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SimplePons, Inc.
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S-1
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false
--12-31
No
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Yes
Smaller Reporting Company
2012
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%"><b></b></td>
<td style="width: 95%"><b>Organization, Basis of Presentation and Nature of Operations</b></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">The accompanying unaudited condensed financial statements have been
prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations
of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information
necessary for a comprehensive presentation of financial position and results of operations. The interim results for the period
ended June 30, 2012 are not necessarily indicative of results for the full fiscal year. It is management’s opinion, however
that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial
statements presentation.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p></td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left">
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">Simplepons, Inc. is a Delaware Corporation formed on February 7,
2011. IFLI Acquisition Corp., formerly International Fight League, Inc. (“IFLI”) was incorporated in the State of Delaware
on May 8, 1992. On November 1, 2011 we closed on a share exchange agreement with IFLI Acquisition Corp. and exchanged all of our
outstanding shares for 37,455,000 shares of IFLI Acquisition Corp, Inc. and warrants equal to and on the same terms as those outstanding
at the date of the merger. Simplepons, Inc. was the accounting acquirer and IFLI Acquisition Corp. was the accounting acquiree
in the transaction that was treated as a reverse merger and recapitalization. As part of the exchange agreement, IFLI Acquisition
Corp. purchased 1,012,353 shares of common stock from the principal stockholder for $335,000 and assumed net assets of $83,309
resulting in a charge to equity upon recapitalization of $251,691. The Company is deemed to have issued 2,030,870 common shares
to the original shareholders of IFLI. Following the purchase, the shares were cancelled. Upon closing of the reverse merger, IFLI
Acquisition Corp. was renamed Simplepons, Inc. and Simplepons, Inc. was renamed Simplepons Operations, Inc. Simplepons, Inc. and
Simplepons Operations, Inc. are hereafter referred to as the “Company”. At closing, Company’s stockholders owned
approximately 97% of IFLI outstanding common stock, giving effect to the stock repurchase.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">The accompanying consolidated financial statements include the accounts
of Simplepons, Inc. and its wholly owned subsidiary Simplepons Operations, Inc. for the three and six months ended June 30, 2012,
for the three months ended June 30, 2011 and the period from February 7, 2011 (inception) to June 30, 2011. All intercompany accounts
have been eliminated in the consolidation.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">The Company is in the business of mobile coupon
subscriptions that solves the problem of leaving your coupons at home. Their cost effective platform is designed for businesses
to connect with new and existing customers. </p></td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" style="width: 100%; width: 100%; border-collapse: collapse; mso-padding-alt: 0in 0in 0in 0in; font: 12pt Times New Roman, Times, Serif">
<tr style="mso-yfti-irow: 0; mso-yfti-firstrow: yes; font: 12pt Times New Roman, Times, Serif">
<td style="width: 5%; vertical-align: top; width: 5%; padding: 0in; font: 12pt Times New Roman, Times, Serif"><p class="MsoNormal" style="font: 12pt Times New Roman, Times, Serif"><font style="font: 12pt Times New Roman, Times, Serif"></font></p>
</td>
<td style="width: 95%; vertical-align: top; width: 95%; padding: 0in; font: 12pt Times New Roman, Times, Serif"><p class="MsoNormal" style="font: 12pt Times New Roman, Times, Serif"><font style="font: 12pt Times New Roman, Times, Serif"><b>Organization,
Basis of Presentation and Nature of Operations</b></font></p>
</td>
</tr>
<tr style="mso-yfti-irow: 1; font: 12pt Times New Roman, Times, Serif">
<td style="vertical-align: top; padding: 0in; font: 12pt Times New Roman, Times, Serif"><p class="MsoNormal" style="font: 12pt Times New Roman, Times, Serif"><font style="font: 12pt Times New Roman, Times, Serif"> </font></p>
</td>
<td style="vertical-align: top; padding: 0in; font: 12pt Times New Roman, Times, Serif"><p class="MsoNormal" style="font: 12pt Times New Roman, Times, Serif"><font style="font: 12pt Times New Roman, Times, Serif"> </font></p>
</td>
</tr>
<tr style="mso-yfti-irow: 2; mso-style-name: yes; font: 12pt Times New Roman, Times, Serif">
<td style="vertical-align: top; padding: 0in; font: 12pt Times New Roman, Times, Serif"><p class="MsoNormal" style="font: 12pt Times New Roman, Times, Serif"><font style="font: 12pt Times New Roman, Times, Serif"> </font></p>
</td>
<td style="vertical-align: top; padding: 0in; font: 12pt Times New Roman, Times, Serif"><p class="MsoNormal" style="text-align: justify; font: 12pt Times New Roman, Times, Serif"><font style="font: 12pt Times New Roman, Times, Serif">Simplepons,
Inc. is a Delaware Corporation formed on February 7, 2011. IFLI Acquisition Corp.,
formerly International Fight League, Inc. (“IFLI”) was incorporated
in the State of Delaware on May 8, 1992. On November 1, 2011 we closed on a share
exchange agreement with IFLI Acquisition Corp. and exchanged all of our outstanding
shares for 37,455,000 shares of IFLI Acquisition Corp, Inc. and warrants equal
to and on the sames terms as those outstanding at the date of the merger. Simplepons,
Inc. was the accounting acquirer and IFLI Acquisition Corp. was the accounting
acquiree in the transaction that was treated as a reverse merger and recapitalization.
As part of the exchange agreement, IFLI Acquisition Corp. purchased 1,012,353
shares of common stock from the principal stockholder for $335,000 and assumed
net assets of $83,309 resulting in a charge to equity upon recapitalization of
$251,691. The Company is deemed to have issued 2,030,870 common shares to the
original shareholders of IFLI. Following the purchase, the shares were cancelled.
Upon closing of the reverse merger, IFLI Acquisition Corp. was renamed Simplepons,
Inc. and Simplepons, Inc. was renamed Simplepons Operating, Inc. Simplepons, Inc.
and Simplepons Operating, Inc. are hereafter referred to as the “Company”.
At closing, Company’s stockholders will own approximately 97%
of IFLI outstanding common stock, giving effect to the stock repurchase.</font></p>
</td></tr></table>
<p class="MsoNormal" style="text-align: justify; font: 12pt Times New Roman, Times, Serif"><font style="font: 12pt Times New Roman, Times, Serif"> </font></p>
<p class="MsoNormal" style="text-align: justify; font: 12pt Times New Roman, Times, Serif"><font style="font: 12pt Times New Roman, Times, Serif">The Company is in</font>
the business of mobile coupon subscriptions that solves the problem of leaving your coupons at home. Their cost effective platform
is designed for businesses to connect with new and existing customers.</p>
<p style="margin: 0pt"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b>Summary of Significant Accounting Principles</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(A) Going Concern</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">As reflected in the accompanying unaudited condensed consolidated
financial statement for the period ended June 30, 2012 has a net loss of $1,428,540 and used cash in operations of $605,037. These
factors raise substantial doubt about the Company’s ability to continue as a going concern. In addition there is a working
capital deficiency of $214,466 and a stockholders’ deficit of $52,977 as of June 30, 2012.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company’s continued existence is dependent upon its ability
to raise capital and to successfully market and sell its products. The financial statements do not include any adjustments that
might be necessary should the Company be unable to continue as a going concern.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Management believes that actions presently being taken to obtain
additional funding and implement its strategic plans provide for the opportunity for the Company to continue as a going concern.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>(B) Use of Estimates</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses
during the reported period. Actual results could differ from those estimates.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The most significant estimates include the valuation of stock based
compensation, amortization period for intangible assets and deferred tax valuation allowance.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>(C) Cash and Cash Equivalents</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">For purposes of the cash flow statements, the Company considers
all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
The Company at times has cash in excess of FDIC insurance limits and places its temporary cash investments with high credit quality
financial institutions. At December 31, 2011 and June 30, 2012 the Company had no balances that exceeded FDIC insurance limits.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(D) Inventories</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company’s inventories consist entirely of purchased finished
goods. Inventories are stated at lower of cost or market. Cost is determined on the first-in, first-out basis. During the six months
ended June 30, 2012, the Company recorded an impairment of inventory in the amount of $12,492 which is also included in the cost
of goods sold.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>(<i>E</i>)<i> Property and Equipment</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company values property and equipment at cost and depreciates
these assets using the straight-line method over their expected useful life. The Company uses a five year life for computer equipment
and a three year life for software.</p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>(<i>F</i>)<i> Impairment</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In accordance with Financial Accounting Standards Board (FASB) Accounting
Standards Codification No. 360,<i> Property, Plant and Equipment</i> , the Company carries long-lived assets at the lower of the
carrying amount or fair value. Impairment is evaluated by estimating future undiscounted cash flows expected to result from the
use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flow is less than the carrying
amount of the assets, an impairment loss is recognized.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Fair value, for purposes of calculating impairment, is measured
based on estimated future cash flows, discounted at a market rate of interest.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(G) Website Development</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company has adopted the provisions of FASB Accounting Standards
Codification No. 350<i> Intangible-Goodwill and Other</i> . Costs incurred in the planning stage of a website are expensed, while
costs incurred in the development stage are capitalized and amortized over the estimated three year life of the asset. During the
six months ended June 30, 2012 and as of December 31, 2011, the Company incurred $40,820 and $114,612 in website development costs,
respectively. The website was placed into service on September 30, 2011. Amortization for the period ended June 30, 2012 was $22,584.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(H) Stock-Based Compensation</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company recognizes compensation costs to employees under FASB
Accounting Standards Codification No. 718,<i> Compensation - Stock Compensation</i> . Under FASB Accounting Standards Codification
No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date
fair value and recognize the costs in the financial statements over the period during which employees are required to provide services.
Share based compensation arrangements include stock options, restricted share plans, performance based awards, share appreciation
rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such
compensation amounts, if any, are amortized over the respective vesting periods of the option grant.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Equity instruments issued to other than employees are recorded on
the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 505,<i> Equity Based
Payments to Non-Employees.</i> In general, the measurement date is when either a (a) performance commitment, as defined, is reached
or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related
to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the
FASB Accounting Standards Codification.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(I) Loss Per Share</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Basic and diluted net (loss) per common share is computed based
upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification Topic 260, Earnings Per
Share.” As of June 30, 2012 there were 8,150,000 options, 21,473,705 warrants and 400,000 common shares issuable upon conversion
of convertible notes payable outstanding whose effect was anti-dilutive and not included in diluted net loss per share for the
three and six months ended June 30, 2012. As of June 30, 2011 there were 50,000 warrants outstanding whose effect was anti-dilutive
and not included in diluted net loss per share for the three months ended June 30, 2011 and the period February 7, 2011 to June
30, 2011. The options and warrants may dilute future earnings per share.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(J) Fair Value of Financial Instruments</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Fair Value of Financial Instruments and Fair Value Measurements</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company measures its financial and non-financial assets and
liabilities, as well as makes related disclosures, in accordance with ASC Topic 820,<i> Fair Value Measurements and Disclosures</i>
(“ASC Topic 820”). For certain of our financial instruments, including cash, accounts receivable, accounts payable
and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for convertible
notes payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities
are substantially the same<b> .</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">ASC Topic 820 provides guidance with respect to valuation techniques
to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable
market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace
the service capacity of an asset or replacement cost). ASC Topic 820 utilizes a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three
levels: </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Level 1: Observable inputs such as quoted prices (unadjusted) in
active markets for identical assets or liabilities.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Level 2: Inputs other than quoted prices that are observable, either
directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical
or similar assets or liabilities in markets that are not active. </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Level 3: Unobservable inputs in which little or no market data exists,
therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(L) Business Segments</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company operates in one segment and therefore segment information
is not presented.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(M) Revenue Recognition</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company recognizes revenue in accordance with FASB Accounting
Standards Codification No. 605, Revenue Recognition. In all cases, revenue is recognized only when the price is fixed or determinable,
persuasive evidence of an arrangement exists, Delivery has occurred and collectability is reasonably assured. This criteria is
met when the deal books are delivered to our customers and collectability is reasonably assured. We record these sales net of any
discounts provided to our customers.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(N) Concentrations</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">During the three and six months ended June 30, 2012 the Company
had one customer who represented 15% of sales. There were no sales during the comparable periods in 2011.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(O) Income Taxes</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company uses the asset and liability method in accounting for
income taxes. Under this method, deferred income tax assets and liabilities are determined based on difference between financial
reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. A valuation allowance is provided to offset any net deferred tax assets for which
management believes it is more likely than not that the net deferred asset will not be realized.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(P) Recent Accounting Pronouncements</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In December 2011, FASB issued Accounting Standards Update 2011-11,
Balance Sheet - Disclosures about Offsetting Assets and Liabilities” to enhance disclosure requirements relating to the offsetting
of assets and liabilities on an entity’s balance sheet. The update requires enhanced disclosures regarding assets and liabilities
that are presented net or gross in the statement of financial position when the right of offset exists, or that are subject to
an enforceable master netting arrangement. The new disclosure requirements relating to this update are retrospective and effective
for annual and interim periods beginning on or after January 1 2013. The update only requires additional disclosures, as such,
we do not expect that the adoption of this standard will have a material impact on our results of operations, cash flows or financial
condition.</p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; font-weight: bold"></td>
<td style="width: 95%; font-weight: bold">Summary of Significant Accounting Principles</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b><i>(A) Going Concern</i></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">As reflected in the accompanying consolidated financial statements,
for the period February 7, 2011(Inception) to December 31, 2011 the Company has a net loss of $831,590 and used cash in operations
of $489,045. These factors raise substantial doubt about the Company’s ability to continue as a going concern</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">The Company’s continued existence is dependent upon its ability
to raise capital and to successfully market and sell its products. The financial statements do not include any adjustments that
might be necessary should the Company be unable to continue as a going concern.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">Management believes that actions presently being taken to obtain
additional funding and implement its strategic plans provide for the opportunity for the Company to continue as a going concern.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b><i>(B) Use of Estimates</i></b></p></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">The most significant estimates include the valuation of stock based compensation, amortization period for intangible assets and deferred tax valuation allowance.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font-style: italic; font-weight: bold">(C) Cash and Cash Equivalents</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. The Company at times has cash in excess of FDIC insurance limits and places its temporary cash investments with high credit quality financial institutions. At December 31, 2011 the Company had no balances that exceeded FDIC insurance limits.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b><i>(D) Inventories</i></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">The Company’s inventories consist entirely of purchased finished
goods. Inventories are stated at lower of cost or market. Cost is determined on the first-in, first-out basis.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b>(<i>E</i>)<i> Property and Equipment</i></b></p></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">The Company values property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. The Company uses a five year life for computer equipment and a three year life for software.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font-weight: bold"><b>(<i>F</i>)<i> Impairment</i></b></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification No. 360,<i> Property, Plant and Equipment</i>, the Company carries long-lived assets at the lower of the carrying amount or fair value. Impairment is evaluated by estimating future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flow is less than the carrying amount of the assets, an impairment loss is recognized.</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%"> </td>
<td style="width: 95%; text-align: justify">Fair value, for purposes of calculating impairment, is measured based on estimated future cash flows, discounted at a market rate of interest.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td>There was no impairment losses recorded during the period ended December 31, 2011.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font-style: italic; font-weight: bold">(G) Website Development</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">The Company has adopted the provisions of FASB Accounting Standards Codification No. 350<i> Intangible-Goodwill and Other</i>. Costs incurred in the planning stage of a website are expensed, while costs incurred in the development stage are capitalized and amortized over the estimated three year life of the asset. During the period February 7, 2011(Inception) to December 31, 2011, the Company incurred $114,612 in website development costs.  The website was put into service on September 30, 2011. Amortization for the period February 7, 2011(Inception) to December 31, 2011 was $8,301.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font-style: italic; font-weight: bold">(H) Stock-Based Compensation</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">The Company recognizes compensation costs to employees under FASB Accounting Standards Codification No. 718,<i> Compensation – Stock Compensation</i>. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share based compensation arrangements include stock options, restricted share plans, performance based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">Equity instruments issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 505,<i> Equity Based Payments to Non-Employees.</i> In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font-style: italic; font-weight: bold">(I) Loss Per Share</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">Basic and diluted net (loss) per common share is computed based upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification Topic 260, “Earnings Per Share.” As of December 31, 2011 there were 25,379,412 options, warrants and shares issuable upon conversion of notes payable outstanding, whose effect was anti-dilutive and not included in diluted net loss per share. The options and warrants may dilute future earnings per share.</td></tr>
<tr>
<td colspan="2"> </td></tr>
<tr>
<td colspan="2"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%"> </td>
<td style="width: 95%; font-style: italic; font-weight: bold">(J) Fair Value of Financial Instruments</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">The carrying amounts of the Company’s accounts payable and accrued expenses related approximate fair value due to the relatively short period to maturity for these instruments.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font-style: italic; font-weight: bold">(K) Income Taxes</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”).  Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%"> </td>
<td style="width: 95%; text-align: justify">The Company’s income tax expense differs from the “expected” tax expense for federal income tax purpose by applying the Federal & State blended rate of 37.63% as follows:</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-left: 11pt; text-align: center; text-indent: -11pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; vertical-align: bottom">December 31, 2011</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 11pt; text-indent: -11pt"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; padding-left: 11pt; text-align: justify; text-indent: -11pt">Expected income tax benefit (expense) at the statutory rate of 37.63%</td>
<td style="width: 10%"> </td>
<td style="width: 1%">$</td>
<td style="width: 18%; text-align: right">(313,003</td>
<td style="width: 1%">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 11pt; text-align: justify; text-indent: -11pt">Tax effect of expenses that are not deductible for income tax purposes</td>
<td> </td>
<td> </td>
<td style="text-align: right">102,906</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 11pt; text-align: justify; text-indent: -11pt">Change in valuation allowance</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">210,097</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 11pt; text-indent: -11pt"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; padding-left: 11pt; text-align: justify; text-indent: -11pt">Provision for income taxes</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">—</td>
<td style="padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 11pt; text-indent: -11pt"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 11pt; text-align: justify; text-indent: -11pt">The components of deferred income taxes are as follows:</td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 11pt; text-indent: -11pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">2011</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 11pt; text-indent: -11pt"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 11pt; text-align: justify; text-indent: -11pt">Deferred income tax asset:</td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 11pt; text-align: justify; text-indent: -11pt">Net operating loss carryforwards</td>
<td> </td>
<td>$</td>
<td style="text-align: right">210,097</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 11pt; text-indent: -11pt">Valuation allowance</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(210,097</td>
<td style="padding-bottom: 1pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; padding-left: 11pt; text-indent: -11pt">Deferred income taxes</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">—</td>
<td style="padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%"> </td>
<td style="width: 95%">
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of December 31, 2011, the Company has a
net operating loss carry forward of approximately $558,321 available to offset future taxable income through 2031.  This
results in deferred tax assets of approximately $210,097 as of December 31, 2011. The valuation allowance at December 31, 2011
was approximately $210,097. The change in the valuation allowance for the period February 7, 2011(Inception) to December 31, 2011
was an increase of $210,097.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s federal income tax return
for the year ended December 31, 2011 is subject to examination by the Internal Revenue Service.</p></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%"> </td>
<td style="width: 95%; font-style: italic; font-weight: bold">(L) Business Segments</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">The Company operates in one segment and therefore segment information is not presented.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font-style: italic; font-weight: bold">(M) Revenue Recognition</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">The Company recognizes revenue in accordance with FASB Accounting Standards Codification No. 605, Revenue Recognition.  In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, Delivery has occurred and collectability is reasonably assured. This criteria is met when the deal books are delivered to our customers and collectability is reasonably assured.  We record these sales net of any discounts provided to our customers.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b><i>(N) Concentrations</i></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">During the year ended December 31, 2011 the Company had four customers
who represented 33%, 20%, 16% and 12% of sales and one customer that represented 100% of accounts receivable at December 31, 2011.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b><i>(O) Recent Accounting Pronouncements</i></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In June, 2011, the FASB issued ASU No. 2011-05,
which amends ASC Topic 220, Comprehensive Income. Under the amendment, an entity has the option to present the total of comprehensive
income, the components of net income, and the components of other comprehensive income either in a single continuous statement
of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component
of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive
income, and a total amount for comprehensive income. This ASU eliminates the option to present the components of other comprehensive
income as part of the statement of changes in stockholders’ equity. The amendments in this ASU do not change the items that
must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.
The amendments in this ASU should be applied retrospectively.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Additionally, the FASB issued a second amendment
to ASC Topic 220 in December 2011, ASU No. 2011-12, which allows companies the ability to defer certain aspects of ASU 2011-05.
For public entities, these amendments are effective for fiscal years, and interim periods within those years, beginning after December
15, 2011. The amendments do not require any transition disclosures.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On September 15, 2011, the FASB issued ASU
2011-08, Intangibles – Goodwill and Other, which simplifies how an entity is required to test goodwill for impairment. This
ASU will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative
goodwill impairment test. Under the ASU, an entity would not be required to calculate the fair value of a reporting unit unless
the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its
carrying amount. The ASU includes a number of factors to consider in conducting the qualitative assessment.  The ASU
is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early
adoption is permitted.</p></td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 5%; text-align: justify"><b></b></td>
<td style="width: 95%; text-align: justify"><b>Property and Equipment</b></td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: left">At June 30, 2012 and December 31, 2011 property and equipment consisted of the following:</td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; vertical-align: bottom">June 30,</td><td style="font-weight: bold; text-align: center; vertical-align: bottom"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; vertical-align: bottom">December 31,</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; vertical-align: bottom"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2012</td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2011</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="3" style="text-align: center; vertical-align: bottom">(Unaudited)</td><td> </td>
<td colspan="3" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: justify">Computers and equipment</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">19,448</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">16,468</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1pt">Accumulated depreciation</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(2,732</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(778</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 2.5pt">Balance</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">16,716</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">12,690</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; text-align: justify"> </td>
<td style="width: 95%; text-align: left">Depreciation expense for three and six months ended June 30, 2012, the three months ended June 30, 2011 and the period from February 7, 2011 to June 30, 2011 was $1,040 ,$1,954, $30 and $30 respectively.</td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="font-weight: bold"></td>
<td style="font-weight: bold">Property and Equipment</td></tr>
<tr style="vertical-align: top">
<td style="width: 5%"> </td>
<td style="width: 95%"> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td>At December 31, 2011 property and equipment consisted of the following:</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%">Computer equipment</td>
<td style="width: 10%"> </td>
<td style="width: 1%">$</td>
<td style="width: 18%; text-align: right">13,468</td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt">Less accumulated depreciation</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(778</td>
<td style="padding-bottom: 1pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">12,690</td>
<td style="padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 5%; padding-left: 10pt"> </td>
<td style="width: 95%">Depreciation expense for the period February 7, 2011(Inception) to December 31, 2011 was $778.</td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; text-align: left"><b></b></td>
<td style="width: 95%; text-align: left"><b>Liquidated Damages</b></td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left">Pursuant to the Company’s private placement completed during the six months ended June 30, 2012 in the gross amount of $370,000, as of June 30, 2012 purchasers under the private placement (the “Holders”) are entitled to liquidated damages if a registration statement covering the resale of the 1,480,000 shares of common stock sold under the private placement (the “Registrable Securities”) is not filed within 60 days of the termination date of the private placement on May 15, 2012 and declared effective within 150 days of the termination date. The Company shall make pro rata payments to each Holder, in an amount equal to 1.0% of the aggregate amount invested by such Holder (based upon the number of Registrable Securities then owned by such Holder) for each 30-day period or pro rata for any portion thereof following the date by which such Registration Statement should have been filed or effective (the “Blackout Period”). Such payments can be made in cash or shares of common stock with the fair market value on the date of issuance and shall constitute the Holder’s exclusive monetary remedy for such events, but shall not affect the right of the Holder to seek injunctive relief. The amounts payable as liquidated damages shall be paid monthly within ten (10) business days of the last day of each month following the commencement of the Blackout Period until the termination of the Blackout Period. Such payments shall be made to each holder at the sole option of the Company in either cash or shares of Common Stock. As of August 14, 2012, the Company has not filed the required registration statement. As of June 30, 2012, the Company recorded liquidated damages of $14,800.</td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; text-align: justify"><b></b></td>
<td style="width: 95%; text-align: justify"><b>Related Party Transactions</b></td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify">
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On November 16, 2011, the Company entered into a new five year employment
agreements with its President and Vice President which superseded their prior agreements with our subsidiary, SimplePons Operations,
Inc. Under the terms of these agreements, the Company agreed to pay each of them an annual salary of $100,000 for the period commencing
on the effective date and ending on December 31, 2012, and thereafter for the period commencing on January 1, 2013 and ending on
December 31, 2013, a base salary at an annual rate $125,000, and thereafter for the period commencing January 1, 2014 until the
end of the term of this agreement, a base salary at an annual rate of $150,000. Each executive is also entitled to an annual bonus
of at the discretion of our board of directors. Each of these executive officers is also entitled to participate in all benefit
programs we offer our employees. The agreements, which contain an automatic yearly renewal provision, contain customary confidentially
and non-compete provisions. Each employee’s employment may be terminated upon his death or disability and with or without
cause. In the event we should terminate his employment upon his death or disability, he is entitled to his then current base salary
for a period of three months from the date of termination and all granted but unvested options are immediately vested. In the event
we should terminate the agreement for cause or if he should resign, he is entitled to payment of his base salary through the date
of termination. At our option we may terminate his employment without cause, in which event he is entitled to payment of his then
base salary and bonus through the date of termination together with one years’ salary payable in a lump sum at the date of
termination and all granted but unvested options are immediately vested. As of June 30, 2012 accrued salaries including payroll
taxes are $168,804.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On November 16, 2011, the Company entered into a new five-year employment
agreement with its Chief Financial Officer, which is effective November 16, 2011. Under the terms of this agreement, we agreed
to pay our Chief Financial Officer an annual salary of $70,000 for the period commencing on the effective date and ending on December
31, 2012, and thereafter for the period commencing on January 1, 2013 and ending on December 31, 2013, a base salary at an annual
rate $87,500, and thereafter for the period commencing January 1, 2014 until the end of the term of this agreement, a base salary
at an annual rate of $109,375. He is also entitled to an annual bonus of at the discretion of our board of directors. The agreements,
which contain an automatic yearly renewal provision, contain customary confidentially and non-compete provisions. Each employee’s
employment may be terminated upon his death or disability and with or without cause. In the event we should terminate his employment
upon his death or disability, he is entitled to his then current base salary for a period of three months from the date of termination
and all granted but unvested options are immediately vested. In the event we should terminate the agreement for cause or if he
should resign, he is entitled to payment of his base salary through the date of termination. At our option we may terminate his
employment without cause, in which event he is entitled to payment of his then base salary and bonus through the date of termination
together with one years’ salary payable in a lump sum at the date of termination and all granted but unvested options are
immediately vested. As of June 30, 2012, accrued salary including payroll taxes was $41,714. On February 8, 2012, the Company issued
its Chief Financial Officer an additional grant of options to purchase an aggregate of 1,000,000 shares of our common stock at
an exercise price of $0.75 per share, which vest quarterly over three-years beginning on February 8, 2012.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On January 20, 2012, the Company entered into a three-year employment
with our new Chief Operating Officer. Under the terms of this agreement, the Company agreed to pay our Chief Operating Officer
an annual salary of $150,000. As additional compensation, the Company granted options to purchase an aggregate of 3,000,000 shares
of our common stock at an exercise price of $0.75 per share, which vest quarterly over three-year beginning on August 1, 2012.
Our Chief Operating Officer may be terminated upon his death or disability and with or without cause. In the event we should terminate
his employment upon his death or disability, he is entitled to his then current base salary for a period of three months from the
date of termination and all vested options remain exercisable through the original terms of the options. In the event we should
terminate the agreement for cause or if he should resign, he is entitled to payment of his base salary through the date of termination.
At our option we may terminate his employment without cause. If we terminate him without cause within six months from the date
of the agreement, he is not entitled to any compensation and all granted but unvested options immediately terminate. In the event
we should terminate him without cause after the six-month anniversary of the employment agreement, he is entitled to payment of
his then base salary and bonus through the date of termination together with three months’ salary payable in a lump sum on
the date of termination and all vested options remain exercisable through the original option term. As of June 30, 2012 accrued
salaries including payroll taxes was $50,319.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On January 24, 2012, the Company entered into a 4% convertible promissory
note with its Chief Operating Officer in the amount of $40,000. The note is due on January 24, 2013 prior to the maturity date,
the Company has the option to convert the principal and accrued interest into shares of the Company’s common stock at $0.10
per share. The fair value of the conversion was equal to the Company’s stock price on the date of issuance and no beneficial
conversion was recorded. Interest expense for the three and six months ended June 30, 2012 amount to $399 and $693.</p></td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; font-weight: bold"></td>
<td style="width: 95%; font-weight: bold">Related Party Transactions</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">In February 2011 the Company issued a total of 40,000,000 shares of common stock to its two founders. The founders paid $5,000 ($0.000125 per share) for such shares of common stock.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify">Effective February 15, 2011, the Company entered into employment agreements with its President and Vice President. The employment agreements each provided for a term of five years. Pursuant to the terms of the employment agreements, each of these executive officers will receive an annual salary during the first and second years of the term of the employment agreement of $50,000, which is increased to $75,000 per year in the third year of the term, to $100,000 per year in the fourth year of the term and to $150,000 per year in the final year of the term of the agreement.  The agreement will terminate upon the death or disability of the officers.  In addition, the agreement may be terminated by either party without cause or by the Company for cause.</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">On November 16, 2011, the Company entered into a new five year employment
agreements with its President and Vice President which superseded their prior agreements with our subsidiary, SimplePons, Inc.
Under the terms of these agreements, the Company agreed to pay each of them an annual salary of $100,000 for the period commencing
on the effective date and ending on December 31, 2012, and thereafter for the period commencing on January 1, 2013 and ending on
December 31, 2013, a base salary at an annual rate $125,000, and thereafter for the period commencing January 1, 2014 until the
end of the term of this agreement, a base salary at an annual rate of $150,000. Each executive is also entitled to an annual bonus
of at the discretion of our board of directors. Each of these executive officers is also entitled to participate in all benefit
programs we offer our employees. The agreements, which contain an automatic yearly renewal provision, contain customary confidentially
and non-compete provisions. Each employee’s employment may be terminated upon his death or disability and with or without
cause. In the event we should terminate his employment upon his death or disability, he is entitled to his then current base salary
for a period of three months from the date of termination and all granted but unvested options are immediately vested. In the event
we should terminate the agreement for cause or if he should resign, he is entitled to payment of his base salary through the date
of termination. At our option we may terminate his employment without cause, in which event he is entitled to payment of his then
base salary and bonus through the date of termination together with one years’ salary payable in a lump sum at the date of
termination and all granted but unvested options are immediately vested. Salary expense including payroll taxes for the period
February 7, 2011(Inception) to December 31, 2011 was $82,920 and is accrued as of December 31, 2011.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">On November 16, 2011, the Company entered into a new five-year employment
agreement with its Chief Financial Officer, which is effective November 16, 2011. Under the terms of this agreement, we agreed
to pay our Chief Financial Officer an annual salary of $70,000 for the period commencing on the effective date and ending on December
31, 2012, and thereafter for the period commencing on January 1, 2013 and ending on December 31, 2013, a base salary at an annual
rate $87,500, and thereafter for the period commencing January 1, 2014 until the end of the term of this agreement, a base salary
at an annual rate of $109,375. He is also entitled to an annual bonus of at the discretion of our board of directors. The agreements,
which contain an automatic yearly renewal provision, contain customary confidentially and non-compete provisions. Each employee’s
employment may be terminated upon his death or disability and with or without cause. In the event we should terminate his employment
upon his death or disability, he is entitled to his then current base salary for a period of three months from the date of termination
and all granted but unvested options are immediately vested. In the event we should terminate the agreement for cause or if he
should resign, he is entitled to payment of his base salary through the date of termination. At our option we may terminate his
employment without cause, in which event he is entitled to payment of his then base salary and bonus through the date of termination
together with one years’ salary payable in a lump sum at the date of termination and all granted but unvested options are
immediately vested. Salary expense including payroll taxes for the period February 7, 2011(Inception) to December 31, 2011 was
$9,419 and is accrued as of December 31, 2011 options are immediately vested.</p></td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; text-align: justify"><b></b></td>
<td style="width: 95%; text-align: justify"><b>Stockholders’ Equity </b></td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"><b>(A) Authorized Shares</b></td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">The Company is authorized to issue 400,000,000
shares of common stock, par value $0.01 per shares and 5,000,000 shares of preferred stock, par value $0.01 per share with rights
and preferences to be determined by the Board of Directors.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p></td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left"><b>(B) Sales of Common Stock</b></td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left">
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On January 20, 2012, the Company issued 450,000 Units of its securities
in a private placement to two accredited investors. The price of these Units was $0.50 per unit. Each Unit consists of one share
of common stock and one three year Series C Warrant. Each Series C Warrant entitles the holder to purchase one share of common
stock at an exercise price of $0.50 per share. Upon 30 days’ notice, we have the right to call the warrants at $0.0001 per
warrant if our stock is currently quoted for trading in the over the counter market, the closing price of our common stock is $.50
or more for five consecutive trading days and there is an effective registration statement covering the resale of the shares of
common stock underlying the Series C Warrants. We received proceeds of $225,000.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">During the six months ended June 30, 2012 the Company issued 1,480,000
shares of common stock in a private placement to six accredited investors. The price of the common stock was $0.25 per share. Pursuant
to the placement agent the agreement the Company issued warrants to purchase 148,000 shares of common stock at a price a $.25 to
the placement agent and paid a 10% commission as well as a 2% expense allowance and legal and professional fees of $86,126. The
Company received net proceeds of $283,874.</p></td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left"><b>(C) Common Stock Issued for Services</b></td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left">In May 2011, the Company issued 4,000,000 shares of common stock valued at $200,000 ($0.05 per share) based on contemporaneous stock sales and $50,000 cash to a consultant for management consulting, business advisory, strategic planning and public relations. On August 26, 2011 the Company amended to agreement and agreed to pay the consultant an additional $50,000 for services under this agreement. On February 3, 2012, the Company agreed to amend a May 18, 2011 consulting agreement to pay the consultant an additional $30,000 upon receipt of additional funding. The term of the agreement is for one year and expires on May 17, 2012. For the period February 7, 2011(Inception) to June 30, 2012 the Company has expensed a total of $330,000 as of June 30, 2012. Expense for the three and six months ended June 30, 2012 amounted to $53,684 and $150,794.</td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; text-align: left"> </td>
<td style="width: 95%; text-align: left">In August 2011, the Company issued 4,000,000 shares of common stock valued at $200,000 ($0.05 per share) based on contemporaneous stock sales to a consultant for a variety of services to the Company, including industry analysis, identifying and introducing potential strategic partners to the Company, evaluations of competitors and development of strategies to increase the Company’s competitiveness and advice on effective management of relationships with investment banking firms. The term of the agreement is for two years and expires on August 15, 2013. For the period February 7, 2011(Inception) to June 30, 2012 the Company has expensed a total of $87,500 and recorded a prepaid expense of $112,500 as of June 30, 2012. Expense for the three and six months ended June 30, 2012 amounted to $25,000 and $50,000.</td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; text-align: left"> </td>
<td style="width: 95%; text-align: left">
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">In August 2011, the Company issued 2,000,000 shares of common stock
valued at $100,000 ($0.05 per share) based on contemporaneous stock sales to a consultant for a variety of services to the Company,
including industry analysis, identifying and introducing potential strategic partners to the Company, evaluations of competitors
and development of strategies to increase the Company’s competitiveness and advice on effective management of relationships
with investment banking firms. The term of the agreement is for two years and expires on August 15, 2013. For the period February
7, 2011(Inception) to June 30, 2012 the Company has expensed a total of $43,750 and recorded a prepaid expense of $56,250 as of
June 30, 2012. Expense for the three and six months ended June 30, 2012 amounted to $12,500 and $25,000. </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0 0 0 14.3pt; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On February 15, 2012, the Company engaged an investment banking
firm to serve as our exclusive financial advisor. Under the terms of the one year agreement, the investment banker will provide
the Company with financial advisory and investment banking services for an annual fee of $60,000. The Company has agreed to reimburse
the investment banking firm for its expenses incurred in connection with the engagement and to pay it certain additional transactional
fees. The Company has also granted the investment bank firm the right to serve as our investment banker for any private or public
offering of our securities and in certain other transactions, upon such terms as the parties may mutually agree. As of June 30,
2012 accrued investment banking fees amounted to $22,500.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">In June 2012, the Company issued 500,000 shares of common stock
valued at $125,000 ($0.25 per share) based on contemporaneous stock sales to a consultant for investor relations. All shared were
considered earned upon receipt. Expense for the three and six months ended June 30, 2012 amounted to $125,000 and $125,000.</p></td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left">
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"><b><i>(D) Stock Options</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On November 1, 2011, the Company granted a total of 4,100,000 stock
options to employees and officers including 2,500,000 options to Officers. The option vest quarterly over a period of three years
and have an exercise price of $0.275 per share. The Options were valued using the Black-Scholes Option Pricing Model with the following
assumptions: dividend yield of 0%, annual volatility of 87%, risk free interest rate of .87%, and expected life of 4 years. For
the three and six months ended June 30, 2012 the Company expensed $19,548 and $45,324 as the fair value.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">During the three and six months ended June 30, 2012 , the Company
granted a total of 4,300,000 stock options to employees and officers including 4,000,000 options to officers. The option vest quarterly
over a period of three years and have an exercise price of $0.75 per share. The options were valued at $539,177 using the Black-Scholes
Option Pricing Model with the following assumptions: dividend yield of 0%, annual comparative companies volatility due to the stock
being thinly traded of 87%, risk free interest rate of .87%, and expected life of 4 years using the simplified method. For the
three and six months ended June 30, 2012 the Company expensed $42,652 and $106,630.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On April 30, 2012, the Company hired a Director of Engineering.
Under the terms of the employment offer letter agreement, the Director of Engineering receives an annual salary of $115,000 and
will be eligible to participate in our existing benefit programs. As additional compensation, we granted options to purchase 800,000
shares of our common stock with an exercise price of $0.45 per share that vest quarterly in arrears over three years. Employment
is terminable by either party at any time, with or without cause. The option vest quarterly over a period of three years and have
an exercise price of $0.45 per share. The options were valued at $118,640 using the Black-Scholes Option Pricing Model with the
following assumptions: dividend yield of 0%, annual comparative companies volatility due to the stock being thinly traded of 101%,
risk free interest rate of .39%, and expected life of four years using the simplified method. For the three and six months ended
June 30, 2012 the Company expensed $12,116 and $12,116.</p></td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="3"> </td><td> </td>
<td colspan="3" style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="3" style="font-weight: bold; text-align: center">Weighted<br /> Avg.<br /> Exercise</td></tr>
<tr style="vertical-align: bottom">
<td colspan="3" style="font-weight: bold">Options:</td><td style="font-weight: bold"> </td>
<td colspan="3" style="font-weight: bold; text-align: center">Shares</td><td style="font-weight: bold"> </td>
<td colspan="3" style="font-weight: bold; text-align: center">Price</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 1%; text-align: left"> </td><td style="width: 39%; text-align: right">Balance, December 31, 2011</td><td style="width: 3%; text-align: left"> </td><td style="width: 5%"> </td>
<td style="width: 5%; text-align: left"> </td><td style="width: 23%; text-align: right">4,100,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 20%; text-align: right">.75</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td style="text-align: right">Granted</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,100,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.70</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td style="text-align: right">Exercised</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Expired</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,050,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">.275</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Balance at June 30, 2012</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">8,150,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">.53</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="color: white"> </td>
<td style="color: white; text-align: left"> </td><td style="color: white; text-align: right"> </td><td style="color: white; text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td style="text-align: right">Options exercisable at June 30, 2012</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,353,205</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">.35</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">The following table summarizes information about options for the
Company as of June 30, 2012:</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="3" style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="11" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012 Options Outstanding</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Options Exercisable</td></tr>
<tr style="vertical-align: bottom">
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Range of Exercise Price</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number Outstanding at June 30, 2012</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted Average Remaining Contractual</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted Average Exercise<br /> Price</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number Exercisable at June 30, 2012</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted Average Exercise<br /> Price</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">.275</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 13%; text-align: right">3,350,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 13%; text-align: right">4.34</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">.275</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 13%; text-align: right">1,152,784</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">.275</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">$</td><td style="text-align: right">.45</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">800,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.8</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">.45</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">$</td><td style="text-align: right">.75</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,000,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.58</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">.75</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">200,422</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">.75</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; font-weight: bold; text-align: justify"></td>
<td style="width: 95%; font-weight: bold; text-align: justify">Stockholders’ Equity</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="font-style: italic; font-weight: bold; text-align: justify">(A)  Authorized Shares</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">The Company is authorized to issue 400,000,000 shares of common
stock, par value $0.01 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share with rights and preferences
to be determined by the Board of Directors.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">On November 2, 2011, the Company's stockholders approved a 2 for
1 forward stock split for its common stock. As a result, stockholders of record at the close of business on December 16, 2011,
received two shares of common stock for every one share held. Common stocks, additional paid-in capital, share and per share
data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period
presented.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p></td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="font-style: italic; font-weight: bold; text-align: justify">(B) Sales of Common Stock</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify">In February 2011 the Company issued a total of 40,000,000 shares of common stock to its two founders. The founders paid $5,000 ($0.000125 per share) for such shares of common stock.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify">In February 2011 the Company sold 2,000,000 shares of common stock to an investor for $2,500 ($0.00125 per share).</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify">In February 2011 the Company sold 1,000,000 shares of common stock to an investor for $2,500 ($0.00125 per share).</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">Between March 2011 and October 31, 2011, the Company issued 20,010,000
Units of its securities in a private placement to accredited investors.  The price of these Units was $0.05 per unit.
Each Unit consists of one share of common stock and one three year Series A Warrant.  Each Series A Warrant entitles
the holder to purchase one share of common stock at an exercise price of $0.25 per share. Upon 30 days’ notice, we have the
right to call the warrants at $0.0001 per warrant if our stock is currently quoted for trading in the over the counter market,
the closing price of our common stock is $.25 or more for five consecutive trading days and there is an effective registration
statement covering the resale of the shares of common stock underlying the Series A Warrants.  We received proceeds of
$988,718, net of expenses of $11,783 from this offering.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">In December 2011, the Company issued 200,000 Units of its securities
in a private placement to an accredited investor.  The price of these Units was $0.05 per unit. Each Unit consists of
one share of common stock and one three year Series B Warrant.  Each Series B Warrant entitles the holder to purchase
one share of common stock at an exercise price of $0.50 per share. Upon 30 days’ notice, we have the right to call the warrants
at $0.0001 per warrant if our stock is currently quoted for trading in the over the counter market, the closing price of our common
stock is $.50 or more for five consecutive trading days and there is an effective registration statement covering the resale of
the shares of common stock underlying the Series B Warrants.  We received proceeds of $50,000.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p></td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="font-style: italic; font-weight: bold; text-align: justify">(C) Common Stock Issued for Services</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify">In March 2011, the Company issued 1,000,000 shares of common stock valued at $50,000 ($0.05 per share) based on contemporaneous stock sales to consultant for accounting services. The $50,000 was expensed.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td>In March 2011, the Company issued 400,000 shares of common stock valued at $20,000 ($0.05 per share) based on contemporaneous stock sales for legal services. The $20,000 was expensed. </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td>In May 2011, the Company issued 4,000,000 shares of common stock valued at $200,000 ($0.05 per share) based on contemporaneous stock sales and $50,000 cash to a consultant for management consulting, business advisory, strategic planning and public relations.  On August 26, 2011 the Company amended to agreement and agreed to pay the consultant an additional $50,000 for services under this agreement. The term of the agreement is for one year and expires on May 17, 2012. For the period February 7, 2011(Inception) to December 31, 2011 the Company has expensed a total of $179,205 and recorded a prepaid expense of $120,794, respectively as of December 31, 2011.<br /> <br /> In May 2011, the Company issued 500,000 shares of common stock valued at $25,000 ($0.05 per share) based on contemporaneous stock sales for assistance in developing its website. The $25,000 was capitalized.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify">In August 2011, the Company issued 4,000,000 shares of common stock valued at $200,000 ($0.05 per share) based on contemporaneous stock sales to a consultant for a variety of services to the Company, including industry analysis, identifying and introducing potential strategic partners to the Company, evaluations of competitors and development of strategies to increase the Company’s competitiveness and advice on effective management of relationships with investment banking firms. The term of the agreement is for two years and expires on August 15, 2013. For the period February 7, 2011(Inception) to December 31, 2011 the Company has expensed a total of $37,500 and recorded a prepaid expense of $162,500 as of December 31, 2011.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="padding-top: 12pt; text-align: justify"> In August 2011, the Company issued 2,000,000 shares of common stock valued at $100,000 ($0.05 per share) based on contemporaneous stock sales to a consultant for a variety of services to the Company, including industry analysis, identifying and introducing potential strategic partners to the Company, evaluations of competitors and development of strategies to increase the Company’s competitiveness and advice on effective management of relationships with investment banking firms. The term of the agreement is for two years and expires on August 15, 2013. For the period February 7, 2011(Inception) to December 31, 2011 the Company has expensed a total of $18,750 and recorded a prepaid expense of $81,250 as of December 31, 2011.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="width: 5%; text-align: justify"> </td>
<td style="width: 95%"><b><i>(D) Stock Options<br />
<br />
</i></b>November 1, 2011, the Company granted a total of 4,100,000 stock options to Employees and Officers including 2,500,000 options to Officers. The option vest quarterly over a period of three years and have an exercise price of $0.275 per share. The Options were valued using the Black-Scholes Option Pricing Model with the following assumptions: dividend yield of 0%, annual volatility of 87%, risk free interest rate of .87%, and expected life of 4 years. For the year ended December 31, 2011 the Company expensed $17,184 as the fair value.</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">  </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Weighted</td>
<td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Avg.</td>
<td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; text-indent: -10pt"> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Exercise</td>
<td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; padding-left: 10pt; font-weight: bold; text-indent: -10pt">Options:</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Shares</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Price</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt">Balance at February 7, 2011 (Inception)</td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td>
<td> </td>
<td>$</td>
<td style="text-align: right">—</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 56%; padding-left: 10pt; text-indent: -10pt">Issued</td>
<td style="width: 8%"> </td>
<td style="width: 1%"> </td>
<td style="width: 12%; text-align: right">4,100,000</td>
<td style="width: 1%"> </td>
<td style="width: 8%"> </td>
<td style="width: 1%"> </td>
<td style="width: 12%; text-align: right">.275</td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt">Exercised</td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt">Expired</td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; text-indent: -10pt">Balance at December 31, 2011</td>
<td> </td>
<td> </td>
<td style="text-align: right">4,100,000</td>
<td> </td>
<td> </td>
<td>$</td>
<td style="text-align: right">.275</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt; text-indent: -10pt">Options exercisable at December 31, 2011</td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td>
<td> </td>
<td>$</td>
<td style="text-align: right">—</td>
<td> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">The following table summarizes information about options for the
Company as of December 31, 2011:</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">2011 Options Outstanding</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Options Exercisable</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Range of <br /> Exercise Price</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Number <br /> Outstanding at <br /> December 31, <br /> 2011</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Weighted <br /> Average <br /> Remaining <br /> Contractual</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Weighted <br /> Average <br /> Exercise <br /> Price</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Number <br /> Exercisable at <br /> December 31, <br /> 2011</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Weighted <br /> Average <br /> Exercise <br /> Price</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 30%; text-align: center">$.275</td>
<td style="width: 3%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right">4,100,000</td>
<td style="width: 1%"> </td>
<td style="width: 3%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: center">3.83</td>
<td style="width: 1%"> </td>
<td style="width: 3%"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">.275</td>
<td style="width: 1%"> </td>
<td style="width: 3%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right">—</td>
<td style="width: 1%"> </td>
<td style="width: 3%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right">—</td>
<td style="width: 1%"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; font: bold 11pt Times New Roman, Times, Serif"></td>
<td style="width: 95%; font: bold 11pt Times New Roman, Times, Serif; text-align: justify">Warrants</td></tr>
<tr style="vertical-align: top">
<td style="font: 11pt Times New Roman, Times, Serif"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="font: 11pt Times New Roman, Times, Serif">The following tables summarize all warrant grants for the six months ended June 30, 2012, and the related changes during this period.</td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; font-weight: bold; text-align: center; text-indent: -10pt"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Number of Warrants</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Weighted<br /> Average Exercise Price</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; font-weight: bold; text-indent: -10pt">Stock Warrants</td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 56%; padding-left: 20pt; text-indent: -10pt">Balance at December 31, 2011</td>
<td style="width: 3%"> </td>
<td style="width: 2%"> </td>
<td style="width: 15%; text-align: right">20,879,412</td>
<td style="width: 2%"> </td>
<td style="width: 3%"> </td>
<td style="width: 2%">$</td>
<td style="width: 15%; text-align: right">.89</td>
<td style="width: 2%"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 20pt; text-indent: -10pt">Granted</td>
<td> </td>
<td> </td>
<td style="text-align: right">598,000</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">0.44</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt">Exercised</td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 20pt; text-indent: -10pt">Expired</td>
<td> </td>
<td> </td>
<td style="text-align: right">(3,706</td>
<td>)</td>
<td> </td>
<td> </td>
<td style="text-align: right">250.00</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt">Balance at June 30, 2012</td>
<td> </td>
<td> </td>
<td style="text-align: right">21,473,705</td>
<td> </td>
<td> </td>
<td>$</td>
<td style="text-align: right">.88</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 20pt; text-indent: -10pt">Warrants Exercisable at June 30 , 2012</td>
<td> </td>
<td> </td>
<td style="text-align: right">21,473,705</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">.88</td>
<td> </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In connection with a private placement in 2007, the Company issued
13,976,180 warrants with an exercise price of $1.05 that expires on August 6, 2012. The exercise price and number of warrant shares
issuable upon exercise of the warrants are subject to adjustment from time to time for stock dividends and splits and fundamental
transactions, which include a merger or consolidation or any sale of all or substantially all of the Company’s assets, any
tender offer or exchange offer is completed pursuant to which holders of the Company’s common stock are permitted to tender
or exchange their shares for other securities, cash or property, or any reclassification of the Company’s common stock or
any compulsory share exchange pursuant to which the Company’s common stock is effectively converted into or exchanged for
other securities, cash or property. The warrants also contain a cashless exercise provision. In the case of a fundamental transaction,
the warrant holders will be entitled to rights equivalent to the common shareholders as if the warrant shares were issued immediately
prior to the fundamental transaction. The investor warrants also provide that if the Company offers or sells stock in a subsequent
equity sale at a price below the warrant exercise price then in effect, then the number of warrant shares issuable will be increased
such that the aggregate exercise price of the warrants, after taking into account an equivalent price decrease, shall be equal
to the aggregate exercise price prior to such adjustment (“reset provision”). Under ASC 815-40-15, the Company is required
to account for warrants with reset provisions when the following three items are present (1) one or more underlying amounts or
payments are required (2) no initial net investment or an initial net investment that is smaller than would be required for other
types of contracts (3) its terms require or permit net settlement, it can be readily settled net by means outside the contract
or it provides for delivery of an asset that puts the recipient in a position not substantially different from the net settlement.
ASC 815-40-15 further defines the requirement that the assets are readily convertible to cash. Due to the lack of a public market
for the Company’s securities, the Company determined that the warrants were not readily convertible to cash and therefore
no derivative liability has been recorded. As of June 30, 2012, the total warrants outstanding have reset to 681,140 shares with
an exercise price of $19.52 per share.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><b>Warrants</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">The following tables summarize all warrant grants for the period
February 7, 2011 (Inception) to December 31, 2011, and the related changes during these periods are presented below.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1pt; text-align: center"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Number of Warrants</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Weighted <br /> Average <br /> Exercise <br /> Price</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt; font-weight: bold; text-indent: -10pt">Stock Warrants</td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt">Balance at February 7, 2011 (Inception)</td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; padding-left: 20pt; text-indent: -10pt">Warrants included with reverse merger</td>
<td style="width: 8%"> </td>
<td style="width: 1%"> </td>
<td style="width: 12%; text-align: right">669,412</td>
<td style="width: 1%"> </td>
<td style="width: 8%"> </td>
<td style="width: 1%">$</td>
<td style="width: 12%; text-align: right">21.24</td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt">Granted</td>
<td> </td>
<td> </td>
<td style="text-align: right">20,210,000</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">0.25</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 20pt; text-indent: -10pt">Exercised</td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt">Expired</td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 20pt; text-indent: -10pt">Balance at December 31, 2011</td>
<td> </td>
<td> </td>
<td style="text-align: right">20,879,412</td>
<td> </td>
<td> </td>
<td>$</td>
<td style="text-align: right">0.92</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 20pt; text-indent: -10pt">Warrants Exercisable at December 30, 2011</td>
<td> </td>
<td> </td>
<td style="text-align: right">20,879,412</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">0.92</td>
<td> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">In connection with a private placement in 2007, the Company issued
13,976,180 warrants with an exercise price of $1.05 that expires on August 6, 2012. The exercise price and number of warrant shares
issuable upon exercise of the warrants are subject to adjustment from time to time for stock dividends and splits and fundamental
transactions, which include a merger or consolidation or any sale of all or substantially all of the Company’s assets, any
tender offer or exchange offer is completed pursuant to which holders of the company’s common stock are permitted to tender
or exchange their shares for other securities, cash or property, or any reclassification of the Company’s common stock or
any compulsory share exchange pursuant to which the Company’s common stock is effectively converted into or exchanged for
other securities, cash or property. The warrants also contain a cashless exercise provision. In the case of a fundamental transaction,
the warrant holders will be entitled to rights equivalent to the common shareholders as if the warrant shares were issued immediately
prior to the fundamental transaction. The investor warrants also provide that if the Company offers or sells stock in a subsequent
equity sale at a price below the warrant exercise price then in effect, then the number of warrant shares issuable will be increased
such that the aggregate exercise price of the warrants, after taking into account an equivalent price decrease, shall be equal
to the aggregate exercise price prior to such adjustment (“reset provision”). Under ASC 815-40-15, the Company is required
to account for warrants with reset provisions when the following three items are present (1) one or more underlying amounts or
payments are required (2) no initial net investment or an initial net investment that is smaller than would be required for other
types of contracts (3) its terms require or permit net settlement, it can be readily settled net by means outside the contract
or it provides for delivery of an asset that puts the recipient in a position not substantially different from the net settlement.
ASC 815-40-15 further defines the requirement that the assets are readily convertible to cash. Due to the lack of a public market
for the company’s securities, the Company determined that the warrants were not readily convertible to cash and therefore
no derivative liability has been recorded. As of December 31, 2011, the total warrants outstanding have reset to 664,913 shares
with an exercise price of $19.90 per share.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0">During 2007 and 2008, the Company issued 4,499 warrants to individuals
for services at exercise prices ranging from $60.00 to $250 per warrant.</p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; font: bold 11pt Times New Roman, Times, Serif"></td>
<td style="width: 95%; font: bold 11pt Times New Roman, Times, Serif">Subsequent Events</td></tr>
<tr style="vertical-align: top">
<td style="font: 11pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="font: 11pt Times New Roman, Times, Serif; text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="font: 11pt Times New Roman, Times, Serif">Subsequent to June 30, 2012, the Company issued Units of its securities in a private placement to accredited investors. The price of these units was $0.10 per unit. Each unit consists of one share of common stock and one three year Series D Warrant. Each Series D Warrant entitles the holder to purchase one share of common stock at an exercise price of $0.25 per share. We received gross proceeds of $255,000.</td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="font: 11pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="font: 11pt Times New Roman, Times, Serif">On July 23, 2012 the Company issued 900,000 shares of common stock valued at $90,000, ($0.10 per share) based on contemporaneous stock sales to a consultant, as compensation for services to be rendered to it under the terms of a three year Advisory Agreement. </td></tr>
<tr style="vertical-align: top">
<td style="font: 11pt Times New Roman, Times, Serif"> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="font: 11pt Times New Roman, Times, Serif">On August 1, 2012 the Company entered into an three year Advisory Agreement with Dr. David Greenfield pursuant to which it engaged him to provide various advisory services to us including, (i) brand advisory services to evaluate existing practices or establish new processes, (ii) corporate and product brand identity strategy development, (iii) corporate positioning, (iv) brand architecture analysis and system development, (v) advertising strategy development, (vi) creative and strategic resource identification and management, and (vii) new business support, as well as such additional related services as we may request from time to time. As compensation for these services, the Company issued him 450,000 shares of its common stock valued at $45,000.</td></tr>
<tr style="vertical-align: top">
<td style="font: 11pt Times New Roman, Times, Serif"> </td>
<td style="font: 11pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="font: 11pt Times New Roman, Times, Serif">On August 6, 2012 the Company entered into an Investor Relations and Consulting Agreement with Acorn Management Partners, L.L.C. Under the terms of this six-month agreement, the Company engaged the firm to provide various consulting services to it and as compensation agreed to issue the firm and its designee an aggregate of 600,000 shares of our common stock valued at $60,000 ($.10 per share) based on contemporaneous stock sales and to reimburse the firm for its out of pocket expenses. After 90 days, the agreement may be terminated by the Compay, in its sole discretion, upon seven days notice; however, in the event the Company should terminate it is not entitled to a refund of any of the compensation. The Company also granted the consultant piggy-back registration rights for the shares issued as compensation.</td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; font-weight: bold"></td>
<td style="width: 95%; font-weight: bold">Subsequent Events</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td>On January 20, 2012, the Company entered into a three-year employment with our new Chief Operating Officer. Under the terms of this agreement, the Company agreed to pay our Chief Operating Officer an annual salary of $150,000. As additional compensation, the Company granted options to purchase an aggregate of 3,000,000 shares of our common stock at an exercise price of $0.75 per share, which vest quarterly over three-year beginning on August 1, 2012. Our Chief Operating Officer may be terminated upon his death or disability and with or without cause. In the event we should terminate his employment upon his death or disability, he is entitled to his then current base salary for a period of three months from the date of termination and all vested options remain exercisable through the original terms of the options. In the event we should terminate the agreement for cause or if he should resign, he is entitled to payment of his base salary through the date of termination. At our option we may terminate his employment without cause. If we terminate him without cause within six months from the date of the agreement, he is not entitled to any compensation and all granted but unvested options immediately terminate. In the event we should terminate him without cause after the six-month anniversary of the employment agreement, he is entitled to payment of his then base salary and bonus through the date of termination together with three months’ salary payable in a lump sum on the date of termination and all vested options remain exercisable through the original option term. </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="width: 4%"> </td>
<td style="width: 1%"> </td>
<td style="width: 95%; padding-bottom: 6pt; text-align: justify">On January 20, 2012, the Company issued 450,000 Units of its securities in a private placement to two accredited investors.  The price of these Units was $0.50 per unit. Each Unit consists of one share of common stock and one three year Series C Warrant.  Each Series C Warrant entitles the holder to purchase one share of common stock at an exercise price of $0.50 per share. Upon 30 days’ notice, we have the right to call the warrants at $0.0001 per warrant if our stock is currently quoted for trading in the over the counter market, the closing price of our common stock is $.50 or more for five consecutive trading days and there is an effective registration statement covering the resale of the shares of common stock underlying the Series C Warrants.  We received proceeds of $225,000.</td></tr>
<tr style="vertical-align: top">
<td style="padding-bottom: 6pt; text-align: right"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="padding-bottom: 6pt; text-align: right"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td>
<td style="padding-bottom: 6pt; text-align: justify">On January 24, 2012, the Company entered into a 4% convertible promissory note with its Chief Operating Officer in the amount of $40,000. The note is due on January 24, 2013 prior to the expiration date and the Company has the option to convert the principle and accrued interest into shares of the Company’s common at $0.10. </td></tr>
<tr style="vertical-align: top">
<td style="padding-bottom: 6pt; text-align: right"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="padding-bottom: 6pt; text-align: right"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td>
<td style="padding-bottom: 6pt; text-align: justify">On February 3, 2012, the Company agreed to amend a May 18, 2011 consulting agreement to pay the consultant an additional $30,000 upon receipt of additional funding. </td></tr>
<tr style="vertical-align: top">
<td style="padding-bottom: 6pt; text-align: right"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="padding-bottom: 6pt; text-align: right"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td>
<td style="padding-bottom: 6pt; text-align: justify">On February 8, 2011, the Company issued its Chief Financial Operating Officer an additional grant of options to purchase an aggregate of 1,000,000 shares of our common stock at an exercise price of $0.75 per share, which vest quarterly over three-years beginning on February 8, 2012. </td></tr>
<tr style="vertical-align: top">
<td style="padding-bottom: 6pt; text-align: right"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="padding-bottom: 6pt; text-align: right"> </td>
<td style="padding-bottom: 6pt; text-align: justify"> </td>
<td style="text-align: justify">On February 15, 2012, the Company engaged an investment banking firm to serve as our exclusive financial advisor. Under the terms of the one year agreement, the investment banker will provide the Company with financial advisory and investment banking services for an annual fee of $60,000. The Company has agreed to reimburse the investment banking firm for its expenses incurred in connection with the engagement and to pay it certain additional transactional fees. The Company has also granted the investment bank firm the right to serve as our investment banker for any private or public offering of our securities and in certain other transactions, upon such terms as the parties may mutually agree.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: right"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: right"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">Subsequent to December 31, 2011, the Company issued to various employees an additional grant of options to purchase an aggregate of 300,000 shares of our common stock at an exercise price of $.75 per share which vest quarterly over three years. </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="vertical-align: top"><td style="text-align: justify"><p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>(A) Going Concern</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">As reflected in the accompanying unaudited condensed consolidated
financial statement for the period ended June 30, 2012 has a net loss of $1,428,540 and used cash in operations of $605,037. These
factors raise substantial doubt about the Com</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">pany’s ability to continue as a going concern. In addition there is a working
capital deficiency of $214,466 and a stockholders’ deficit of $52,977 as of June 30, 2012.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">The Company’s continued existence is dependent upon its ability
to raise capital and to successfully market and sell its products. The financial statements do not include any adjustments that
might be necessary should the Company be unable to continue as a going concern.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">Management believes that actions presently being taken to obtain
additional funding and implement its strategic plans provide for the opportunity for the Company to continue as a going concern.</p></td></tr></table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>(B) Use of Estimates</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses
during the reported period. Actual results could differ from those estimates.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The most significant estimates include the valuation of stock based
compensation, amortization period for intangible assets and deferred tax valuation allowance.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>(C) Cash and Cash Equivalents</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">For purposes of the cash flow statements, the Company considers
all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
The Company at times has cash in excess of FDIC insurance limits and places its temporary cash investments with high credit quality
financial institutions. At December 31, 2011 and June 30, 2012 the Company had no balances that exceeded FDIC insurance limits.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(D) Inventories</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company’s inventories consist entirely of purchased finished
goods. Inventories are stated at lower of cost or market. Cost is determined on the first-in, first-out basis. During the six months
ended June 30, 2012, the Company recorded an impairment of inventory in the amount of $12,492 which is also included in the cost
of goods sold.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>(<i>E</i>)<i> Property and Equipment</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company values property and equipment at cost and depreciates
these assets using the straight-line method over their expected useful life. The Company uses a five year life for computer equipment
and a three year life for software.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b>(<i>F</i>)<i> Impairment</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In accordance with Financial Accounting Standards Board (FASB) Accounting
Standards Codification No. 360,<i> Property, Plant and Equipment</i> , the Company carries long-lived assets at the lower of the
carrying amount or fair value. Impairment is evaluated by estimating future undiscounted cash flows expected to result from the
use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flow is less than the carrying
amount of the assets, an impairment loss is recognized.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Fair value, for purposes of calculating impairment, is measured
based on estimated future cash flows, discounted at a market rate of interest.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(G) Website Development</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company has adopted the provisions of FASB Accounting Standards
Codification No. 350<i> Intangible-Goodwill and Other</i> . Costs incurred in the planning stage of a website are expensed, while
costs incurred in the development stage are capitalized and amortized over the estimated three year life of the asset. During the
six months ended June 30, 2012 and as of December 31, 2011, the Company incurred $40,820 and $114,612 in website development costs,
respectively. The website was placed into service on September 30, 2011. Amortization for the period ended June 30, 2012 was $22,584.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(H) Stock-Based Compensation</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company recognizes compensation costs to employees under FASB
Accounting Standards Codification No. 718,<i> Compensation - Stock Compensation</i> . Under FASB Accounting Standards Codification
No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date
fair value and recognize the costs in the financial statements over the period during which employees are required to provide services.
Share based compensation arrangements include stock options, restricted share plans, performance based awards, share appreciation
rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such
compensation amounts, if any, are amortized over the respective vesting periods of the option grant.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Equity instruments issued to other than employees are recorded on
the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 505,<i> Equity Based
Payments to Non-Employees.</i> In general, the measurement date is when either a (a) performance commitment, as defined, is reached
or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related
to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the
FASB Accounting Standards Codification.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(I) Loss Per Share</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Basic and diluted net (loss) per common share is computed based
upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification Topic 260, Earnings Per
Share.” As of June 30, 2012 there were 8,150,000 options, 21,473,705 warrants and 400,000 common shares issuable upon conversion
of convertible notes payable outstanding whose effect was anti-dilutive and not included in diluted net loss per share for the
three and six months ended June 30, 2012. As of June 30, 2011 there were 50,000 warrants outstanding whose effect was anti-dilutive
and not included in diluted net loss per share for the three months ended June 30, 2011 and the period February 7, 2011 to June
30, 2011. The options and warrants may dilute future earnings per share.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(J) Fair Value of Financial Instruments</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Fair Value of Financial Instruments and Fair Value Measurements</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company measures its financial and non-financial assets and
liabilities, as well as makes related disclosures, in accordance with ASC Topic 820,<i> Fair Value Measurements and Disclosures</i>
(“ASC Topic 820”). For certain of our financial instruments, including cash, accounts receivable, accounts payable
and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for convertible
notes payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities
are substantially the same<b> .</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">ASC Topic 820 provides guidance with respect to valuation techniques
to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable
market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace
the service capacity of an asset or replacement cost). ASC Topic 820 utilizes a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three
levels: </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Level 1: Observable inputs such as quoted prices (unadjusted) in
active markets for identical assets or liabilities.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Level 2: Inputs other than quoted prices that are observable, either
directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical
or similar assets or liabilities in markets that are not active. </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">Level 3: Unobservable inputs in which little or no market data exists,
therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(L) Business Segments</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company operates in one segment and therefore segment information
is not presented.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(M) Revenue Recognition</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company recognizes revenue in accordance with FASB Accounting
Standards Codification No. 605, Revenue Recognition. In all cases, revenue is recognized only when the price is fixed or determinable,
persuasive evidence of an arrangement exists, Delivery has occurred and collectability is reasonably assured. This criteria is
met when the deal books are delivered to our customers and collectability is reasonably assured. We record these sales net of any
discounts provided to our customers.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(N) Concentrations</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">During the three and six months ended June 30, 2012 the Company
had one customer who represented 15% of sales. There were no sales during the comparable periods in 2011.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(O) Income Taxes</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">The Company uses the asset and liability method in accounting for
income taxes. Under this method, deferred income tax assets and liabilities are determined based on difference between financial
reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. A valuation allowance is provided to offset any net deferred tax assets for which
management believes it is more likely than not that the net deferred asset will not be realized.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i>(P) Recent Accounting Pronouncements</i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">In December 2011, FASB issued Accounting Standards Update 2011-11,
Balance Sheet - Disclosures about Offsetting Assets and Liabilities” to enhance disclosure requirements relating to the offsetting
of assets and liabilities on an entity’s balance sheet. The update requires enhanced disclosures regarding assets and liabilities
that are presented net or gross in the statement of financial position when the right of offset exists, or that are subject to
an enforceable master netting arrangement. The new disclosure requirements relating to this update are retrospective and effective
for annual and interim periods beginning on or after January 1 2013. The update only requires additional disclosures, as such,
we do not expect that the adoption of this standard will have a material impact on our results of operations, cash flows or financial
condition.</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; vertical-align: bottom">June 30,</td><td style="font-weight: bold; text-align: center; vertical-align: bottom"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; vertical-align: bottom">December 31,</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; vertical-align: bottom"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2012</td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2011</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="3" style="text-align: center; vertical-align: bottom">(Unaudited)</td><td> </td>
<td colspan="3" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: justify">Computers and equipment</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">19,448</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">16,468</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1pt">Accumulated depreciation</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(2,732</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(778</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 2.5pt">Balance</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">16,716</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">12,690</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="3"> </td><td> </td>
<td colspan="3" style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="3" style="font-weight: bold; text-align: center">Weighted<br /> Avg.<br /> Exercise</td></tr>
<tr style="vertical-align: bottom">
<td colspan="3" style="font-weight: bold">Options:</td><td style="font-weight: bold"> </td>
<td colspan="3" style="font-weight: bold; text-align: center">Shares</td><td style="font-weight: bold"> </td>
<td colspan="3" style="font-weight: bold; text-align: center">Price</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 1%; text-align: left"> </td><td style="width: 39%; text-align: right">Balance, December 31, 2011</td><td style="width: 3%; text-align: left"> </td><td style="width: 5%"> </td>
<td style="width: 5%; text-align: left"> </td><td style="width: 23%; text-align: right">4,100,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 20%; text-align: right">.75</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td style="text-align: right">Granted</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,100,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.70</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td style="text-align: right">Exercised</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Expired</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,050,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">.275</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Balance at June 30, 2012</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">8,150,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">.53</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="color: white"> </td>
<td style="color: white; text-align: left"> </td><td style="color: white; text-align: right"> </td><td style="color: white; text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td style="text-align: right">Options exercisable at June 30, 2012</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,353,205</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">.35</td><td style="text-align: left"> </td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="3" style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="11" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012 Options Outstanding</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Options Exercisable</td></tr>
<tr style="vertical-align: bottom">
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Range of Exercise Price</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number Outstanding at June 30, 2012</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted Average Remaining Contractual</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted Average Exercise<br /> Price</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number Exercisable at June 30, 2012</td><td style="font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted Average Exercise<br /> Price</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">.275</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 13%; text-align: right">3,350,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 13%; text-align: right">4.34</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">.275</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 13%; text-align: right">1,152,784</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 13%; text-align: right">.275</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">$</td><td style="text-align: right">.45</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">800,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.8</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">.45</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">$</td><td style="text-align: right">.75</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,000,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4.58</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">.75</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">200,422</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">.75</td><td style="text-align: left"> </td></tr>
</table>
<table align="center" cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding-left: 10pt; font-weight: bold; text-align: center; text-indent: -10pt"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Number of Warrants</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Weighted<br /> Average Exercise Price</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EAF9E8">
<td style="padding-left: 10pt; font-weight: bold; text-indent: -10pt">Stock Warrants</td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 56%; padding-left: 20pt; text-indent: -10pt">Balance at December 31, 2011</td>
<td style="width: 3%"> </td>
<td style="width: 2%"> </td>
<td style="width: 15%; text-align: right">20,879,412</td>
<td style="width: 2%"> </td>
<td style="width: 3%"> </td>
<td style="width: 2%">$</td>
<td style="width: 15%; text-align: right">.89</td>
<td style="width: 2%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EAF9E8">
<td style="padding-left: 20pt; text-indent: -10pt">Granted</td>
<td> </td>
<td> </td>
<td style="text-align: right">598,000</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">0.44</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 20pt; text-indent: -10pt">Exercised</td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">—</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #EAF9E8">
<td style="padding-left: 20pt; text-indent: -10pt">Expired</td>
<td> </td>
<td> </td>
<td style="text-align: right">(3,706</td>
<td>)</td>
<td> </td>
<td> </td>
<td style="text-align: right">250.00</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 20pt; text-indent: -10pt">Balance at June 30, 2012</td>
<td> </td>
<td> </td>
<td style="text-align: right">21,473,705</td>
<td> </td>
<td> </td>
<td>$</td>
<td style="text-align: right">.88</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #EAF9E8">
<td style="padding-left: 20pt; text-indent: -10pt">Warrants Exercisable at June 30 , 2012</td>
<td> </td>
<td> </td>
<td style="text-align: right">21,473,705</td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right">.88</td>
<td> </td></tr>
</table>
37455000
1012353
335000
83309
251691
2030870
0.97
225000
4500
220500
450000
9494
9282
93750
18750
637800
1411444
3350000
800000
.275
.45
1152784
.0275
<p style="margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="vertical-align: top"><td style="width: 5%; font-weight: bold"></td>
<td style="width: 95%; font-weight: bold">Commitments and Contingencies</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font-style: italic; font-weight: bold">Employment Agreements</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">Effective February 15, 2011, the Company entered into employment
agreements with its President and Vice President. The employment agreements each provided for a term of five years. Pursuant to
the terms of the employment agreements, each of these executive officers will receive an annual salary during the first and second
years of the term of the employment agreement of $50,000, which is increased to $75,000 per year in the third year of the term,
to $100,000 per year in the fourth year of the term and to $150,000 per year in the final year of the term of the agreement.  The
agreement will terminate upon the death or disability of the officers.  In addition, the agreement may be terminated
by either party without cause or by the Company for cause.  Upon the termination of the agreement, the officers are not
entitled to any severance payments and the Company is only obligated to compensate the officer through the date of termination.  If
the Company should terminate the agreement without cause, the non-compete provisions of the agreement terminate.  </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On November 16, 2011, the Company entered into a new five year employment
agreements with its President and Vice President which superseded their prior agreements with our subsidiary, SimplePons, Inc.
Under the terms of these agreements, the Company agreed to pay each of them an annual salary of $100,000 for the period commencing
on the effective date and ending on December 31, 2012, and thereafter for the period commencing on January 1, 2013 and ending on
December 31, 2013, a base salary at an annual rate $125,000, and thereafter for the period commencing January 1, 2014 until the
end of the term of this agreement, a base salary at an annual rate of $150,000. Each executive is also entitled to an annual bonus
of at the discretion of our board of directors. Each of these executive officers is also entitled to participate in all benefit
programs we offer our employees. The agreements, which contain an automatic yearly renewal provision, contain customary confidentially
and non-compete provisions. As additional compensation the Company granted options to both executives to purchase an aggregate
of 2,000,000 shares of common stock vesting quarterly in arrears over three years (See note 6(e)). Each employee’s employment
may be terminated upon his death or disability and with or without cause. In the event we should terminate his employment upon
his death or disability, he is entitled to his then current base salary for a period of three months from the date of termination
and all granted but unvested options are immediately vested. In the event we should terminate the agreement for cause or if he
should resign, he is entitled to payment of his base salary through the date of termination. At our option, we may terminate his
employment without cause, in which event he is entitled to payment of his then base salary and bonus through the date of termination
together with one years’ salary payable in a lump sum at the date of termination and all granted but unvested options are
immediately vested. Salary expense including payroll taxes for the period February 7, 2011(Inception) to December 31, 2011 was
$82,920 and is accrued as of December 31, 2011.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left">On November 16, 2011, the Company entered into a new five year employment
agreements with its Chief Financial Officer, which is effective November 16, 2011. Under the terms of this agreement, we agreed
to pay our Chief Financial Officer an annual salary of $70,000 for the period commencing on the effective date and ending on December
31, 2012, and thereafter for the period commencing on January 1, 2013 and ending on December 31, 2013, a base salary at an annual
rate $87,500, and thereafter for the period commencing January 1, 2014 until the end of the term of this agreement, a base salary
at an annual rate of $109,375. He is also entitled to an annual bonus of at the discretion of our board of directors. The agreements,
which contain an automatic yearly renewal provision, contain customary confidentially and non-compete provisions. As additional
compensation the Company granted options to the executive to purchase an aggregate of 500,000 shares of common stock vesting quarterly
in arrears over three years (See note 6(e)). Each employee’s employment may be terminated upon his death or disability and
with or without cause. In the event we should terminate his employment upon his death or disability, he is entitled to his then
current base salary for a period of three months from the date of termination and all granted but unvested options are immediately
vested. In the event we should terminate the agreement for cause or if he should resign, he is entitled to payment of his base
salary through the date of termination. At our option, we may terminate his employment without cause, in which event he is entitled
to payment of his then base salary and bonus through the date of termination together with one years’ salary payable in a
lump sum at the date of termination and all granted but unvested options are immediately vested. Salary expense including payroll
taxes for the period February 7, 2011(Inception) to December 31, 2011 was $9,419 and is accrued as of December 31, 2011.</p></td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%"> </td>
<td style="width: 95%; font-style: italic; font-weight: bold; text-align: justify">Lease Commitments</td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: left">On November 10, 2011, the Company leased approximately 3,200 square feet of office space from an unaffiliated third party under the terms of a three year agreement from December 15, 2011 through December 14, 2014. Future minimum lease commitments due under the operating lease at December 31, 2011 are as follows:</td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">  </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 50%">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 86%; padding-left: 5.4pt; text-align: justify">2012:</td>
<td style="width: 3%"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">60,375</td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 5.4pt; text-align: justify">2013:</td>
<td> </td>
<td> </td>
<td style="text-align: right">61,387</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 5.4pt; text-align: justify">2014:</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">62,433</td>
<td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 2.5pt; padding-left: 5.4pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">184,195</td>
<td style="padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 5%; text-align: left"><b></b></td>
<td style="width: 95%; text-align: left"><b>Convertible Note Payable -Related Party</b></td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: top">
<td style="text-align: left"> </td>
<td style="text-align: left">On January 24, 2012, the Company entered into a 4% convertible promissory note with its Chief Operating Officer in the amount of $40,000. The note is due on January 24, 2013 prior to the maturity date, the Company has the option to convert the principle and accrued interest into shares of the Company’s common stock at $0.10 per share. The fair value of the conversion was equal to the Company’s stock price on the date of issuance and no beneficial conversion was recorded. Interest expense for the three and six months ended June 30, 2012 amount to $399 and $693. </td></tr>
</table>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
214466