0000885475
2014-06-30
0000885475
2013-12-31
0000885475
2014-01-01
2014-06-30
0000885475
2013-06-17
0000885475
2014-08-19
0000885475
ECOP:CADMember
2014-06-30
0000885475
ECOP:CADMember
2014-01-01
2014-06-30
0000885475
2013-04-01
2013-06-30
0000885475
ECOP:CADMember
2013-06-17
0000885475
2013-06-15
2013-06-17
0000885475
2013-07-03
0000885475
ECOP:CADMember
2013-07-03
0000885475
2013-07-02
2013-07-03
0000885475
ECOP:EcoShiftScientificIncMember
2014-06-30
0000885475
ECOP:SimpleponsMember
2014-06-30
0000885475
ECOP:SimpleponsMember
2013-01-01
2013-12-31
0000885475
us-gaap:WarrantMember
2013-12-31
0000885475
2014-04-01
2014-06-30
0000885475
2013-01-01
2013-06-30
0000885475
ECOP:SimpleponsMember
2013-12-31
0000885475
ECOP:MarchFifteenTwoThousandAndTenMember
2014-06-30
0000885475
ECOP:JuneTenTwoThousandAndTenMember
2014-06-30
0000885475
ECOP:FebruaryOneTwoThousandTwelveMember
2014-06-30
0000885475
ECOP:JanuaryTwentyNineTwoThousandThirteenMember
2014-06-30
0000885475
ECOP:DecemberElevenTwoThousandTwelveMember
2014-06-30
0000885475
ECOP:JuneTenTwoThousandAndTenMember
2014-01-01
2014-06-30
0000885475
ECOP:FebruaryOneTwoThousandTwelveMember
2014-01-01
2014-06-30
0000885475
ECOP:JanuaryTwentyNineTwoThousandTwelveMember
2014-01-01
2014-06-30
0000885475
ECOP:DecemberElevenTwoThousandTwelveMember
2014-01-01
2014-06-30
0000885475
us-gaap:ConvertibleDebtMember
2014-01-01
2014-06-30
0000885475
2012-12-31
0000885475
ECOP:MarchFifteenTwoThousandThirteenMember
2014-06-30
0000885475
ECOP:MarchFifteenTwoThousandTenMember
2014-06-30
0000885475
ECOP:MarchFifteenTwoThousandTenMember
2014-01-01
2014-06-30
0000885475
ECOP:MarchFifteenthTwoThousandAndTenMember
2014-01-01
2014-06-30
0000885475
ECOP:MarchFifteenTwoThousandAndThirteenMember
2014-01-01
2014-06-30
0000885475
2014-01-30
2014-01-31
0000885475
2014-02-27
2014-02-28
0000885475
2014-02-28
0000885475
us-gaap:SubsequentEventMember
ECOP:ThirdPartyMember
2014-06-29
2014-06-30
0000885475
us-gaap:SubsequentEventMember
ECOP:AccreditedInvestorsMember
2014-07-02
2014-07-18
0000885475
us-gaap:SubsequentEventMember
ECOP:AccreditedInvestorsMember
2014-07-18
0000885475
ECOP:JSJInvestmentsMember
2014-04-07
0000885475
ECOP:JSJInvestmentsMember
2014-06-10
0000885475
ECOP:JSJInvestmentsMember
2014-04-05
2014-04-07
0000885475
ECOP:JSJInvestmentsMember
2014-06-09
2014-06-10
0000885475
ECOP:AssetPurchaseAgreementWithRelatedPartyMember
2014-04-29
2014-04-30
0000885475
ECOP:AssetPurchaseAgreementWithRelatedPartyMember
2014-04-30
0000885475
ECOP:AprilTenTwoThousandFourteenMember
2014-06-30
0000885475
ECOP:AprilTenTwoThousandFourteenMember
2014-01-01
2014-06-30
0000885475
ECOP:ThirdPartyMember
2014-04-26
2014-04-30
0000885475
ECOP:ThirdPartyOneMember
2014-04-25
2014-04-30
0000885475
us-gaap:MinimumMember
ECOP:JSJInvestmentsMember
2014-01-01
2014-06-30
0000885475
us-gaap:MaximumMember
ECOP:JSJInvestmentsMember
2014-01-01
2014-06-30
0000885475
ECOP:GolenExplorationsMember
2014-01-01
2014-06-30
0000885475
ECOP:ErwinSpeckertMember
2014-01-01
2014-06-30
0000885475
ECOP:GolenExplorationOneMember
2014-01-01
2014-06-30
0000885475
ECOP:FBoulosMember
2014-01-01
2014-06-30
0000885475
ECOP:PBowmanIraLlcOneMember
2014-01-01
2014-06-30
0000885475
ECOP:FBoulosOneMember
2014-01-01
2014-06-30
0000885475
ECOP:PBowmanIraLlcTwoMember
2014-01-01
2014-06-30
0000885475
ECOP:BhktMember
2014-01-01
2014-06-30
0000885475
ECOP:FundacionRpdMember
2014-01-01
2014-06-30
0000885475
ECOP:AIRMember
2014-01-01
2014-06-30
0000885475
ECOP:ArangoMFernandoMember
2014-01-01
2014-06-30
0000885475
ECOP:CarlosLugoMember
2014-01-01
2014-06-30
0000885475
ECOP:SagaSagurosSaMember
2014-01-01
2014-06-30
0000885475
ECOP:EnriqureRohrmoserMember
2014-01-01
2014-06-30
0000885475
ECOP:WalterBrunettiMember
2014-01-01
2014-06-30
0000885475
ECOP:SungariTradingsMember
2014-01-01
2014-06-30
0000885475
ECOP:CMCapitalCorpMember
2014-01-01
2014-06-30
0000885475
ECOP:FundacionRpdOneMember
2014-01-01
2014-06-30
0000885475
ECOP:WestwoodCapitalSaMember
2014-01-01
2014-06-30
0000885475
ECOP:JacquilineDozalDePreMember
2014-01-01
2014-06-30
0000885475
ECOP:FundacionRpdTwoMember
2014-01-01
2014-06-30
0000885475
ECOP:CmCapitalCorpOneMember
2014-01-01
2014-06-30
0000885475
ECOP:GolenExplorationMember
2014-06-30
0000885475
ECOP:ErwinSpeckertMember
2014-06-30
0000885475
ECOP:GolenExplorationOneMember
2014-06-30
0000885475
ECOP:FBoulosMember
2014-06-30
0000885475
ECOP:PBowmanIraLlcOneMember
2014-06-30
0000885475
ECOP:FBoulosOneMember
2014-06-30
0000885475
ECOP:PBowmanIraLlcTwoMember
2014-06-30
0000885475
ECOP:BhktMember
2014-06-30
0000885475
ECOP:FundacionRpdMember
2014-06-30
0000885475
ECOP:AIRMember
2014-06-30
0000885475
ECOP:ArangoMFernandoMember
2014-06-30
0000885475
ECOP:CarlosLugoMember
2014-06-30
0000885475
ECOP:SagaSagurosSaMember
2014-06-30
0000885475
ECOP:EnriqureRohrmoserMember
2014-06-30
0000885475
ECOP:WalterBrunettiMember
2014-06-30
0000885475
ECOP:SungariTradingsMember
2014-06-30
0000885475
ECOP:CMCapitalCorpMember
2014-06-30
0000885475
ECOP:FundacionRpdOneMember
2014-06-30
0000885475
ECOP:WestwoodCapitalSaMember
2014-06-30
0000885475
ECOP:JacquilineDozalDePreMember
2014-06-30
0000885475
ECOP:FundacionRpdTwoMember
2014-06-30
0000885475
ECOP:CmCapitalCorpOneMember
2014-06-30
0000885475
ECOP:GolenExplorationMember
2014-04-07
0000885475
ECOP:ErwinSpeckertMember
2014-04-07
0000885475
ECOP:GolenExplorationOneMember
2014-04-07
0000885475
ECOP:FBoulosMember
2014-04-07
0000885475
ECOP:PBowmanIraLlcOneMember
2014-04-07
0000885475
ECOP:FBoulosOneMember
2014-04-07
0000885475
ECOP:PBowmanIraLlcTwoMember
2014-04-07
0000885475
ECOP:BhktMember
2014-04-07
0000885475
ECOP:FundacionRpdMember
2014-04-07
0000885475
ECOP:AIRMember
2014-04-07
0000885475
ECOP:ArangoMFernandoMember
2014-04-07
0000885475
ECOP:CarlosLugoMember
2014-04-07
0000885475
ECOP:SagaSagurosSaMember
2014-04-07
0000885475
ECOP:EnriqureRohrmoserMember
2014-04-07
0000885475
ECOP:WalterBrunettiMember
2014-04-07
0000885475
ECOP:SungariTradingsMember
2014-04-07
0000885475
ECOP:CMCapitalCorpMember
2014-04-07
0000885475
ECOP:FundacionRpdOneMember
2014-04-07
0000885475
ECOP:WestwoodCapitalSaMember
2014-04-07
0000885475
ECOP:JacquilineDozalDePreMember
2014-04-07
0000885475
ECOP:FundacionRpdTwoMember
2014-04-07
0000885475
ECOP:CmCapitalCorpOneMember
2014-04-07
0000885475
2014-04-07
0000885475
us-gaap:WarrantMember
2014-06-30
0000885475
us-gaap:ConvertibleDebtMember
2014-06-30
0000885475
us-gaap:ConvertibleDebtMember
2013-12-31
0000885475
us-gaap:WarrantMember
2014-01-01
2014-06-30
0000885475
ECOP:JSJInvestmentsMember
2014-06-30
0000885475
2013-06-30
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
xbrli:pure
iso4217:CAD
0.10
0.10
0.04
0.10
0.10
0.12
0.12
0.12
0.04
0.08
0.12
Eco-Shift Power Corp.
0000885475
10-Q
2014-06-30
false
--12-31
Smaller Reporting Company
Q2
2014
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>1. NATURE OF OPERATIONS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>2. BASIS OF PRESENTATION</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 six months ended June 30, 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="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Use of Estimates</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Fair Value of Financial Instruments</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s financial instruments consist
of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, advances from shareholders and convertible
debt. The estimated fair value of cash, accounts payable and accrued liabilities approximate their carrying amounts due to the
short-term nature of these instruments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company utilizes various types of financing
to fund its business needs, including convertible debt and warrants. The Company reviews its warrants and conversion features of
securities issued as to whether they are freestanding or contain an embedded derivative and, if so, whether they are classified
as a liability at each reporting period until the amount is settled and reclassified into equity with changes in fair value recognized
in current earnings. At June 30, 2014, the Company had convertible debt and warrants to purchase common stock, the fair values
of which are classified as a liability. Some of these units have embedded conversion features that are treated as a discount on
the notes. Such financial instruments are initially recorded at fair value and amortized to interest expense over the life of the
debt using the effective interest method.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Inputs used in the valuation to derive fair
value are classified based on a fair value hierarchy which distinguishes between assumptions based on market data (observable inputs)
and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Level one — Quoted market
prices in active markets for identical assets or liabilities;</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Level two — Inputs other than
level one inputs that are either directly or indirectly observable; and</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Level three — Unobservable
inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that
a market participant would use.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Determining which category an asset or liability
falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company’s
only asset or liability measured at fair value on a recurring basis is its derivative liability associated with the convertible
debt and warrants to purchase common stock (discussed above). The Company classifies the fair value of these convertible notes
and warrants under level three.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Recently issued accounting pronouncements</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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="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">The outstanding convertible notes of
$195,609 comprise of $189,082 issued to Eco-Shift Scientific Inc. and $6,527 issued to JSJ Investments as detailed below:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top; background-color: white">
<td style="width: 48px; font: 10pt/115% Calibri, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"><i>a)</i></font></td>
<td style="font: 10pt/115% Calibri, Helvetica, Sans-Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Convertible notes issued to Eco-Shift Scientific Inc.</i></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">On June 17 and July 3, 2013, the Company
entered into two 10% convertible promissory notes with Eco-Shift Scientific Inc. amounting to $189,082 ($201,750 CAD). These two
notes were 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. The Company is in the process
of formalizing arrangements with these noteholders to extend the term by one more year.</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 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 and six months ended June 30, 2014 amounts to $4,569
and $9,096, respectively (2013 - $nil and $385, respectively).</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 a result of issuance of JSJ Investment
notes as explained below, the Eco-Shift notes were tainted and the embedded conversion feature in these notes have been accounted
for as a derivative liability due to the variable conversion provision and full reset conversion price feature based on guidance
in ASC 820 and EITF 07-05 (See note 10).</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top; background-color: white">
<td style="width: 48px; font: 10pt/115% Calibri, Helvetica, Sans-Serif"><font style="font: 10pt Times New Roman, Times, Serif"><i>b)</i></font></td>
<td style="font: 10pt/115% Calibri, Helvetica, Sans-Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Convertible notes issued to JSJ Investments</i></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">On April 7, 2014 and June 10, 2014,
the Company issued convertible promissory notes in the principal amounts of $100,000 each to JSJ Investments (“Holder”).
These notes bear interest at 12% per annum and have a six-month term. The note is pre-payable 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 $50,000 plus interest, or 4.99% of the then current
issued and outstanding number of shares of common stock of the Company, whichever is lower.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 71%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Gross amount received – contractual balance</font></td>
<td style="width: 10%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 17%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">200,000</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<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></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net proceeds</font></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">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">200,000</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Following is an analysis of convertible
debt due to JSJ Investments at June 30, 2014:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2014</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 82%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Contractual balance</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">200,000</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Less unamortized discount</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">(193,473</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<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></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Convertible debt</font></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">6,527</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"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The embedded conversion feature in
the Note has been accounted for as a derivative liability due to the variable conversion provision and full reset conversion price
feature based on guidance in ASC 820 and EITF 07-05 (See note 10).</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>13. COMMITMENTS AND CONTINGENCIES</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>Commitments</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 leases premises under an
operating lease with a five year term in Cambridge, Ontario. Minimum lease commitments under the lease as at June 30, 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: 71%; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2014 (6 months remaining)</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%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 25%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">40,971</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<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="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="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; background-color: white">
<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="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="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">248,423</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="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In April 2014, the Company entered into
an Asset Purchase Agreement, subject to completion of certain conditions, with E-Shift Scientific Inc., which provided for the
purchase of certain assets and intellectual property of E-Shift Scientific. 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. As at June 30, 2014, the agreement is not yet effective due to non-completion of certain
conditions as explained in the agreement.</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>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. NederlandscheApparatenfabriek “Nedap”, NiekNijenhuis,
Thomas Lang, JeroenSomsen, 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="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 July 2, 2014, the Company commenced
an action in the Federal Court of Canada against Costco Wholesale Canada Ltd. for patent infringement. The defendant has delivered
a statement 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="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>5. RESTRICTED CASH </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Restricted cash represented cash which was
held in a trust account and was available subject to approval from certain investors.</p>
644332
604080
46850
23425
46850
182715
21083
234384
46850
42175
56889618
0.0001
0.0001
5000000
5000000
1
1
0.01
0.01
400000000
400000000
41346
751772
365000
100000
100000
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Earnings Per Share</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 June 30,
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 and six months ended June 30, 2014 and 2013.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Inventory</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Fair Value of Financial Instruments</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s financial instruments consist
of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, advances from shareholders and convertible
debt. The estimated fair value of cash, accounts payable and accrued liabilities approximate their carrying amounts due to the
short-term nature of these instruments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company utilizes various types of financing
to fund its business needs, including convertible debt and warrants. The Company reviews its warrants and conversion features of
securities issued as to whether they are freestanding or contain an embedded derivative and, if so, whether they are classified
as a liability at each reporting period until the amount is settled and reclassified into equity with changes in fair value recognized
in current earnings. At June 30, 2014, the Company had convertible debt and warrants to purchase common stock, the fair values
of which are classified as a liability. Some of these units have embedded conversion features that are treated as a discount on
the notes. Such financial instruments are initially recorded at fair value and amortized to interest expense over the life of the
debt using the effective interest method.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Inputs used in the valuation to derive fair
value are classified based on a fair value hierarchy which distinguishes between assumptions based on market data (observable inputs)
and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Level one — Quoted market
prices in active markets for identical assets or liabilities;</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Level two — Inputs other than
level one inputs that are either directly or indirectly observable; and</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Level three — Unobservable
inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that
a market participant would use.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Determining which category an asset or liability
falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company’s
only asset or liability measured at fair value on a recurring basis is its derivative liability associated with the convertible
debt and warrants to purchase common stock (discussed above). The Company classifies the fair value of these convertible notes
and warrants under level three.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Use of Estimates</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Income Taxes</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Recently issued accounting pronouncements</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>3. GOING CONCERN</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Income Taxes</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>6. LIQUIDATED DAMAGES PAYABLE</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 June 30, 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="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>7. PROVISION FOR A CONTINGENT LIABILITY</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 ($9,372,100) and return of a deposit of $150,000 CAD ($140,582)
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 ($8,949,005) resulting from the plaintiff’s breach of contract plus punitive damages of $1,000,000
CAD ($937,210) for negligence and loss of business reputation. Management of the company believes these claims are without merit
and has accrued $150,000 CAD ($140,582) in the unaudited interm 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>
140582
150000
9372100
10000000
140582
150000
937210
1000000
8949005
9548560
<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-align: justify; 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
2014-07-03
2014-10-10
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>11. PROMISSORY 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">The details of the promissory notes
outstanding as at June 30, 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 colspan="2" 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%"> </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 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 style="text-align: center; line-height: 115%"> </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>issuance</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>maturity</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 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>
<td style="text-align: center; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 20%; 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: 1%; text-align: center; 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: 1%; line-height: 115%"> </td>
<td style="width: 10%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">46,850</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">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: 32%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<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%"> </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="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">46,850</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">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>
<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">June 10, 2010</font></td>
<td style="line-height: 115%"> </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">N/A</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">23,425</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">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>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<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%"> </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="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">46,850</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">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>
<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 11, 2012</font></td>
<td style="line-height: 115%"> </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">December 11, 2013*</font></td>
<td> </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">21,083</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">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>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<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%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">January 15, 2014*</font></td>
<td> </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">182,715</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">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>
<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">March 15, 2013</font></td>
<td style="line-height: 115%"> </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">December 11, 2013*</font></td>
<td> </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">234,384</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">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>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">April 10, 2014</font></td>
<td style="line-height: 115%"> </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">October 10, 2014</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">42,175</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">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">Net assets of the Company</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; 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">644,332</font></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 colspan="2" 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-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Promissory notes amounting to $163,975
($175,000 CAD) have been issued to close family members of the shareholders which are outstanding as at June 30, 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="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The details of the promissory notes
outstanding as at June 30, 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 colspan="2" 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%"> </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 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 style="text-align: center; line-height: 115%"> </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>issuance</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>maturity</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 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>
<td style="text-align: center; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 20%; 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: 1%; text-align: center; 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: 1%; line-height: 115%"> </td>
<td style="width: 10%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">46,850</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">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: 32%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<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%"> </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="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">46,850</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">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>
<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">June 10, 2010</font></td>
<td style="line-height: 115%"> </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">N/A</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">23,425</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">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>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<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%"> </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="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">46,850</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">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>
<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 11, 2012</font></td>
<td style="line-height: 115%"> </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">December 11, 2013*</font></td>
<td> </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">21,083</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">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>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<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%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">January 15, 2014*</font></td>
<td> </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">182,715</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">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>
<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">March 15, 2013</font></td>
<td style="line-height: 115%"> </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">December 11, 2013*</font></td>
<td> </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">234,384</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">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>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">April 10, 2014</font></td>
<td style="line-height: 115%"> </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">October 10, 2014</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">42,175</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">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">Net assets of the Company</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"> </td>
<td style="text-align: center; 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">644,332</font></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 colspan="2" 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-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"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">No security</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">No security</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">No security</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">Net assets of the Company</font></p>
163975
175000
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><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 June 30, 2014 and December 31,
2013, the Company is authorized to issue 5,000,000 shares of preferred stock with a par value of $0.0001 and 400,000,000 shares
of common stock with a 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. Accordingly $140,000 has been recorded as legal and professional charges in the statement
of operations with corresponding credits 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">In April 2014, the Company engaged a
third party consultant to provide certain business consulting services for a term of one year and issued 1,300,000 shares of common
stock as compensation for such services. These shares were valued at $0.45 per common stock and $585,000 was recorded as prepaid
expenses to be amortized over a term of one year. Accordingly, the Company recorded $146,342 as professional charges in the statement
of operations for the quarter ended June 30, 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"><b><i><u>Issued and outstanding stock
(continued)</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 April 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.
These shares were valued at $0.45 per common stock and $1,125,000 was recorded as professional charges in the statement of operations.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>14. 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="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>15. SUPPLEMENTAL CASH FLOWS INFORMATION</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">During the three and six months ended
June 30, 2014 interest of $14,345 and $34,637 (2013 - $27,615 and $57,126) were paid.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>16. SUBSEQUENT EVENTS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 2, 2014 through July 18, 2014, the
Company entered into subscription agreements with accredited investors for the issuance of convertible promissory notes in the
aggregate principal amount of $365,000, together with common stock purchase warrants to purchase an aggregate of 1,525,000 shares
of common stock at $0.25 per share, to three accredited investors. The convertible notes bear interest at 8% per annum, subject
to a default rate at 12% per annum, and mature on the one-year anniversary of the date of issuance. The notes may be pre-paid at
any time at the option of the Company. The unpaid principal and accrued and unpaid interest are convertible at any time before
prepayment in full or the maturity date, at the option of the note holder, into shares of common stock of the Company at a conversion
price of $0.15 per share. The warrants are exercisable for three years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company paid a third party service provider
commissions and expenses of approximately $59,000 in connection with the issuance of the notes and warrants.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The sales of securities were made as part
of an offering of up to $850,000 of convertible promissory notes and warrants.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company leases premises under an
operating lease with a five year term in Cambridge, Ontario. Minimum lease commitments under the lease as at June 30, 2014 were:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 71%; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2014 (6 months remaining)</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 25%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">40,971</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<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="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="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; background-color: white">
<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="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="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">248,423</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="margin: 0pt"></p>
248423
0.35
0.25
.25
0.25
0.45
0.45
60900476
54863211
34637
27615
14345
57126
189082
201750
189082
201750
0.25
0.25
.15
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Inventory</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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">(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
40971
82492
83103
0.25
0.5000
0.5000
0.5000
1.0000
1.0000
0.2500
0.2500
0.5000
0.5000
0.5000
0.5000
0.5000
0.5000
0.5000
0.5000
0.5000
.2500
0.5000
0.5000
0.5000
0.5000
.2500
9096
4569
385
4138394
4138394
34047928
400000
140000
25000
50000
1650000
160000
60900476
54863211
29911799
1300000
0.12
0.12
0.12
<p style="margin: 0">six-month term</p>
<p style="margin: 0">six-month term</p>
1.25
1.25
<p style="margin: 0pt"></p>
<p style="font: 10pt 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 4.99% of the then current issued
and outstanding number of shares of common stock of the Company, whichever is lower.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt 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 4.99% of the then current issued
and outstanding number of shares of common stock of the Company, whichever is lower.</p>
500000
9800000
2500000
1525000
1500000
41857
2014-10-25
0.50
0.50
50000
50000
0.0499
0.0499
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i><u>Earnings Per Share</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt 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 June 30,
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 and six months ended June 30, 2014 and 2013.</p>
1004804
710354
12717
12098
992087
698256
487366
55020
199928
150756
217681
142891
47349
24442
217377
39763
107770
1761
1857
897569
195609
189685
189082
6527
133294
118696
140582
141030
70300
70300
24002
357976
980612
418415
1004804
710354
-2081496
-1189828
-6753238
-4716567
96249
82292
3966487
2895815
609005
548631
1
1
2188731
1900182
3086300
1900182
234447
40539
9600
191338
139513
4919
37160
115772
373960
45458
46760
307110
-2022714
-329751
-1762062
-479579
13957
28624
-22382
46226
-2036671
-358375
-1739680
-525805
-2036671
-358375
-1739680
-525805
2271118
398914
1749280
717143
65357
20704
52581
50254
328620
328620
18296
7252
9941
15160
25683
6951
15184
15302
304525
31138
285122
63575
35119
13597
14613
24692
61639
3716
41021
7746
99414
41649
66763
65665
1575547
85856
1383875
136785
146342
1125000
414158
188051
208800
337964
-0.0346
-0.0092
-0.0292
-0.0135
58411636
35972444
60414762
35554512
276959
-1399588
-22534
40567
-74912
17816
-49242
-239752
24639
15832
-3721
551461
91828
-326311
-120515
-594450
-714943
212439
212439
291804
728541
14683
-72995
198975
97032
36800
-47268
-90207
13598
22200
-13502
585000
2500000
0.0011
0.0088
0.39
328620
2015-10-31
2015-11-30
2015-11-30
2016-05-31
2016-05-31
2016-09-30
2016-09-30
2016-12-31
2016-12-31
2016-12-31
2016-12-31
2016-12-31
2016-12-31
2016-12-31
2016-12-31
2016-12-31
2016-12-31
2016-12-31
2017-02-28
2017-02-28
2017-02-28
2017-02-28
2000000
800000
600000
6000
6000
100000
100000
120000
20000
43560
15720
4000
8000
20000
10000
80000
15064
60000
40000
40000
80000
31064
432128
199535
79411
59558
276
276
16819
16819
11483
1914
4168
1504
383
766
1914
957
7655
2516
5741
3816
3816
7631
5170
300432
119758
89796
360
360
19780
19775
17514
2918
6354
2293
583
1166
2915
1457
11652
2947
8735
5809
5808
11613
6044
638069
-328620
-122679
-205941
200000
200000
193473
6527
59000
850000
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>10. DERVIATIVE LIABILITIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Based on ASC Topic 815 and related guidance,
the Company concluded the convertible notes issued to JSJ on April 7, 2014 and June 10, 2014 are required to be accounted for as
derivatives as of the issue date due to the variable conversion provision and a full reset feature on the conversion/exercise price.
Also, due to the variable conversion provision, outstanding convertible debt and warrants became tainted due to the indeterminate
number of shares issuable under the JSJ notes. At the date of issuance of the JSJ convertible notes, the notes and warrant derivative
liabilities were measured at fair value using either quoted market prices of financial instruments with similar characteristics
or other valuation techniques. The Company records the fair value of these derivatives on its balance sheet at fair value with
changes in the values of these derivatives reflected in the consolidated statements of operations as “Gain (loss) on derivative
liabilities.” These derivative instruments are not designated as hedging instruments under ASC 815-10 and are disclosed on
the balance sheet under Derivative Liabilities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes the convertible
debt and warrant liabilities activity for the period ended June 30, 2014:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt">Description</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Convertible Notes</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Warrant Liabilities</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Total</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 49%"><font style="font-size: 10pt">Fair value at Issuance</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 14%; text-align: right"><font style="font-size: 10pt">588,120</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 14%; text-align: right"><font style="font-size: 10pt">638,069</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 14%; text-align: right"><font style="font-size: 10pt">1,226,189</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">Change in Fair Value</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">(122,679</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">(205,941</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">(328,620</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Fair value at June 30, 2014</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">465,441</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">432,128</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">897,569</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the period ended June 30, 2014, net derivative
income was $328,620.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The lattice methodology was used to value the
convertible notes and warrants with the following assumptions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt">Assumptions</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">June 30, 2014</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 77%; text-align: justify"><font style="font-size: 10pt">Dividend yield</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 20%; text-align: center"><font style="font-size: 10pt">0.00%</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Risk-free rate for term</font></td>
<td> </td>
<td> </td>
<td style="text-align: center"><font style="font-size: 10pt">0.11% - 0.88%</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Volatility</font></td>
<td> </td>
<td> </td>
<td style="text-align: center"><font style="font-size: 10pt">219%</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Maturity dates</font></td>
<td> </td>
<td> </td>
<td style="text-align: center"><font style="font-size: 10pt">6/17/15 - 2/28/17</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Stock price</font></td>
<td> </td>
<td> </td>
<td style="text-align: center"><font style="font-size: 10pt">0.39</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Following tainted warrants (tainted by the JSJ Investments notes
and therefore require derivative treatment) are summarized as:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">            
  </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td colspan="27" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Warrants</font></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Holder</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Issue Date</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Maturity Date</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Issuance - Warrants</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Exercise Price</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Derivative Value at 4/7/14</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Derivative Value at 6/30/14</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Mark to Market</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt">#</font></td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt">$</font></td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt">$</font></td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt">$</font></td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 32%"><font style="font-size: 10pt">10/04/12 - Golden Explorations</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: center"> </td>
<td style="width: 7%; text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: center"> </td>
<td style="width: 7%; text-align: center"><font style="font-size: 10pt">10/31/2015</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%; text-align: right"><font style="font-size: 10pt">2,000,000</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%; text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%; text-align: right"><font style="font-size: 10pt">300,432</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%; text-align: right"><font style="font-size: 10pt">199,535</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%; text-align: right"><font style="font-size: 10pt">(100,897</font></td>
<td style="width: 1%"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">11/19/12 - Erwin Speckert</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">11/30/2015</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">800,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">119,758</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">79,411</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(40,347</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">11/21/12 - Golden Explorations</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">11/30/2015</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">600,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">89,796</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">59,558</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(30,238</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">05/13/13 - F. Boulos</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">5/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">6,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1.0000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">360</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">276</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(84</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">05/13/13 - P. Bowman IRA LLC</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">5/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">6,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1.0000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">360</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">276</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(84</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">09/11/13 - F. Boulos</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">9/30/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">100,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.2500</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">19,780</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">16,819</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(2,961</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">09/11/13 - P. Bowman IRA LLC</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">9/30/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">100,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.2500</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">19,775</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">16,819</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(2,956</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - BHKT</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">120,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">17,514</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">11,483</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(6,031</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">12/17/13 - Fundacion R.P.D.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">20,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,918</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,914</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,004</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - A.I.R.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">43,560</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">6,354</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,168</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(2,186</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">12/17/13 - Arango M. Fernando</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">15,720</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,293</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,504</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(789</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - Carlos Lugo</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">583</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">383</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(200</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">12/17/13 - Saga Saguros S.A.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">8,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,166</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">766</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(400</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - Enrique Rohrmoser</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">20,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,915</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,914</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,001</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">12/17/13 - Walter Brunetti</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">10,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,457</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">957</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(500</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - Sungari Trading</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">80,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">11,652</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">7,655</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(3,997</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">12/17/13 - CM Capital Corp.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">15,064</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.2500</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,947</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,516</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(431</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - Fundacion R.P.D.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">60,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">8,735</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">5,741</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(2,994</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">02/12/14 - Westwood Capital S.A.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">2/28/2017</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">40,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">5,809</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">3,816</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,993</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">02/12/14 - Jacquiline Dozal de Prescott</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">2/28/2017</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">40,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">5,808</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">3,816</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,992</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">02/14/14 - Fundacion R.P.D.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">2/28/2017</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">80,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">11,613</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">7,631</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(3,982</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">02/14/14 - CM Capital Corp.</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"><font style="font-size: 10pt">2/28/2017</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 10pt">31,064</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 10pt">0.2500</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">6,044</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">5,170</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">(874</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt"><b>638,069</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt"><b>432,128</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt"><b>(205,941</b></font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"><b>)</b></font></td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes the convertible
debt and warrant liabilities activity for the period ended June 30, 2014:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt">Description</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Convertible Notes</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Warrant Liabilities</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Total</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 49%"><font style="font-size: 10pt">Fair value at Issuance</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 14%; text-align: right"><font style="font-size: 10pt">588,120</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 14%; text-align: right"><font style="font-size: 10pt">638,069</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 14%; text-align: right"><font style="font-size: 10pt">1,226,189</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">Change in Fair Value</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">(122,679</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">(205,941</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">(328,620</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Fair value at June 30, 2014</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">465,441</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">432,128</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">897,569</font></td>
<td> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The lattice methodology was used to value the
convertible notes and warrants with the following assumptions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 1.5pt solid"><font style="font-size: 10pt">Assumptions</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">June 30, 2014</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 77%; text-align: justify"><font style="font-size: 10pt">Dividend yield</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 20%; text-align: center"><font style="font-size: 10pt">0.00%</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Risk-free rate for term</font></td>
<td> </td>
<td> </td>
<td style="text-align: center"><font style="font-size: 10pt">0.11% - 0.88%</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Volatility</font></td>
<td> </td>
<td> </td>
<td style="text-align: center"><font style="font-size: 10pt">219%</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Maturity dates</font></td>
<td> </td>
<td> </td>
<td style="text-align: center"><font style="font-size: 10pt">6/17/15 - 2/28/17</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Stock price</font></td>
<td> </td>
<td> </td>
<td style="text-align: center"><font style="font-size: 10pt">0.39</font></td>
<td> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Following tainted warrants (tainted by the JSJ Investments notes
and therefore require derivative treatment) are summarized as:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">            
  </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td colspan="27" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Warrants</font></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Holder</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Issue Date</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Maturity Date</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Issuance - Warrants</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Exercise Price</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Derivative Value at 4/7/14</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Derivative Value at 6/30/14</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt">Mark to Market</font></td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt">#</font></td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt">$</font></td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt">$</font></td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 10pt">$</font></td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 32%"><font style="font-size: 10pt">10/04/12 - Golden Explorations</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: center"> </td>
<td style="width: 7%; text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: center"> </td>
<td style="width: 7%; text-align: center"><font style="font-size: 10pt">10/31/2015</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%; text-align: right"><font style="font-size: 10pt">2,000,000</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%; text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%; text-align: right"><font style="font-size: 10pt">300,432</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%; text-align: right"><font style="font-size: 10pt">199,535</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 7%; text-align: right"><font style="font-size: 10pt">(100,897</font></td>
<td style="width: 1%"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">11/19/12 - Erwin Speckert</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">11/30/2015</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">800,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">119,758</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">79,411</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(40,347</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">11/21/12 - Golden Explorations</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">11/30/2015</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">600,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">89,796</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">59,558</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(30,238</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">05/13/13 - F. Boulos</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">5/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">6,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1.0000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">360</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">276</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(84</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">05/13/13 - P. Bowman IRA LLC</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">5/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">6,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1.0000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">360</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">276</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(84</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">09/11/13 - F. Boulos</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">9/30/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">100,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.2500</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">19,780</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">16,819</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(2,961</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">09/11/13 - P. Bowman IRA LLC</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">9/30/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">100,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.2500</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">19,775</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">16,819</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(2,956</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - BHKT</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">120,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">17,514</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">11,483</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(6,031</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">12/17/13 - Fundacion R.P.D.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">20,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,918</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,914</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,004</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - A.I.R.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">43,560</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">6,354</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,168</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(2,186</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">12/17/13 - Arango M. Fernando</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">15,720</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,293</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,504</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(789</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - Carlos Lugo</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">583</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">383</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(200</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">12/17/13 - Saga Saguros S.A.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">8,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,166</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">766</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(400</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - Enrique Rohrmoser</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">20,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,915</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,914</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,001</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">12/17/13 - Walter Brunetti</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">10,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,457</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">957</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(500</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - Sungari Trading</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">80,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">11,652</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">7,655</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(3,997</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">12/17/13 - CM Capital Corp.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">15,064</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.2500</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,947</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,516</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(431</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">12/17/13 - Fundacion R.P.D.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">12/31/2016</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">60,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">8,735</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">5,741</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(2,994</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">02/12/14 - Westwood Capital S.A.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">2/28/2017</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">40,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">5,809</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">3,816</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,993</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">02/12/14 - Jacquiline Dozal de Prescott</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">2/28/2017</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">40,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">5,808</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">3,816</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,992</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">02/14/14 - Fundacion R.P.D.</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><font style="font-size: 10pt">2/28/2017</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">80,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">0.5000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">11,613</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">7,631</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(3,982</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">02/14/14 - CM Capital Corp.</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"><font style="font-size: 10pt">4/7/2014</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"><font style="font-size: 10pt">2/28/2017</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 10pt">31,064</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 10pt">0.2500</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">6,044</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">5,170</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">(874</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt; text-align: center"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt"><b>638,069</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt"><b>432,128</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt"><b>(205,941</b></font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 10pt"><b>)</b></font></td></tr>
</table>
<p style="margin: 0pt"></p>
2015-06-17
2017-02-28
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
2014-04-07
1
1
200000
897569
1226189
638069
432128
465441
588120
.00
2.19
-205941
-100897
-40347
-30238
-84
-84
-2961
-2956
-6031
-1004
-2186
-789
-200
-400
-1001
-500
-3997
-431
-2994
-1993
-1992
-3982
-874
<p style="margin: 0pt"></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: 71%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Gross amount received – contractual balance</font></td>
<td style="width: 10%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 17%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">200,000</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net proceeds</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</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">200,000</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<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">Following is an analysis of convertible
debt due to JSJ Investments at June 30, 2014:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; 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: white">
<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: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2014</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<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></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 82%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Contractual balance</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">$</font></td>
<td style="width: 15%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">200,000</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Less unamortized discount</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(193,473</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Convertible debt</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</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">6,527</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="margin: 0pt"></p>
22600000
25000000
P1Y
P3Y
* These promissory notes are in default and management is in the process of negotiating to extend these for further one year term.