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">Weighted Average</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Remaining Life</p></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"> </td></tr>
<tr>
<td style="vertical-align: top; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, December 31, 2011</td>
<td style="vertical-align: bottom; border-top: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">12,106,355 </td>
<td style="vertical-align: bottom; border-top: windowtext 1pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">$  0.56</td>
<td style="vertical-align: bottom; border-top: windowtext 1pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">2.81</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Issued</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">5,516,668 </td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">0.26</td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">3.32</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt">  Exercised, cancelled or expired</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(714,400)</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">2.33</td>
<td style="border-bottom: windowtext 0.5pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, December 31, 2012</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">16,908,623 </td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">$  0.39</td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">2.19</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Issued</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">3,470,709 </td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">0.07</td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">2.00</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">  Exercised</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(1,898,588)</td>
<td style="padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">0.06</td>
<td style="padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt">  Extinguished or expired</td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">(1,950,000)</td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">0.53</td>
<td style="border-bottom: windowtext 1pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">-</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">Balance, March 31, 2013</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">16,530,744 </td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 20.4pt; padding-left: 5.4pt; text-align: right">$  0.32</td>
<td style="border-bottom: windowtext 1.5pt solid; padding-right: 23.5pt; padding-left: 5.4pt; text-align: right">2.57</td></tr>
</table>