0000885475
2014-03-31
0000885475
2013-12-31
0000885475
2014-01-01
2014-03-31
0000885475
2013-06-17
0000885475
2014-05-15
0000885475
ECOP:CADMember
2014-03-31
0000885475
ECOP:CADMember
2014-01-01
2014-03-31
0000885475
ECOP:CADMember
2013-06-17
0000885475
2013-06-15
2013-06-17
0000885475
ECOP:SimpleponsMember
2014-03-31
0000885475
ECOP:SimpleponsMember
2013-01-01
2013-12-31
0000885475
ECOP:WarrantOneMember
2014-01-01
2014-03-31
0000885475
ECOP:WarrantOneMember
2014-03-31
0000885475
ECOP:WarrantTwoMember
2014-01-01
2014-03-31
0000885475
ECOP:WarrantTwoMember
2014-03-31
0000885475
ECOP:WarrantThreeMember
2014-01-01
2014-03-31
0000885475
ECOP:WarrantThreeMember
2014-12-31
0000885475
ECOP:WarrantFourMember
2014-01-01
2014-03-31
0000885475
ECOP:WarrantFourMember
2014-12-31
0000885475
2013-01-01
2013-03-31
0000885475
2013-03-31
0000885475
ECOP:SimpleponsMember
2013-12-31
0000885475
ECOP:MarchFifteenTwoThousandAndTenMember
2014-03-31
0000885475
ECOP:JuneTenTwoThousandAndTenMember
2014-03-31
0000885475
ECOP:FebruaryOneTwoThousandTwelveMember
2014-03-31
0000885475
ECOP:JanuaryTwentyNineTwoThousandThirteenMember
2014-03-31
0000885475
ECOP:DecemberElevenTwoThousandTwelveMember
2014-03-31
0000885475
ECOP:MarchFifteenTwoThousandAndThirteenMember
2013-12-31
0000885475
ECOP:JuneTenTwoThousandAndTenMember
2014-01-01
2014-03-31
0000885475
ECOP:FebruaryOneTwoThousandTwelveMember
2014-01-01
2014-03-31
0000885475
ECOP:JanuaryTwentyNineTwoThousandTwelveMember
2014-01-01
2014-03-31
0000885475
ECOP:DecemberElevenTwoThousandTwelveMember
2014-01-01
2014-03-31
0000885475
ECOP:WarrantFiveMember
2014-03-31
0000885475
ECOP:WarrantFiveMember
2014-01-01
2014-03-31
0000885475
2012-12-31
0000885475
ECOP:MarchFifteenTwoThousandThirteenMember
2014-03-31
0000885475
ECOP:MarchFifteenTwoThousandTenMember
2014-03-31
0000885475
ECOP:MarchFifteenTwoThousandTenMember
2014-01-01
2014-03-31
0000885475
ECOP:MarchFifteenthTwoThousandAndTenMember
2014-01-01
2014-03-31
0000885475
ECOP:MarchFifteenTwoThousandAndThirteenMember
2014-01-01
2014-03-31
0000885475
2014-01-30
2014-01-31
0000885475
2014-02-27
2014-02-28
0000885475
2014-02-28
0000885475
ECOP:WarrantSixMember
2014-03-31
0000885475
ECOP:WarrantSixMember
2014-01-01
2014-03-31
0000885475
ECOP:WarrantSevenMember
2014-01-01
2014-03-31
0000885475
ECOP:WarrantEightMember
2014-03-31
0000885475
ECOP:WarrantEightMember
2014-01-01
2014-03-31
0000885475
ECOP:WarrantNineMember
2014-03-31
0000885475
ECOP:WarrantNineMember
2014-01-01
2014-03-31
0000885475
us-gaap:SubsequentEventMember
2014-04-09
2014-04-10
0000885475
us-gaap:SubsequentEventMember
ECOP:ThirdPartyMember
2014-04-13
2014-04-14
0000885475
us-gaap:SubsequentEventMember
ECOP:ThirdPartyMember
2014-04-21
2014-04-22
0000885475
us-gaap:SubsequentEventMember
ECOP:ThirdPartyMember
2014-04-22
0000885475
ECOP:AssetPurchaseAgreementWithThirdPartyMember
us-gaap:SubsequentEventMember
2014-04-24
2014-04-25
0000885475
us-gaap:SubsequentEventMember
ECOP:AssetPurchaseAgreementWithThirdPartyMember
2014-04-25
0000885475
us-gaap:SubsequentEventMember
2014-05-06
2014-05-07
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
xbrli:pure
iso4217:CAD
25290
107770
25026
1761
0.10
0.04
0.10
0.10
0.12
0.12
0.12
0.04
Eco-Shift Power Corp.
0000885475
10-Q
2014-03-31
false
--12-31
Smaller Reporting Company
Q1
2014
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>1. NATURE OF OPERATIONS</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Eco-Shift Power Corp. (“Eco-Shift
Canada”, or the “Company”) was incorporated on May 15, 2008 under the laws of the Province of Ontario, Canada.
Eco-Shift Canada is primarily engaged in developing, selling and distributing electrical lighting products.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Eco-Shift Power Corp. (formerly Simplepons,
Inc. or “Simplepons”) was a Delaware corporation formed on February 7, 2011. Simplepons was in the business of the
sale of coupon books and was developing a mobile coupon subscription that solves the problem of leaving your coupons at home. On
February 5, 2013, Simplepons completed a reverse merger and subsequently the board of directors (the “Board”) ceased
the then existing coupon subscription business.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s consolidated financial
statements include the assets, liabilities and historical operations of both Eco-Shift Canada and Simplepons as one entity.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>2. BASIS OF PRESENTATION</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying unaudited interim consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
for interim financial information and the Securities Exchange Commission (“SEC”) instructions to Form 10-Q and Article
8 of SEC Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting
principles for complete financial statements and should be read in conjunction with the Company’s audited financial statements
and notes thereto included in a current report on Forms 10-K and 10-K/A filed with the SEC on April 8, 2014.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation of financial position and results of operations
for the interim periods presented have been reflected herein. Operating results for the three months ended March 31, 2014, are
not necessarily indicative of the results that may be expected for the year ending December 31, 2014. Notes to the Unaudited interim
consolidated financial statements which would substantially duplicate the disclosures contained in the Company’s audited
consolidated financial statements for the year ended December 31, 2013 as included in the current report on Forms 10-K and 10-K/A
filed with the SEC on April 8, 2014 have been omitted.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><i><u>Use of Estimates</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of financial statements
in conformity with accounting principles generally accepted in the United States requires management 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 the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported
in earnings in the period in which they become known.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><i><u>Fair Value of Financial Instruments</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective January 1, 2008, the Company
adopted Statement of Financial Accounting Standards (“SFAS”) No. 157 Fair Value Measurements (“SFAS 157”),
superseded by ASC 820-10, which defines fair value, establishes a framework for measuring fair value and expands required disclosure
about fair value measurements of assets and liabilities. The impact of adopting ASC 820-10 was not significant to the Company’s
condensed financial statements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity
to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes
three levels of inputs that may be used to measure fair value:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px; line-height: 115%"> </td>
<td style="width: 24px; line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">●</font></td>
<td style="line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">Level 1 – Valuation based on quoted market prices in active markets for identical assets or liabilities.</font></td></tr>
<tr style="vertical-align: top">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: top">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">●</font></td>
<td style="line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.</font></td></tr>
<tr style="vertical-align: top">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: top">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">●</font></td>
<td style="text-align: justify; line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In instances where the determination
of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value
hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair
value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its
entirety requires judgment, and considers factors specific to the asset or liability. The valuation of our derivative liability
is determined using Level 1 inputs, which consider (i) time value, (ii) current market and (iii) contractual prices.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Fair value estimates discussed herein
are based upon certain market assumptions and pertinent information available to management as of March 31, 2014 and 2013. The
respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term
nature of these instruments. These financial instruments include cash, notes receivable, accounts payable and accrued expenses.
The fair value of the Company’s debt instruments is estimated based on current rates that would be available for debt of
similar terms, which is not significantly different from its stated value, except for the convertible note payable, at fair value,
which has been revalued based on current market rates using Level 1 inputs.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><i><u>Recently issued accounting pronouncements</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">From time to time, new accounting pronouncements
are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company
as of the specified effective date. Unless otherwise discussed, the Company believes that recently issued accounting pronouncements
adopted do not have a material impact on its financial position or results of operations.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>9. CONVERTIBLE NOTES PAYABLE</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 17 and July 3, 2013, the Company
entered into two 10% convertible promissory notes with Eco-Shift Scientific Inc. amounting to $182,503 ($201,750 CAD). These two
notes are due on June 17, 2014 and July 3, 2014, respectively. Prior to the maturity date, the holder has the option to convert
the principle and accrued interest into shares of the Company’s common stock at $0.25 per share.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company evaluated the terms and
conditions of the convertible debentures under the guidance of ASC 815, <i>Derivatives and Hedging</i>. The conversion feature
met the definition of conventional convertible for purposes of applying the conventional convertible exemption. The definition
of conventional contemplates a limitation on the number of shares issuable under the arrangement. The instrument was convertible
into a fixed number of shares and there were no down round protection features contained in the contracts. Since the convertible
promissory note achieved the conventional convertible exemption, the Company was required to consider whether the hybrid contract
embodied a beneficial conversion feature. The calculation of the effective conversion amount did not result in a beneficial conversion
feature because 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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">These notes have been issued to an
associated company (a related party as one of the shareholder of “E”-Shift Scientific Inc. is a close family member
of the shareholder of the Company). Interest expense recognized on these notes for the three months ended March 31, 2014 amounts
to $4,569 (2013 - $nil).</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>11. COMMITMENTS AND CONTINGENCIES</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><u>Commitments</u></i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company leases premises under an
operating lease with a five year term in Cambridge, Ontario. Minimum lease commitments under the lease as at March 31, 2014 were:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 77%; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2014 (9 months remaining)</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 20%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">61,456</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2015</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">82,492</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">83,103</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2017</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">41,857</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: center; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">268,908</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b><i><u>Contingencies</u></i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 7, 2014, the Company commenced
an action in the Superior Court of Justice for Ontario against N.V. Nederlandsche Apparatenfabriek “Nedap”, Niek Nijenhuis,
Thomas Lang, Jeroen Somsen, Venture Lighting International Inc., Andrew Tyrrell, NRG Metalworks Inc., Craig Chornaby, Full Energy
Solutions Distribution and Jan Christopher Vargas (together, the Defendants). The Company claims for $25 million CAD ($22.6 million)
in compensatory and punitive damages for breach of contract, breach of confidence, conspiracy, breach of fiduciary duty, intentional
interference with economic relations and inducing breach of contract. The Company anticipates amending its statement of claim
to also allege patent infringement. The Defendents have delivered statements of defence. The Company does not expect this action
to proceed to trial until 2015 or 2016.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>5. RESTRICTED CASH</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Restricted cash represents cash which
are held in a trust account and are available subject to approval from certain investors.</p>
581206
604080
45230
22615
45230
176397
20354
235051
226150
45230
56762082
0.0001
0.0001
5000000
5000000
1
1
0.01
0.01
400000000
400000000
368448
100000
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>4. SIGNIFICANT ACCOUNTING POLICIES</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><i><u>Earnings Per Share</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has adopted the Financial
Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 260-10 which provides
for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution
and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding
for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an
entity. Basic and diluted losses per share were the same at the reporting dates as there were no common stock equivalents outstanding
at March 31, 2014 and 2013. All outstanding warrants and options have an anti-dilutive effect on the loss per share and are therefore
excluded from the determination of the diluted loss per share calculation for the three months ended March 31, 2014 and 2013.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Inventory</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Inventory, which comprises of electrical
lighting materials and supplies, is valued at the lower of cost and market value, with cost being determined on a weighted average
basis. The cost of inventory includes purchase price, freight, custom duties and other delivery expenses. Market for materials
and supplies is net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less
any applicable variable selling costs.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company evaluates the carrying value
of inventory on a regular basis, taking into account such factors as historical and anticipated future sales compared with quantities
on hand and the price the Company expects to obtain for products in the market compared with historical cost.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><i><u>Fair Value of Financial Instruments</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective January 1, 2008, the Company
adopted Statement of Financial Accounting Standards (“SFAS”) No. 157 Fair Value Measurements (“SFAS 157”),
superseded by ASC 820-10, which defines fair value, establishes a framework for measuring fair value and expands required disclosure
about fair value measurements of assets and liabilities. The impact of adopting ASC 820-10 was not significant to the Company’s
condensed financial statements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity
to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes
three levels of inputs that may be used to measure fair value:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px; line-height: 115%"> </td>
<td style="width: 24px; line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">●</font></td>
<td style="line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">Level 1 – Valuation based on quoted market prices in active markets for identical assets or liabilities.</font></td></tr>
<tr style="vertical-align: top">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: top">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">●</font></td>
<td style="line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.</font></td></tr>
<tr style="vertical-align: top">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: top">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">●</font></td>
<td style="text-align: justify; line-height: 115%"><font style="font: 10pt/115% Times New Roman, Times, Serif">Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In instances where the determination
of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value
hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair
value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its
entirety requires judgment, and considers factors specific to the asset or liability. The valuation of our derivative liability
is determined using Level 1 inputs, which consider (i) time value, (ii) current market and (iii) contractual prices.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Fair value estimates discussed herein
are based upon certain market assumptions and pertinent information available to management as of March 31, 2014 and 2013. The
respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term
nature of these instruments. These financial instruments include cash, notes receivable, accounts payable and accrued expenses.
The fair value of the Company’s debt instruments is estimated based on current rates that would be available for debt of
similar terms, which is not significantly different from its stated value, except for the convertible note payable, at fair value,
which has been revalued based on current market rates using Level 1 inputs.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><i><u>Use of Estimates</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of financial statements
in conformity with accounting principles generally accepted in the United States requires management 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 the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported
in earnings in the period in which they become known.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><i><u>Income Taxes</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company provides for federal and
state income taxes payable, as well as for those deferred because of the timing differences between reporting income and expenses
for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recoverable or settled. The effect of a change
in tax rates is recognized as income or expense in the period of the change. A valuation allowance is established, when necessary,
to reduce deferred income tax assets to the amount that is more likely than not to be realized.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Upon inception, the Company adopted
the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), superseded by
ASC 740-10. The Company did not recognize a liability as a result of the implementation of ASC 740-10. A reconciliation of the
beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit as of the
date of adoption. The Company did not recognize interest expense or penalties as a result of the implementation of ASC 740-10.
If there were an unrecognized tax benefit, the Company would recognize interest related to unrecognized tax benefits in interest
expense and penalties in other operating expenses.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><i><u>Recently issued accounting pronouncements</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">From time to time, new accounting pronouncements
are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company
as of the specified effective date. Unless otherwise discussed, the Company believes that recently issued accounting pronouncements
adopted do not have a material impact on its financial position or results of operations.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>3. GOING CONCERN</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s unaudited interim
consolidated financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business. The Company has experienced losses from operations since inception that raise
substantial doubt as to its ability to continue as a going concern.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s existence is dependent
upon management’s ability to develop profitable operations and resolve its liquidity problems. Management anticipates the
Company will attain profitable status and improve its liquidity through continued business development and additional equity investment
in the Company. Management is pursuing various sources of financing. In the event the Company is not able to raise the necessary
equity financing, the Company intends to seek stockholder loans or debt financing, as needed, until profitable operations are attained.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The unaudited interim consolidated
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue
as a going concern.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><i><u>Income Taxes</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company provides for federal and
state income taxes payable, as well as for those deferred because of the timing differences between reporting income and expenses
for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recoverable or settled. The effect of a change
in tax rates is recognized as income or expense in the period of the change. A valuation allowance is established, when necessary,
to reduce deferred income tax assets to the amount that is more likely than not to be realized.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Upon inception, the Company adopted
the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), superseded by
ASC 740-10. The Company did not recognize a liability as a result of the implementation of ASC 740-10. A reconciliation of the
beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit as of the
date of adoption. The Company did not recognize interest expense or penalties as a result of the implementation of ASC 740-10.
If there were an unrecognized tax benefit, the Company would recognize interest related to unrecognized tax benefits in interest
expense and penalties in other operating expenses.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>6. LIQUIDATED DAMAGES PAYABLE</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Pursuant to the Company’s private
placement completed during the year ended December 31, 2012 in the gross amount of $370,000, purchasers (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”).</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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 March 31, 2014 and December 31, 2013, the Company has accrued liquidated damages
payable in the amount of $70,300.</p>
370000
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>7. PROVISION FOR A CONTINGENT LIABILITY</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has been named as a co-defendant
in a claim by a customer, who is seeking damages of $10,000,000 CAD ($9,046,000) and return of a deposit of $150,000 CAD ($135,690)
which was received by the Company under a Value-Added Reseller arrangement. The Company has filed a counterclaim against the customer
for damages of $9,548,560 CAD ($8,637,627) resulting from the plaintiff’s breach of contract plus punitive damages of $1,000,000
CAD ($904,600) for negligence and loss of business reputation. Management of the company believes these claims are without merit
and has accrued $150,000 CAD ($135,690) in the consolidated financial statements in regards to this claim, as management believes
this represents a reasonable estimate of the amount the Company may ultimately be required to pay.</p>
150000
135690
9046000
10000000
135690
150000
904600
1000000
8637627
9548560
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>8. ADVANCES FROM SHAREHOLDERS</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The advances from shareholders are
unsecured, non-interest bearing and due on demand.</p>
2014-06-17
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>10. PROMISSORY NOTES PAYABLE</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The details of the promissory notes
outstanding as at March 31, 2014 are as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Date of</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Date of</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Amount</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Rate of</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>issuance</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>maturity</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>$</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>interest</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Security</b></font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 18%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">March 15, 2010</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 18%; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">N/A</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 10%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">45,230</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 10%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">4</font></td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 36%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">March 15, 2010</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">N/A</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">45,230</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">4</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">June 10, 2010</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">N/A</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">22,615</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">10</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">February 1, 2012</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">N/A</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">45,230</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">10</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">December 11, 2012</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">December 11, 2013 *</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">20,354</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">12</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">No security</font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">January 29, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">January 15, 2014 *</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">176,397</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">12</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">No security</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">March 15, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">December 11, 2013 *</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">226,150</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">12</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">No security</font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">581,206</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">N/A – There is no maturity date
of these promissory notes. Repayment is due when the Company has sufficient working capital to operate.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Promissory notes amounting to $158,305
($175,000 CAD) have been issued to close family members of the shareholders which are outstanding as at March 31, 2014.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">* These promissory notes are in default
and management is in the process of negotiating to extend these for further one year term.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The details of the promissory notes
outstanding as at March 31, 2014 are as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Date of</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Date of</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Amount</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Rate of</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>issuance</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>maturity</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>$</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>interest</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Security</b></font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 18%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">March 15, 2010</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 18%; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">N/A</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 10%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">45,230</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 10%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">4</font></td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 36%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">March 15, 2010</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">N/A</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">45,230</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">4</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">June 10, 2010</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">N/A</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">22,615</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">10</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">February 1, 2012</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">N/A</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">45,230</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">10</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">December 11, 2012</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">December 11, 2013 *</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">20,354</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">12</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">No security</font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">January 29, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">January 15, 2014 *</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">176,397</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">12</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">No security</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">March 15, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">December 11, 2013 *</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">226,150</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">12</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">No security</font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">581,206</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
<p style="margin: 0pt">Net assets of the Company</p>
<p style="margin: 0pt">Net assets of the Company</p>
<p style="margin: 0pt">No security</p>
<p style="margin: 0pt">No security</p>
<p style="margin: 0pt">Net assets of the Company</p>
<p style="margin: 0pt">Net assets of the Company</p>
<p style="margin: 0pt">No security</p>
158305
175000
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>12. STOCKHOLDERS’ DEFICIENCY</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><u>Authorized stock</u></i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">As at March 31, 2014 and December 31,
2013, the Company is authorized to issue 5,000,000 shares of preferred stock having par value of $0.0001 and 400,000,000 shares
of common stock having par value of $0.01.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><u>Issued and outstanding stock</u></i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In January 2014, the Company issued
400,000 shares of common stock pursuant to a consulting agreement. These shares were valued at $0.35 per common share representing
the market price at the time of issuance and accordingly $140,000 has been recorded as legal and professional charges in the statement
of operations with corresponding credit to common stock and additional paid-in capital.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In January 2014, the Company issued
remaining 25,000 shares of common stock out of the total shares of 50,000 common stock pursuant to a Confidential Settlement Agreement
and Mutual General Release with a claimant finalized during the year ended December 31, 2013.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In January 2014, the Company issued
1,650,000 shares of common stock in respect of stock based compensation recorded during the year ended December 31, 2013.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In February 2014, the Company entered
into various subscription and warrant agreements for the issuance of 160,000 shares of common stock at a price of $0.25 per common
share.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In February 2014, the Company issued
29,911,799 shares of common stock in exchange of 34,047,928 outstanding exchangeable shares pursuant to the terms of the Voting
and Trust Agreement, Rollover Agreement and Support Agreement finalized as referred to in the consolidated financial statements
for the year ended December 31, 2013.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><u>Outstanding warrants</u></i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has the following warrants
outstanding as at March 31, 2014:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Outstanding</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Weighted average</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Weighted average</b></font></td>
<td style="text-align: center; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>exercisable</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>exercise price</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>remaining life</b></font></td>
<td style="text-align: center; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Grant date</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Maturity date</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>warrants</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>$</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Years</b></font></td>
<td style="text-align: center; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 24%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">May 13, 2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 20%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2016</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 14%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">12,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 16%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">1.00</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 16%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.33</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">August 31, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">August 31, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">200,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.50</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.42</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">September 10, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">September 30, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">200,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.25</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.75</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">October 4, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">October 31, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2,000,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.50</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.66</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">November 19, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">November 30, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">800,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.50</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.67</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">November 21, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">November 30, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">600,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.50</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.67</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">December 17, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">December 31, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">316,344</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.43</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.80</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">February 12, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">February 28, 2017</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">80,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.50</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.93</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">February 14, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">February 28, 2017</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">111,064</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.38</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.93</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">4,319,408</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.49</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.68</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>13. RELATED PARTY TRANSACTIONS</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s transactions with
related parties were, in the opinion of the directors, carried out on normal commercial terms and in the ordinary course of the
Company’s business.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Other than those disclosed elsewhere
in the financial statements, there were no other related party transactions or balances.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>14. SUPPLEMENTAL CASH FLOWS INFORMATION</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">During the three months ended March
31, 2014 interest of $14,345 (2013 - $11,461) was paid.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>15. SUBSEQUENT EVENTS</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 10, 2014, the Company engaged
a third party company as a consultant to provide certain business consulting services for a period of one year. The Company issued
1,300,000 shares of restricted common stock as compensation for such services.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 14, 2014, the Company agreed
to settle certain claims for consulting services provided by a third party through issuance of 2,500,000 shares of common stock.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 22, 2014, the Company issued
a promissory note in the principal amount of $100,000 to a third party company. The note bears interest at 12% per annum and has
a six-month term. The note is prepayable at any time by the Company, subject to payment of a redemption premium of 125% in lieu
of principal and interest otherwise payable. The note is also convertible by the holder into shares of common stock of the Company
at a 50% discount to the average of the three lowest trades on the previous ten trading days before conversion. The note may be
converted in two tranches of $50,000 plus interest, or 4.9% of the then current issued and outstanding number of shares of common
stock of the Company, whichever is lower.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 25, 2014, the Company entered
into an Asset Purchase Agreement with a third party company, which provided for the purchase of certain assets and intellectual
property of the third party. The consideration for such purchase included the payment of $500,000 in cash on or before October
25, 2014, and the issuance of 9,800,000 shares of common stock of the Company, together with a three-year option to purchase 2,500,000
shares of common stock at $0.25 per share, and a three-year warrant to purchase 1,500,000 shares of common stock at $0.25 per share.
The option is immediately exercisable and the warrant is exercisable beginning eighteen months after the issue date.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 7, 2014, the Company entered
into Master Services Agreement with a software development service provider. The service provider will provide certain software
development services. Consideration for such services is $110,000 in cash and a three-year option to purchase 600,000 shares of
common stock of the Company at $0.25 per share. The payment of cash and vesting of the option is tied to deliverables of software
under the Master Services Agreement.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company leases premises under an
operating lease with a five year term in Cambridge, Ontario. Minimum lease commitments under the lease as at March 31, 2014 were:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 77%; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2014 (9 months remaining)</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 20%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">61,456</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2015</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">82,492</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">83,103</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2017</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">41,857</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: center; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">268,908</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><b><i></i></b></p>
268908
0.35
0.25
0.25
0.25
57100476
54863211
4319408
12000
200000
200000
2000000
800000
600000
316344
800000
111064
14345
11461
182503
201750
0.25
469925
710354
11640
12098
458285
698256
30991
55020
182805
150756
195804
142891
18072
24442
1743604
1900182
250065
118696
135690
141030
70300
70300
9547
357976
514293
418415
469925
710354
-5013558
-4716567
118631
82292
571005
548631
1
1
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Inventory</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Inventory, which comprises of electrical
lighting materials and supplies, is valued at the lower of cost and market value, with cost being determined on a weighted average
basis. The cost of inventory includes purchase price, freight, custom duties and other delivery expenses. Market for materials
and supplies is net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less
any applicable variable selling costs.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company evaluates the carrying
value of inventory on a regular basis, taking into account such factors as historical and anticipated future sales compared with
quantities on hand and the price the Company expects to obtain for products in the market compared with historical cost.</p>
70300
70300
1480000
<p style="margin: 0pt"></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
0.01
61456
82492
83103
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has the following warrants
outstanding as at March 31, 2014:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Outstanding</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Weighted average</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Weighted average</b></font></td>
<td style="text-align: center; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>exercisable</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>exercise price</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>remaining life</b></font></td>
<td style="text-align: center; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Grant date</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Maturity date</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>warrants</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>$</b></font></td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Years</b></font></td>
<td style="text-align: center; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 24%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">May 13, 2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 20%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2016</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 14%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">12,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 16%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">1.00</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 16%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.33</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">August 31, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">August 31, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">200,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.50</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.42</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">September 10, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">September 30, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">200,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.25</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.75</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">October 4, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">October 31, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2,000,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.50</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.66</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">November 19, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">November 30, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">800,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.50</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.67</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">November 21, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">November 30, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">600,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.50</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.67</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">December 17, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">December 31, 2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">316,344</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.43</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.80</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">February 12, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">February 28, 2017</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">80,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.50</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.93</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">February 14, 2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">February 28, 2017</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">111,064</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.38</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.93</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">4,319,408</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0.49</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2.68</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
0.49
1.00
0.50
0.25
0.50
0.50
0.43
0.50
0.38
0.25
5323
217377
2013-05-13
2013-08-31
2013-09-10
2013-10-04
2013-11-19
2013-11-21
2013-12-17
2014-02-12
2014-02-14
2016-06-30
2016-08-31
2016-09-30
2016-10-31
2016-11-30
2016-11-30
2016-12-31
2017-02-28
2017-02-28
4569
4138394
34047928
34047928
182503
189685
3050242
2895815
P2Y8M5D
P2Y3M29D
P2Y5M1D
P2Y9M
P2Y7M28D
P2Y8M1D
P2Y8M1D
P2Y9M18D
P2Y11M5D
P2Y11M5D
-1273679
-1189828
327200
261651
102353
110852
224847
150799
205358
149913
191672
50929
32651
24016
20618
4030
20506
11095
19403
32437
10499
8351
8355
7908
12776
29550
521838
318229
-296991
-167430
-296991
-167430
36339
17602
-260652
-149828
-0.0046
-0.0043
56386254
35123981
5453
-8745
-59550
25594
-38374
-307
-5039
21945
-7438
104263
-240524
-335356
40603
-458610
-363286
204116
204116
-59075
36800
310000
136058
-181926
172858
437447
-81636
74161
-844
-50896
-140000
400000
140000
25000
50000
1650000
160000
29911799
25000000
22600000
1300000
2500000
0.12
<p style="margin: 0pt">six-month term.</p>
1.25
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The note is also convertible by the
holder into shares of common stock of the Company at a 50% discount to the average of the three lowest trades on the previous
ten trading days before conversion. The note may be converted in two tranches of $50,000 plus interest, or 4.9% of the then current
issued and outstanding number of shares of common stock of the Company, whichever is lower.<b> </b></p>
500000
9800000
2500000
15000000
110000
600000
41857
2014-10-25
0.50
50000
0.049
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><i><u>Earnings Per Share</u></i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><i> </i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has adopted the Financial
Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 260-10 which provides
for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution
and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding
for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an
entity. Basic and diluted losses per share were the same at the reporting dates as there were no common stock equivalents outstanding
at March 31, 2014 and 2013. All outstanding warrants and options have an anti-dilutive effect on the loss per share and are therefore
excluded from the determination of the diluted loss per share calculation for the three months ended March 31, 2014 and 2013.</p>
* These promissory notes are in default and management is in the process of negotiating to extend these for further one year term.