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--12-31
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<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 1 - ORGANIZATION</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0">BUSINESS</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 11pt Times New Roman, Times, Serif; color: black">MediSwipe,
Inc., (referred to hereafter as “MWIP,” or, the “Company”), was initially incorporated under the laws of
the State of Delaware in February, 1997 </font>under the<font style="color: black"> </font>name Easy Street Online, Inc. (“Easy
Street”).</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">MediSwipe (www.MediSwipe.com) offers
a full spectrum of secure and reliable transaction processing and security solutions for the medical and healthcare industries,
using traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) payment solutions. The Company additionally has
developed a closed loop pre-paid patient stored value and loyalty card as a unique cash alternative to these regulated and e-commerce
businesses specializing within the healthcare sector.<font style="color: black"> The Company is headquartered in West Palm Beach,
Florida. </font></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company changed its name form Easy
Street to Frontline Communications<font style="color: black"> </font>Corporation in July 1997. On April 3, 2003, we acquired Proyecciones
y Ventas<font style="color: black"> </font>Organizadas, S.A. de C.V. ("Provo Mexico") and in December 2003 we changed our<font style="color: black">
</font>name to Provo International Inc.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In September 2008, Provo changed its
name to Ebenefits Direct, Inc., which, through its wholly-owned subsidiary, L.A. Marketing Plans, LLC, engaged in the business
of direct response marketing. The Company’s principal business was to market and sell non-insurance healthcare programs designed
to complement medical insurance products and to provide savings for those who cannot afford or qualify for traditional health insurance
products.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 14, 2008, Ebenefits Direct,
Inc. changed its name to Seraph Security, Inc. (“Seraph”).</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 25, 2009, Seraph acquired Commerce
Online Technologies, Inc., a credit and debit card processing company.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 20, 2009, Seraph Security, Inc.
changed its name to Commerce Online, Inc. to more accurately reflect its core business of merchant processing, and financial services.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March 4, 2010, Commerce Online,
Inc. changed its name to Cannabis Medical Solutions, Inc. as a provider of merchant processing payment technologies for the medical
marijuana and wellness sector.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"></td></tr>
</table>
<p style="margin: 6pt 0 12pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"> </td></tr>
</table>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 14, 2011, Cannabis Medical Solutions,
Inc. changed its name to MediSwipe Inc. to further expand its’ merchant and mobile payment solutions to the overall health
and wellness sector.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 8, 2010, the company completed
the acquisition of 800 Commerce, Inc., (“800 Commerce”) a Florida Corporation incorporated by the Company’s Chief
Executive Officer.  The company issued 10,000,000 shares of common stock to 800 Commerce for all the issued and outstanding
stock of 800 Commerce, Inc.  </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company generates revenues by charging
fees for the electronic processing of payment transactions and related services. The Company charges certain merchants for these
processing services at a bundled rate based on a percentage of the dollar amount of each transaction and, in some instances, additional
fees are charged for each transaction. The Company charges other merchant customers a flat fee per transaction, and may also charge
miscellaneous fees to our customers, including fees for returns, monthly minimums, and other miscellaneous services. The Company
operates solely in the United States as a single operating segment.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s card-based processing
services enable merchants to process both traditional card-present, or "swipe," transactions, as well as card-not-present transactions.
A traditional card-present transaction occurs whenever a cardholder physically presents a credit or debit card to a merchant at
the point-of-sale. A card-not-present transaction occurs whenever the customer does not physically present a payment card at the
point-of-sale and may occur over the internet, mail, fax or telephone. The Company’s electronic payment processing may take
place in a variety of forms and situations. For example, the Company’s capabilities allow merchants to have their customer
service representatives take e-check or card payments from their consumers by telephone, and enable their consumers to make e-check
or card payments directly through the use of a web site or by calling an Interactive Voice Response telephone system.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company also operates online payment
processing services, gift and loyalty card program programs and prepaid debit cards for consumers through 800 Commerce Inc., our
majority owned subsidiary, under the domain name www.800Commerce.com . The Company offers MasterCard prepaid cards branded with
corporations’ brands. The prepaid cards can be used for various applications including payroll, corporate incentives, employee
incentives, and general use.  Some card programs can be reloaded with funds and others cannot.  In some cases,
the cards can be used at Automatic Teller Machines to withdrawal cash. Each of these activities creates a fee opportunity for us
and our affiliated banks and merchants.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Presently, the Company provides merchant
services to approximately forty medical dispensaries and wellness centers throughout California and Colorado through our sponsor
bank EMS. The Company has a number of additional merchants through FrontStream Payments and Pay Ventures in which we receive residuals
from each merchant account each month. In order to provide payment-processing services for Visa, MasterCard and Discover transactions,
the Company must be sponsored by a financial institution that is a principal member of the respective Visa, MasterCard and Discover
card associations. The Company has agreements with several processors to provide to us, on a non-exclusive basis, transaction processing
and transmittal, transaction authorization and data capture, and access to various reporting tools.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"></td></tr>
</table>
<p style="margin: 6pt 0 12pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"> </td></tr>
</table>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> The Company also maintains a
bank sponsorship agreement for our prepaid card programs. Monthly revenues are derived through new existing merchant account residual
payments paid to us via wire transfer or ACH each month by our three banking partners. The Company will seek to capitalize on
this presently untapped marketplace and is in the unique position to access this distribution channel, by managing and leveraging
its’ merchant relationships as a vertical pipeline and distribution channel for its’ nutraceutical product lines and
social media applications for its growing patient database and clients.</p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><b> </b></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">800 Commerce (www.800commerce.com) is
a payment processing company with offices located in West Palm Beach, Florida. 800 Commerce offers a full spectrum of secure and
reliable transaction processing solutions using traditional, Internet Point of Sale (POS), e-commerce, social networks and mobile
(wireless) solutions through our alliance partner network. Our electronic payment processing suite of services will enable clients
to accept all major credit cards,  in store or online, debit and ATM cards and ACH check drafts for payment whether a retail,
service, mail-order or Internet merchant. As an industry innovator, we are dedicated to delivering comprehensive services from
merchant account activation, gateway connections and web development to a world-wide client base.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">BASIS OF PRESENTATION AND PRINCIPLES
OF CONSOLIDATION</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying condensed consolidated
financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to
present the financial position, results of operations and cash flows for the stated periods have been made. Except as described
below, these adjustments consist only of normal and recurring adjustments. Certain information and note disclosures normally included
in the Company’s annual consolidated financial statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read
in conjunction with a reading of the Company’s consolidated financial statements and notes thereto included in the Company’s
Form 10-K annual report filed with the Securities and Exchange Commission (SEC) on April 16, 2012. Interim results of operations
for the three months ended March 31, 2012 are not necessarily indicative of future results for the full year. Certain amounts from
the 2011 period have been reclassified to conform to the presentation used in the current period.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font: 11pt Times New Roman, Times, Serif">The
condensed consolidated financial statements include the accounts of the Company and 800 Commerce, which was wholly owned until
June 1, 2011 when 800 Commerce began to sell shares of its common stock.</font> All material intercompany balances and transactions
have been eliminated</p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"></td></tr>
</table>
<p style="margin: 6pt 0 12pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"> </td></tr>
</table>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">NONCONTROLLING INTEREST</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 1, 2011, the Company
adopted authoritative accounting guidance that requires the ownership interests in subsidiaries held by parties other than the
parent, and income attributable to those parties, be clearly identified and distinguished in the parent’s consolidated financial
statements. The Company’s noncontrolling interest is now disclosed as a separate component of the Company’s consolidated
equity defeciency on the balance sheets. Earnings and other comprehensive income are separately attributed to both the controlling
and noncontrolling interests.  Earnings per share is calculated based on net income attributable to the Company’s
controlling interest.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">From January 1, 2011 through May 31,
2011 the Company owned 100% of 800 Commerce. From June 1, 2011 through October 1, 2011 800 Commerce sold 155,000 shares of its
common stock and issued 1,178,000 shares of its common stock to its officers as compensation. Therefore, for the three months ended
March 31, 2012 and 2011, the Company owned 60% and 100%, respectively, of 800 Commerce.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">USE OF ESTIMATES</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of consolidated financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reported period.
Actual results could differ from those estimates.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">CASH AND CASH EQUIVALENTS</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company considers all highly liquid
investments with an original term of three months or less to be cash equivalents.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">ACCOUNTS RECEIVABLE</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company records accounts receivable from
amounts due from its processors. The Company charges certain merchants for processing services at a bundled rate based on a percentage
of the dollar amount of each transaction and, in some instances, additional fees are charged for each transaction. The Company
charges other merchant customers a flat fee per transaction, and may also charge miscellaneous fees to our customers, including
fees for returns, monthly minimums, and other miscellaneous services. All the charges and collections thereon flow through our
processors who then remit the fee due the Company within the month following the actual charges.</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0">DEFERRED FINANCING COSTS</p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The costs related to the issuance of debt
are capitalized and amortized to interest expense using the straight-line method over the lives of the related debt.  </p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"></td></tr>
</table>
<p style="margin: 6pt 0 12pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"> </td></tr>
</table>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">REVENUE RECOGNITION</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recognizes revenue in accordance
with the Securities and Exchange Commission, Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition” (“SAB
No. 104”). SAB 104 clarifies application of generally accepted accounting principles related to revenue transactions. The
Company also follows the guidance in EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables ("EITF Issue No. 00-21"),
in arrangements with multiple deliverables.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recognizes revenues when
all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services
has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0">The Company recognizes revenue during the month in which
commissions are earned.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">FAIR VALUE OF FINANCIAL INSTRUMENTS</p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">Fair value measurements are determined
under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair
value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of
the reporting entity (“observable inputs”) and the reporting entity’s own assumptions about market participant
assumptions developed based on the best information available in the circumstances (“unobservable inputs”).</p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">Fair value is the price that would be
received to sell an asset or would be paid to transfer a liability (i.e., the “exit price”) in an orderly transaction
between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant
information generated by market transactions involving identical or comparable assets (“market approach”). The Company
also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with
normal activity to identify transactions that are not orderly.</p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">The highest priority is given to unadjusted
quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level
3 measurements). Securities are classified in their entirety based on the lowest level of input that is significant to the fair
value measurement.</p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">The three hierarchy levels are defined
as follows:</p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 1 – Quoted
prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;</p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 2 – Quoted
prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in
active markets or financial instruments for which significant inputs are observable, either directly or indirectly;</p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"></td></tr>
</table>
<p style="margin: 6pt 0 12pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"> </td></tr>
</table>
<p style="font: 12pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 3 – Prices
or valuations that require inputs that are both significant to the fair value measurement and unobservable.</p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">Credit risk adjustments are applied to
reflect the Company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent
with that applied in developing counterparty credit risk adjustments, but incorporates the Company’s own credit risk as observed
in the credit default swap market.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company's financial instruments
consist primarily of cash, accounts payable and accrued expenses, and convertible debt. The carrying amounts of such financial
instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest
rates of these instruments.  The estimated fair value is not necessarily indicative of the amounts the Company would
realize in a current market exchange or from future earnings or cash flows.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">INCOME TAXES</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">We account for income taxes in
accordance with ASC 740-10, Income Taxes. We recognize deferred tax assets and liabilities to reflect the estimated future tax
effects, calculated at the tax rate expected to be in effect at the time of realization. We record a valuation allowance related
to a deferred tax asset when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">ASC 740-10 prescribes a recognition
threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on
recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.
We classify interest and penalties as a component of interest and other expenses. To date, we have not been assessed, nor have
we paid, any interest or penalties.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">We measure and record uncertain
tax positions by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may
be recognized or continue to be recognized. The Company’s tax years subsequent to 2005 remain subject to examination by federal
and state tax jurisdictions.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0">EARNINGS (LOSS) PER SHARE</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Earnings (loss) per share is computed
in accordance with SFAS No. 128, "Earnings per Share". Basic earnings (loss) per share is computed by dividing net income (loss),
after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock
outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of
shares of common stock, common stock equivalents and other potentially dilutive securities, if any, outstanding during the period.
There were not any outstanding warrants or options as of March 31, 2012 and 2011. As of March 31, 2012, the Company’s
outstanding convertible debt is convertible into 40,762,661 shares of common stock.</p>
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<tr>
<td style="text-align: center; width: 100%"></td></tr>
</table>
<p style="margin: 6pt 0 12pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"> </td></tr>
</table>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">ACCOUNTING FOR STOCK-BASED COMPENSATION </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for stock awards
issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. The measurement date is the earlier
of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the
date at which the counterparty's performance is complete. Stock awards granted to non-employees are valued at their respective
measurement dates based on the trading price of the Company’s common stock and recognized as expense during the period in
which services are provided.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">For the three months ended March 31,
2012 and 2011, the Company did not grant any stock options. As of March 31, 2012, we do not have any outstanding stock options
or warrants.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">In May 2011, the FASB issued ASU 2011-04,
“Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements
in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 will result in common fair value measurement and
disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements
in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. ASU 2011-04 is effective
for interim and annual periods beginning after December 15, 2011, with early application not permitted, and became effective
for the Company on January 1, 2012. The adoption of this standard did not have a material impact on the Company’s consolidated
financial position or results of operations.</p>
<p style="font: 11pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Other accounting standards that have
been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not
expected to have a material impact on the consolidated financial statements upon adoption.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">NOTE 4 - RECLASSIFICATIONS</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain prior period balances have been
reclassified to conform to the current period's financial statement presentation. These reclassifications had no impact on previously
reported results of operations or stockholders' deficiency.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 5 – SALES CONCENTRATION AND CONCENTRATION OF CREDIT
RISK</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Cash</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Financial   instruments   that   potentially   subject   the   Company to concentrations
of credit risk consist principally of cash. The Company maintains cash balances at one financial institution,
which is insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC insured institution insures
up to $250,000 on account balances. The amounts that are not insured by FDIC limitations are held in short-term securities.
The company has not experienced any losses in such accounts.</p>
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<tr>
<td style="text-align: center; width: 100%"></td></tr>
</table>
<p style="margin: 6pt 0 12pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"> </td></tr>
</table>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Sales</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">None of our customers account for more
than 10% of our business, however we rely on a few<font style="color: black"> processors to provide to us, on a non-exclusive basis,
transaction processing and transmittal, transaction authorization and data capture, and access to various reporting tools.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">NOTE 6 – CONVERTIBLE DEBT</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 11pt Times New Roman, Times, Serif; color: black">In
December 2011 the Company issued a $50,000 convertible promissory note as part of a guaranty fee due (the “Guaranty Note”)
to a Company that is affiliated with a former shareholder of the Company. Terms of the note include an eight percent per annum
interest rate and the note matures on the one year anniversary on December 20, 2012.</font> Additionally, the holder of the Note
has the right to convert the note into shares of common stock of the Company at a conversion price equal to eighty percent (80%)
of the lowest closing bid price of the common stock within five (5) days of the conversion. The beneficial conversion feature included
in the Guaranty Note resulted in an initial debt discount and derivative liability of $36,765. The fair value of the embedded conversion
feature of the Guaranty Note was calculated at the issue date utilizing the following assumptions:</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table border="0" cellpadding="0" cellspacing="0" align="center" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"><b>Market</b> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td style="text-align: center; font-weight: bold">Assumed</td>
<td style="text-align: center; font-weight: bold">Price on </td>
<td style="text-align: center; font-weight: bold">Expected</td>
<td style="text-align: center; font-weight: bold">Risk free</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; font-weight: bold">Issuance </td>
<td style="text-align: center; font-weight: bold"> </td>
<td style="text-align: center; font-weight: bold"> </td>
<td style="text-align: center; font-weight: bold">Conversion</td>
<td style="text-align: center; font-weight: bold">Grant</td>
<td style="text-align: center; font-weight: bold">Volatility</td>
<td style="text-align: center; font-weight: bold">Interest</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 0.5pt solid; text-align: center; font-weight: bold">Date</td>
<td style="border-bottom: windowtext 0.5pt solid; text-align: center; font-weight: bold">Fair Value</td>
<td style="border-bottom: windowtext 0.5pt solid; text-align: center; font-weight: bold">Term</td>
<td style="border-bottom: windowtext 0.5pt solid; text-align: center; font-weight: bold">Price</td>
<td style="border-bottom: windowtext 0.5pt solid; text-align: center; font-weight: bold">Date</td>
<td style="border-bottom: windowtext 0.5pt solid; text-align: center; font-weight: bold">Percentage</td>
<td style="border-bottom: windowtext 0.5pt solid; text-align: center; font-weight: bold">Rate</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center">12/20/11</td>
<td style="text-align: center"> $  36,765</td>
<td style="text-align: center">1 Year</td>
<td style="text-align: center"> $     0.00272</td>
<td style="text-align: center"> $  0.00330</td>
<td style="text-align: center">147%</td>
<td style="text-align: center">0.02</td></tr>
</table>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">As of December 31, 2011, the Company
revalued the Guaranty Note. For the period from issuance to December 31, 2011, the Company decreased the derivative liability of
$36,765 by $1,050 resulting in a derivative liability balance of $35,714 at December 31, 2011. The Company revalued the Guaranty
Note as of March 31, 2012 and based on the valuation, the Company decreased the derivative liability balance by $22,416 resulting
in a derivative liability balance of $13,298 at March 31, 2012.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The fair value of
the embedded conversion feature of the Guaranty Note was calculated at March 31, 2012 utilizing the following assumptions:</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="margin: 6pt 0 12pt"></p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table border="0" cellpadding="0" cellspacing="0" align="center" style="width: 100%; border-collapse: collapse; font-size: 11pt">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center">Assumed</td>
<td style="font-weight: bold; text-align: center">Expected</td>
<td style="font-weight: bold; text-align: center">Risk free</td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center">Fair</td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center">Conversion</td>
<td style="font-weight: bold; text-align: center">Volatility</td>
<td style="font-weight: bold; text-align: center">Interest</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Value</td>
<td style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Term</td>
<td style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Price</td>
<td style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Percentage</td>
<td style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Rate</td></tr>
<tr style="vertical-align: middle">
<td style="text-align: center">$13,298</td>
<td style="text-align: center">6 months</td>
<td style="text-align: center">$0.00376</td>
<td style="text-align: center">147.30%</td>
<td style="text-align: center">0.07%</td></tr>
</table>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In September, October and December 2011,
the Company entered into three separate note agreements with an unaffiliated investor for the issuance of three convertible promissory
notes each in the amount of $25,000 (the “2011 Notes”). Among other terms the 2011 Notes are due nine months from their
issuance dates, bear interest at 8% per annum, payable in cash or shares at the Conversion Price as defined herewith, and are convertible
at a conversion price (the “Conversion Price”) for each share of common stock equal to 50% of the average of the lowest
three trading prices (as defined in the note agreements) per share of the Company’s common stock for the ten trading days
immediately preceding the date of conversion. Upon the occurrence of an event of default, as defined in the 2011 Notes, the Company
is required to pay interest at 22% per annum and the holders may at their option declare a Note, together with accrued and unpaid
interest, to be immediately due and payable. In addition, the 2011 Notes provide for adjustments for dividends payable other than
in shares of common stock, for reclassification, exchange or substitution of the common stock for another security or securities
of the Company or pursuant to a reorganization, merger, consolidation, or sale of assets, where there is a change in control of
the Company. The Company may at its own option prepay the 2011 Notes and must maintain sufficient authorized shares reserved for
issuance under the 2011 Notes. On March 26, 2012, the investor converted $10,000 of the September 2011 Note. Pursuant to the Conversion
Price, the Company issued 4,545,455 shares of common stock at approximately $0.0022 per share. As of March 31, 2012, the outstanding
principal balance of the 2011 Notes was $65,000.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">We received net proceeds of $67,500
after debt issuance costs of $7,500 paid for lender legal fees. These debt issuance costs will be amortized over the earlier of
the terms of the Note or any redemptions and accordingly $2,807 has been expensed as debt issuance costs (included in interest
expense) during the three months ended March 31, 2012.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">We have determined that the conversion
feature of the 2011 Notes represent an embedded derivative since each Note is convertible into a variable number of shares upon
conversion. Accordingly, the 2011 Notes are not considered to be conventional debt under EITF 00-19 and the embedded conversion
feature must be bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of this
derivative instrument has been recorded as a liability on the consolidated balance sheet with the corresponding amount recorded
as a discount to each Note. Such discount will be accreted from the date of issuance to the maturity dates of each Note. The change
in the fair value of the liability for derivative contracts will be recorded in other income or expenses in the consolidated statements
of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet. The beneficial conversion
feature included in the 2011 Notes resulted in an initial debt discount of $75,000 and an initial loss on the valuation of derivative
liabilities of $41,882 for a derivative liability initial balance of $116,882. The fair value of the embedded conversion feature
2011 Notes was calculated at each issue date utilizing the following assumptions:</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="margin: 6pt 0 12pt"></p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table border="0" cellpadding="0" cellspacing="0" align="center" style="width: 100%; border-collapse: collapse; font-size: 11pt">
<tr style="vertical-align: middle">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center; padding-left: 10pt; padding-right: 10pt"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center">Market</td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: middle">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center; padding-left: 10pt; padding-right: 10pt"> </td>
<td style="font-weight: bold; text-align: center">Assumed</td>
<td style="font-weight: bold; text-align: center">Price on</td>
<td style="font-weight: bold; text-align: center">Expected</td>
<td style="font-weight: bold; text-align: center">Risk free</td></tr>
<tr style="vertical-align: middle">
<td style="font-weight: bold; text-align: center">Issuance</td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center; padding-left: 10pt; padding-right: 10pt"> </td>
<td style="font-weight: bold; text-align: center">Conversion</td>
<td style="font-weight: bold; text-align: center">Grant</td>
<td style="font-weight: bold; text-align: center">Volatility</td>
<td style="font-weight: bold; text-align: center">Interest</td></tr>
<tr style="vertical-align: middle">
<td style="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Date</td>
<td style="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Fair Value</td>
<td style="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center; padding-left: 10pt; padding-right: 10pt">Term</td>
<td style="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Price</td>
<td style="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Date</td>
<td style="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Percentage</td>
<td style="border-bottom: windowtext 0.5pt solid; font-weight: bold; text-align: center">Rate</td></tr>
<tr style="vertical-align: middle">
<td style="text-align: center">9/23/2011</td>
<td style="text-align: center"> $ 55,556</td>
<td style="text-align: center; padding-left: 30pt; padding-right: 30pt">9 months</td>
<td style="text-align: center"> $   0.00225</td>
<td style="text-align: center"> $  0.0069</td>
<td style="text-align: center">141%</td>
<td style="text-align: center">0.03%</td></tr>
<tr style="vertical-align: middle">
<td style="text-align: center">10/25/2011</td>
<td style="text-align: center"> $ 31,915</td>
<td style="text-align: center; padding-left: 10pt; padding-right: 10pt">9 months</td>
<td style="text-align: center"> $   0.00235</td>
<td style="text-align: center"> $  0.0045</td>
<td style="text-align: center">142%</td>
<td style="text-align: center">0.03%</td></tr>
<tr style="vertical-align: middle">
<td style="text-align: center">12/20/2011</td>
<td style="text-align: center"> $ 29,412</td>
<td style="text-align: center; padding-left: 10pt; padding-right: 10pt">9 months</td>
<td style="text-align: center"> $     0.0017</td>
<td style="text-align: center"> $  0.0033</td>
<td style="text-align: center">147%</td>
<td style="text-align: center">0.03%</td></tr>
</table>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">At December 31, 2011, the Company revalued
the embedded conversion feature of the 2011 Notes. For the period from their issuance to December 31, 2011, the Company decreased
the derivative liability of $116,862 by $27,781 resulting in a derivative liability balance of $89,101 at December 31, 2011.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March 31, 2012, the Company revalued
the embedded conversion feature of the 2011 Notes. For the period from January 1, 2012 through March 31, 2012, the Company decreased
the derivative liability of $89,101 by $34,177 resulting in a derivative liability balance of $54,925.</p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table border="0" cellpadding="0" cellspacing="0" align="center" style="width: 100%; border-collapse: collapse; font-size: 11pt">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center">Assumed</td>
<td style="font-weight: bold; text-align: center">Expected</td>
<td style="font-weight: bold; text-align: center">Risk Free</td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center">Fair</td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center">Conversion</td>
<td style="font-weight: bold; text-align: center">Volatility</td>
<td style="font-weight: bold; text-align: center">Interest</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Value</td>
<td style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Term</td>
<td style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Price</td>
<td style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Percentage</td>
<td style="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Rate</td></tr>
<tr style="vertical-align: middle">
<td style="text-align: center">$54,925</td>
<td style="text-align: center">  6 months</td>
<td style="text-align: center">$0.0024</td>
<td style="text-align: center">147.30%</td>
<td style="text-align: center">0.07%</td></tr>
</table>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair values of the 2011 Notes were
calculated at March 31, 2012 utilizing the following assumptions:</p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The inputs used estimate the fair value
of the derivative liabilities are considered to be level 2 inputs within the fair value hierarchy.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">In April and May 2012, holders
of the Company’s convertible debt converted the remaining principal balance of the September 2011 Note of $15,000 and accrued
interest of $1,000 into 8,750,000 shares of common stock at approximately $0.0018 per share.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">NOTE 7 – RELATED PARTY TRANSACTIONS</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Management and administration fees</b></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">During the three months ended March
31, 2012 the Company paid management fees of $1,900 to Michael Friedman (CEO) and $1,500 to Barry Hollander, our Chief Financial
Officer (“CFO”). Additionally the Company has agreed to annual compensation of $90,000 for its CEO and accordingly
has expensed $22,500 for the three months ended March 31, 2012, which is included in deferred compensation, which totaled $112,500
and $90,000 as of the March 31, 2012 and December 31, 2011, respectively. The Company also paid Michele Friedman, the wife of our
CEO, $2,100 during the three months ended March 31, 2012 for compensation for office administration and bookkeeping. No such amounts
were incurred during the three months ended March 31, 2011.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"></td></tr>
</table>
<p style="margin: 6pt 0 12pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%">
<tr>
<td style="text-align: center; width: 100%"> </td></tr>
</table>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Agreements with prior management</b></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 11pt Times New Roman, Times, Serif; color: black">In
December 2011 the Company issued a $50,000 convertible promissory note as part of a guaranty fee due to a Company that is affiliated
with a former officer of the Company. Terms of the note include an eight percent per annum interest rate and the note matures on
the one year anniversary on December 20, 2012.</font> Additionally, the holder of the Note has the right to convert the note into
shares of common stock of the Company at a conversion price equal to eighty percent (80%) of the lowest closing bid price of the
common stock within five (5) days of the conversion.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has agreed to pay an additional
$50,000 in common stock, which is included in accounts payable and accrued expenses on the March 31, 2012 and December 31, 2011
balance sheets.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">NOTE 8 – INCOME TAXES</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Deferred income taxes reflect the net
tax effects of operating loss and tax credit carry forwards and temporary differences between carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in
which temporary differences representing net future deductible amounts become deductible. Due to the uncertainty of the Company’s
ability to realize the benefit of the deferred tax assets, the deferred tax assets are fully offset by a valuation allowance at
March 31, 2012 and 2011.</p>
<p style="font: 11pt/12pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March 31, 2012, the Company had
a tax net operating loss carry forward of approximately $432,000. <font style="color: black"> Any unused portion of this carry
forward expires in 2029. Utilization of this loss may be limited in the event of an ownership change pursuant to IRS Section 382.
</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0">NOTE 9 – CONTINGENCIES AND COMMITMENTS</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is not aware of any legal
proceedings against it as of March 31, 2012. No contingencies have been provided in the financial statements.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"><b>Lease Agreement</b></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective on December 1, 2011 the Company
and its majority owned subsidiary entered into a two year agreement to rent executive office space in West Palm Beach, Florida.
The lease automatically renews for 3 month periods unless terminated in writing 30 days prior to the then current end date by either
party. Totaling approximately 1,200 square feet, effective March 1, 2012 the monthly rent is $2,500.  Our annual payment obligation
under the lease is as follows:</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" align="center" style="width: 6.5in">
<tr style="vertical-align: top">
<td style="font: 11pt/115% Times New Roman, Times, Serif; text-align: right">2012</td>
<td style="font: 11pt/115% Times New Roman, Times, Serif; text-align: right">$22,500</td></tr>
<tr style="vertical-align: top">
<td style="font: 11pt/115% Times New Roman, Times, Serif; text-align: right">2013</td>
<td style="font: 11pt/115% Times New Roman, Times, Serif; text-align: right">$30,000</td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">NOTE 10 – GOING CONCERN</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying consolidated financial
statements have been prepared assuming the Company will continue as a going concern. As of March 31, 2012 the Company had an accumulated
deficit of $4,465,457 and a working capital deficit of $294,829. These conditions raise substantial doubt about the Company's ability
to continue as a going concern.<font style="color: red"> </font>The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.</p>
<p style="color: red; font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Management’s Plans</p>
<p style="color: red; font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">We presently maintain our daily operations
and capital needs through the receipts of the monthly account residuals we receive directly from the Company’s processors.
From time to time when we need additional working capital we have been able to issue convertible promissory notes to an unaffiliated
investor. Additionally, the Company’s CEO. B. Michael Friedman has loaned the Company money in the past. The Company expects
to increase sales of additional merchant accounts over the course of this fiscal year and has received term sheets for additional
credit facilities for working capital if needed.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">NOTE 11 – SUBSEQUENT EVENTS</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">In April and May 2012, holders
of the Company’s convertible debt converted the remaining principal balance of the September 2011 Note of $15,000 and accrued
interest of $1,000 into 8,750,000 shares of common stock at approximately $0.0018 per share.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">On May 10, 2012, 800 Commerce
issued a $50,000 convertible promissory note. The note matures on May 10, 2013, has an eight percent (8%) per annum interest rate
and at option of note-holder can convert to shares of 800 Commerce common stock at a conversion price equal to 65% of the lowest
closing bid price for the five days preceding the date of conversion.</p>
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">In May 2012, 800 Commerce received
proceeds of $105,000 upon the sale of 1,050,000 shares of its restricted common stock. The shares of common stock were sold for
$0.10 per share.  </p>
<p style="margin: 0pt"></p>
-294829
-287100
15550
20290
MEDISWIPE INC.
374741470
-287100
3747414
466446
-64831
-4436129
10000
4545455
45455
-35455
11881
11881
-29610
-282
-29328
379286925
-294829
3792869
442872
-65113
-4465457