0001451512
2012-01-01
2012-03-31
0001451512
2012-05-18
0001451512
2012-03-31
0001451512
2011-12-31
0001451512
2011-01-01
2011-03-31
0001451512
2010-12-31
0001451512
2011-03-31
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
Terra Tech Corp.
0001451512
10-Q
2012-03-31
true
--12-31
No
No
Yes
Smaller Reporting Company
Q1
2012
81998520
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company maintains cash balances in several
financial institutions which are insured by the Federal Deposit Insurance Corporation up to certain federal limitations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company provides credit in the normal course
of business to customers located throughout the U. S.  The Company performs ongoing credit evaluations of its customers
and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends,
and other information.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 9, 2012, the Company completed
a reverse merger transaction through a merger with GrowOp Technology whereby we acquired all of the issued and outstanding shares
of GrowOp Technology in exchange for 33,998,520 shares of our common stock, which represented approximately 41.4% of our total
shares outstanding immediately following the closing of the transaction. As a result of the reverse acquisition, GrowOp Technology
became our wholly owned subsidiary and the former shareholders of GrowOp Technology became our controlling stockholders. The share
exchange transaction with GrowOp Technology was treated as a reverse acquisition, with GrowOp Technology as the acquiror and the
Company as the acquired party.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 26, 2012, pursuant the Agreement
and Plan of Merger, the Company issued an aggregate of 100 shares of Series A Preferred Stock and 14,750,000 shares of Series
B Preferred Stock  to Derek Peterson and Amy Almsteier, both of whom are officers and directors of the Company.  The
Company exchanged the shares for the Series A Preferred Stock and shares of Series B Preferred Stock issued by GrowOp Technology.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Purchase Accounting</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Acquisition was accounted for using the
purchase method of accounting as a reverse acquisition. In a reverse acquisition, the post-acquisition net assets of the surviving
combined company includes the historical cost basis of the net assets of the accounting acquirer (GrowOp Technologies Ltd.) plus
the fair value of the net assets of the accounting acquiree (Terra Tech Corp). Further, under the purchase method, the purchase
price is allocated to the assets acquired and liabilities assumed based on their estimated fair values and the excess of the purchase
price over the estimated fair value of the identifiable net assets is allocated to any intangible assets with the remaining excess
purchase price over net assets acquired allocated to goodwill.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> <br />
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair value of the consideration transferred
in the Acquisition was $4,800,000 and was calculated as the number of shares of common stock that GrowOp Technologies Ltd. would
have had to issue in order for Terra Tech Corp. shareholders to hold a 58.6% equity interest in the combined Company post-acquisition,
multiplied by the estimated fair value of the Company’s common stock on the acquisition date. The estimated fair value of
the Company’s common stock was based on the offering price of the common stock sold in a private placement of share subscriptions
which was completed most recently prior to the merger. This price was determined to be the best indication of fair value on that
date since the price was based on an arm’s length negotiation with a group consisting of both new and existing investors
that had been advised of the pending Acquisition and assumed similar liquidity risk as those investors holding the majority of
shares being valued as purchase consideration.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes the Company’s
determination of fair values of the assets acquired and the liabilities as of the date of acquisition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 88%">Consideration - issuance of securities</td>
<td style="width: 1%"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">4,800,000</td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>Cash</td>
<td> </td>
<td>$</td>
<td style="text-align: right">35</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Goodwill</td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">4,799,965</td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Total purchase price</td>
<td> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">4,800,000</td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company performed an impairment test related
to goodwill as of the date of the merger and it was determined that goodwill was impaired. At that time, the Company recorded a
charge to operations for the amount of the impairment of $4,799,965.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Inventories consist of finished goods for the
Company’s product lines.  Cost-of-goods sold are calculated using the average costing method.  Inventory
costs include direct materials, direct labor and cost of freight.  The Company reviews its inventory periodically to
determine net realizable value and considers product upgrades in its periodic review of realizability.  The Company writes
down inventory, if required, based on forecasted demand and technological obsolescence.  These factors are impacted by
market and economic conditions, technology changes and new product introductions and require estimates that may include uncertain
elements.   Inventories consist of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 76%">Finished Goods</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double">$</td>
<td style="width: 9%; border-bottom: black 2.25pt double; text-align: right">363,228</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double">$</td>
<td style="width: 9%; border-bottom: black 2.25pt double; text-align: right">515,014</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Property and equipment at cost, less accumulated depreciation, at
March 31, 2012 consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 76%">Furniture</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">34,421</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">34,421</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>Equipment</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">32,769</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">32,769</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Leasehold improvements</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">10,400</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">10,400</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 9pt">Subtotal</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">77,590</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">77,590</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Less accumulated depreciation</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(27,015</td>
<td nowrap="nowrap">)</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(22,771</td>
<td nowrap="nowrap">)</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 9pt">Total</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">50,575</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">54,819</td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Depreciation expense related to property and
equipment for the quarter ended March 31, 2012 was $4,255 and for the quarter ended March 31, 2011 was $3,020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Accounts payable and accrued expenses consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 76%">Accounts payable</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">55,103</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">81,168</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>Accrued officers’ salary</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">75,000</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">37,500</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Accrued interest</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">35,273</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">19,307</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>Accrued payroll taxes</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">57,850</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">32,225</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Accrued professional fees</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">3,000</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">-</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">226,226</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">170,200</td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Notes payable is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 76%">Senior secured promissory note dated July 15, 2011, issued to an accredited investor, maturing July 15, 2012, bearing interest at a rate of 15% per annum.  Interest shall be paid in cash or common stock at the holders’ option.</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; border-bottom: black 1.5pt solid">$</td>
<td style="width: 9%; border-bottom: black 1.5pt solid; text-align: right">250,000</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; border-bottom: black 1.5pt solid">$</td>
<td style="width: 9%; border-bottom: black 1.5pt solid; text-align: right">250,000</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">250,000</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">250,000</td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The senior secured promissory notes are secured
by shares of common stock.  The $250,000 note is secured by 1,500,000 shares of common stock and has accrued interest
of $26,973 as of March 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Notes payable is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 76%; text-align: justify">Unsecured promissory note dated December 2, 2011 and due December 2, 2012, issued to an entity controlled by Michael James an officer of the Company, bearing interest at a rate of 15% per annum.  Interest shall be paid in cash or common stock at the holders’ option.</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">50,000</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">50,000</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Unsecured promissory note dated December 2, 2011 and due December 2, 2012, issued to Michael Nahass a director of the Company, bearing interest at a rate of 15% per annum.  Interest shall be paid in cash or common stock at the holders’ option.</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">100,000</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">100,000</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Unsecured promissory note dated January 11, 2012 and
due January 11, 2013, issued to an entity controlled by Michael James an officer of the Company, bearing interest at a rate
of 15% per annum. The original loan was for $10,000 of which $5,000 was repaid on March 30,
2012. Interest shall be paid in cash or common stock at the holders’ option.</p></td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">5,000</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">    -</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Unsecured promissory note dated January 16, 2012 and due January 16, 2013, issued to Derek Peterson an officer and
director of the Company, bearing interest at a rate of 15% per annum.  Interest shall be paid in cash or common
stock at the holders’ option.</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">10,000</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">    -</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 76%">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Unsecured promissory note dated January 16, 2012 and
due January 16, 2013, issued to Michael Nahass a director of the Company, bearing interest at a rate of 15% per
annum.  Interest shall be paid in cash or common stock at the holders’ option.</p></td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right">5,000</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right">  -</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Unsecured demand note dated March 30, 2012, issued to Amy Almsteier an officer and director of the Company, bearing interest at a rate of 15% per annum.  Interest shall be paid in cash or common stock at the holders’ option.</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">5,000</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">    -</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">175,000</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">150,000</td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The unsecured demand notes due to related parties have accrued interest
of $8,300 as of March 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Preferred Stock</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has authorized 25 million shares
of preferred stock with $0.001 par value, of which there were 100 shares of Series A Convertible Preferred Stock outstanding as
of March 31, 2012.  Series A Convertible Preferred Stock is convertible on a one-for-one basis into common stock and
has all of the voting rights that the holders of our common stock has.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 26, 2012, pursuant the Agreement
and Plan of Merger, the Company issued an aggregate of 100 shares of Series A Preferred Stock to Derek Peterson and Amy Almsteier,
both of whom are officers and directors of the Company.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">There were 14,750,000 shares of Series B Convertible
Preferred Stock outstanding as of March 31, 2012.  The Series B Convertible Preferred shares will vote with the common
stock of the Company, be equal to 100 votes of common stock and be convertible into shares of common stock of the Company and a
1-for-5.384325537.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 26, 2012, pursuant the Agreement
and Plan of Merger, the Company issued an aggregate of 14,750,000 shares of Series B Preferred Stock  to Derek Peterson
and Amy Almsteier, both of whom are officers and directors of the Company.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Common Stock</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has authorized 350 million shares
of common stock with $0.001 par value, of which there were issued and outstanding 81,998,520 as of March 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 17, 2012 the Company sold 150,000
common shares to an accredited investor for $50,000.  The investor also received 150,000 warrants to purchase common
stock at $0.46 per share.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 9, 2012, at the closing of the
Agreement and Plan of Merger, the Company issued an aggregate of 33,998,520 shares of our common stock to the former stockholders
of GrowOp Technology</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company has the following shares of common stock reserved for
the warrants outstanding as of March 31, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2012</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">Shares</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Price</b></p></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 76%">Warrants outstanding – beginning of year</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right">6,188,400</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">0.35</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>Warrants exercised</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Warrants granted</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">150,000</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">0.46</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>Warrants expired</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">-</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">-</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Warrants outstanding – end of period</td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">6,338,400</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid">$</td>
<td style="border-bottom: black 1.5pt solid; text-align: right">0.35</td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><br />
The weighted exercise price and weighted fair value of the warrants granted by the Company as of March 31, 2012, are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2012</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Price</b></p></td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Fair Value</b></p></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 76%">Weighted average of warrants granted during the quarter whose exercise price exceeded fair market value at the date of grant</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">0.33</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 9%; text-align: right">0.46</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Weighted average of warrants granted during the quarter whose exercise price was equal or lower thanfair market value at the date of grant</td>
<td style="text-align: right"> </td>
<td>$</td>
<td style="text-align: right">-</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td>$</td>
<td style="text-align: right">-</td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><br />
The following table summarizes information about fixed-price warrants outstanding:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td colspan="2" style="font-weight: bold; text-align: center">Range of</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td colspan="2">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Outstanding at</b></p></td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Remaining</b></p></td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Weighted</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="font-weight: bold; text-align: center">Exercise</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td>
<td nowrap="nowrap" 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">Contractual</td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Average</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">Prices</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td>
<td nowrap="nowrap" style="font-weight: bold; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">Life</td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">Exercise Price</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 1%">$</td>
<td style="width: 22%; text-align: right">0.33</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 22%; text-align: right">5,588,400</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 26%; text-align: center">30 Months</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 22%; text-align: right">0.33</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>$</td>
<td style="text-align: right">0.46</td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: right">600,000</td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: center">41 Months</td>
<td style="text-align: right"> </td>
<td>$</td>
<td style="text-align: right">0.46</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>$</td>
<td style="text-align: right">0.46</td>
<td nowrap="nowrap"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">150,000</td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="text-align: center">46 Months</td>
<td style="text-align: right"> </td>
<td>$</td>
<td style="text-align: right">0.46</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">6,338,400</td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the warrants issued in January 2012,
the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $2.00, exercise price
of $2.75, volatility of 35.53%, years 4, treasury bond rate 3.5% and dividend rate of 0%.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The warrant expense of $15,000 was based on
the Black Scholes calculation which was expensed during the three months ended March 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company leases certain office and industrial
warehouse space on a month-to-month basis.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The terms of the month to month lease provide
for a rental fee of $5,000 per month through April 15, 2012.  Beginning on April 15, 2012 the month-to-month rent was
increased to $6,300.  Net rent expense for the Company for the three months ended March 31, 2012 was $15,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>F</b>rom time to time, the Company may be
involved in various legal proceedings and claims arising in the ordinary course of business. The disposition of these additional
matters, which may occur, individually or in the aggregate, is not expected to have a material adverse effect on the Company’s
financial condition. However, depending on the amount and timing of such disposition, an unfavorable resolution of some or all
of these matters could materially affect the future results of operations or cash flows in a particular period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March 31, 2012, there was no accrual
recorded for any potential losses related to pending litigation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 26, 2012, pursuant the Agreement
and Plan of Merger, the Company issued an aggregate of 100 shares of Series A Preferred Stock to Derek Peterson and Amy Almsteier,
both of whom are officers and directors of the Company.   </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 26, 2012, pursuant the Agreement
and Plan of Merger, the Company issued an aggregate of 14,750,000 shares of Series B Preferred Stock  to Derek Peterson
and Amy Almsteier, both of whom are officers and directors of the Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Derek Peterson and Amy Almsteier, officers
of the Company, have provided loans to the Company since inception.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the three month period ended March 31,
2012, the Company accrued an additional $37,500 of compensation for the services provided by the officers.  As of March
31, 2012 the officers were owed a total of $75,000 in accrued compensation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the quarter ended March 31, 2012, officers
and directors of the Company had loaned the Company $30,000 and were paid back $5,000.  As of March 31, 2012 the total
amount owed to the officers and directors was $175,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During April 2012, Amy Almsteier an officer
and director of the Company advanced $11,300 to the Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 17, 2012 the Company entered into
a month-to-month lease for certain office and warehouse space in Oakland, California.  The monthly rent is $6,300.</p>
14873
9139
108400
32381
363228
515014
24951
14776
511452
571310
50575
54819
5000
5000
567027
631129
226226
170200
-175000
-150000
651226
570700
0.001
0.001
100
100
100
100
24999900
24999900
14750000
12750000
14750000
12750000
0.001
0.001
350000000
350000000
81998520
33848520
81998520
33848520
0.001
0.001
-500
250000
250000
14750
12750
81999
33849
7881278
2866428
-8062226
-2852598
-84199
60429
567027
631129
-5192783
-90131
407783
123489
14965
33358
196926
210578
211891
243936
-0.07
-0.01
-5209628
-100658
878
-5208750
-100658
-15967
-10527
-15967
-10527
69695760
16956853
4799965
-69301
-22679
-500
37500
56026
102997
-5765
-10175
-4181
151786
-10277
-76019
-45315
15000
4244
3020
35
-5259
5259
5000
100000
30000
50000
183750
75000
83750
14873
9139
62171
117983
5734
55812
15000
35
200000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Organization</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We were incorporated as Private Secretary,
Inc. on July 22, 2008 in the State of Nevada. From inception until we completed our reverse acquisition of GrowOp Technology, the
principal business of the Company originally was to develop a software program that would allow for automatic call processing through
VoIP technology. On January 27, 2012, the Company filed an amendment to its Articles of Incorporation changing its name to Terra
Tech Corp. During that time, we had no revenue and our operations were limited to capital formation, organization, and development
of our business plan and target customer market. As a result of the merger with GrowOp Technology, on February 9, 2012 we ceased
our prior operations and we are now a holding company and our wholly owned subsidiary engages in the design, marketing and sale
of<font style="background-color: white"> hydroponic equipment with proprietary technology to create sustainable solutions for the
cultivation of indoor agriculture.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Recent Developments</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 9, 2012, Terra Tech Corp. (formerly
named, “Private Secretary, Inc.”) , a Nevada corporation (the “Company”) entered into an Agreement and
Plan of Merger dated February 9, 2012 (the “Agreement and Plan of Merger”), by and among the Company, TT Acquisitions,
Inc., a Nevada corporation and a wholly-owned subsidiary of the Company (“TT Acquisitions”), and GrowOp Technology
Ltd., a Nevada corporation (“GrowOp Technology”).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Under the terms and conditions of the Agreement
and Plan of Merger, the Company sold 33,998,500 shares of common stock of the Company in consideration for all the issued and outstanding
shares in GrowOp Technology. The effect of the issuance is that GrowOp Technology shareholders now hold approximately 41.46% of
the issued and outstanding shares of common stock of the Company. Separately, TT Acquisitions merged with GrowOp Technology, with
the effect that GrowOp Technology is a wholly-owned subsidiary of the Company. Articles of Merger, effecting the merger of GrowOp
Technology and TT Acquisitions, were filed with the Secretary of State of the State of Nevada on February 9, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">GrowOp Technology was founded in March 2010,
in Oakland, California. GrowOp Technology’s business (now the principal business of Terra Tech) is the <font style="background-color: white">integration
of best of breed hydroponic equipment with proprietary technology to create sustainable solutions for the cultivation of indoor
agriculture. We work closely with expert horticulturists, engineers, and scientists, to develop and manufacture advanced proprietary
products for the hydroponic industry. Our products are utilized by horticulture enthusiasts, local urban farmers, and green house
growers.</font> We believe that t<font style="background-color: white">he emerging trend of urban and indoor agriculture has fostered
an entrepreneurial push by companies to bring their concept to market. Many of these companies lack both the intellectual resources
and manufacturing capabilities to bring their idea to fruition. That is where Terra Tech is positioned. We have the team and the
resources to help bring indoor cultivation designs from concept to production. Our products can be found through specialty retailers
throughout the United States.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying unaudited condensed financial
statements include all of the accounts of Terra Tech.  These condensed financial statements have been prepared in accordance
with accounting principals generally accepted in the United States for financial information and with the instructions to Form
S-1 and Regulation S-X.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Use of Estimates</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of the financial statements
in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Fair Value of Financial Instruments</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company applies fair value accounting for
all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in
the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining
the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers
the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions
that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer
restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to
measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available
and significant to the fair value measurement:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Level 1 </i>– Quoted prices in active
markets for identical assets or liabilities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Level 2 </i>– Observable inputs other
than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities
in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the
full term of the assets or liabilities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Level 3 </i>– Inputs that are generally
unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the
asset or liability.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s valuation techniques used
to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active
markets for identical assets or liabilities. The valuation techniques used to measure the fair value of all other financial instruments,
all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations
using significant inputs derived from or corroborated by observable market data.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In accordance with the fair value accounting
requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company
has not elected the fair value option for any eligible financial instruments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts Receivable</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company reviews all outstanding accounts
receivable for collectability on a quarterly basis.  An allowance for doubtful accounts is recorded for any amounts deemed
uncollectable.  The Company does not accrue interest receivable on past due accounts receivable.  There was
an allowance of $6,041 at March 31, 2012 and December 31, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Prepaid Inventory</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Prepaid inventory represents deposits made
to foreign manufacturers for purchase orders of specific inventory.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Notes receivable</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Notes receivable due from customers are unsecured
loans which assist with the purchase of products.  The notes range from twelve to eighteen months and bear interest at
the annual rates of 4% to 9%.  A corresponding reserve is established for any uncollectable interest.  There
was a reserve of $29,424 against the collection of notes receivable at March 31, 2012 and December 31, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Property and Equipment</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Property and equipment are stated at cost less
accumulated depreciation.  Depreciation is calculated using the straight-line method over the estimated useful lives
of the assets: 3-8 years for machinery and equipment, leasehold improvements are amortized over the shorter of the estimated useful
lives or the underlying lease term.  Repairs and maintenance expenditures which do not extend the useful lives of related
assets are expensed as incurred.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenue Recognition</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenue is recognized net of discounts, rebates,
promotional adjustments, price adjustments and estimated returns and upon transfer of title and risk to the customer which occurs
at shipping (F.O.B. terms).   Upon shipment, the Company has no further performance obligations and collection is
reasonably assured as the majority of sales are paid for prior to shipping.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Cost of Goods Sold</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management decided to change the focus of the
business in 2011 to designing, manufacturing and selling hydroponic equipment where favorable gross margins are achieved.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Research and Development</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Research and development costs are expensed as incurred.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Income Taxes</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company provides for income taxes based
on enacted tax law and statutory tax rates at which items of income and expenses are expected to be settled in the Company’s
income tax return.  Certain items of revenue and expense are reported for Federal income tax purposes in different periods
than for financial reporting purposes, thereby resulting in deferred income taxes.  Deferred taxes are also recognized
for operating losses that are available to offset future taxable income.  Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.  The Company has incurred net operating losses for
financial-reporting and tax-reporting purposes.  Accordingly, for Federal and state income tax purposes, the benefit
for income taxes has been offset entirely by a valuation allowance against the related federal and state deferred tax asset for
the three months ended March 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Loss Per Common Share</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Net loss per share, in accordance with the
provisions of ASC 260, “Earnings Per Share” is computed by dividing net loss by the weighted average number of shares
of Common Stock outstanding during the period.  During a loss period, the effect of the potential exercise of stock options,
warrants, convertible preferred stock and convertible debt are not considered in the diluted income (loss) per share calculation
since the effect would be anti-dilutive.  The results of operations were a net loss for the three months ended March
31, 2012 therefore the basic and diluted weighted average common shares outstanding were the same.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Recently Issued Accounting Standards</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management does not expect the adoption of
recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash
flow.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Subsequent to the issuance of our condensed
financial statements for the quarter ended March 31, 2012, we have re-evaluated our interpretation of the merger set forth in the
Agreement and Plan of Merger dated February 9, 2012 and have determined that the exchange of the Series A Preferred Stock and the
Series B Preferred Stock should not have been expensed in the quarter ended March 31, 2012.  We have also determined
that the operations for GrowOp Technology should have been included in the quarter ended March 31, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The effect of this restatement is to change
previously reported expenses, net loss and loss per share for the three months ended March 31, 2012 and 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Impact of the restatement on our Condensed
Financial Statements</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our condensed financial statements presented
in this Quarterly Report on Form 10-Q/A has been restated to reflect the impact from the restatement adjustments described above
as follows: </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td colspan="12" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>RECONCILIATION OF CONDENSED BALANCE SHEETS</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="12" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Unaudited</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As of March 31, 2012</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Reported</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Previously</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Adjustments</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Restated</b></font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 10pt">Assets</font></td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 10pt">    Current Assets:</font></td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 64%"><font style="font-size: 10pt">      Cash</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">14,873</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"> </td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">14,873</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      Accounts receivable, net</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">126,456</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(18,056</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">108,400</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Inventories, net</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">363,228</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">363,228</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      Current portion of notes receivable, net of allowance</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">9,424</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(9,424</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Prepaid Inventory</font></td>
<td> </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">13,461</font></td>
<td nowrap="nowrap"> </td>
<td> </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">11,490</font></td>
<td nowrap="nowrap"> </td>
<td> </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">24,951</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">            Total Current Assets</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">527,442</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(15,990</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">511,452</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Property and equipment, net</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">51,286</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(711</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">50,575</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Deposits</font></td>
<td> </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">5,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">5,000</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">            Total Assets</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">583,728</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(16,701</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">567,027</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Liabilities and Stockholders' Equity</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">    Current Liabilities</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Accounts payable and accrued expenses</font></td>
<td> </td>
<td><font style="font-size: 10pt">$</font></td>
<td style="text-align: right"><font style="font-size: 10pt">576,328</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td><font style="font-size: 10pt">$</font></td>
<td style="text-align: right"><font style="font-size: 10pt">(350,102</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td><font style="font-size: 10pt">$</font></td>
<td style="text-align: right"><font style="font-size: 10pt">226,226</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      Note payable</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">250,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">250,000</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Loans from Related Party</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">175,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">175,000</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      Due to officers</font></td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">            Total Current Liabilities</font></td>
<td> </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">1,001,328</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(350,102</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">651,226</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Commitment and Contingencies</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Stockholders' Equity</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Preferred stock, Convertible Series A, Par value $0.001;</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      authorized and issued 100 shares as of March 31, 2012</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Preferred stock, Convertible Series B, Par value $0.001;</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      authorized 24,999,900 shares; issued and outstanding</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      14,750,000 shares as of March 31, 2012</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">14,750</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">14,750</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Common stock, Par value $0.001; authorized 350,000,000</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      shares; issued 81,998,520 shares as of March 31, 2012</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">81,999</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">81,999</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      Additional paid-in capital</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">20,837,044</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(12,955,766</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">7,881,278</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Accumulated Deficit</font></td>
<td> </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">(21,351,393</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">13,289,167</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(8,062,226</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">         Total Stockholders' Equity</font></td>
<td> </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">(417,600</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">333,401</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(84,199</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">            Total Liabilities and Stockholders' Equity</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">583,728</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(16,701</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">567,027</font></td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td colspan="12" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>RECONCILIATION OF CONDENSED BALANCE SHEETS</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As of December 31, 2011</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Reported</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Previously</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Adjustments</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Restated</b></font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 10pt">Assets</font></td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 10pt">    Current Assets:</font></td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 64%"><font style="font-size: 10pt">      Cash</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">10,217</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">(1,078</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 10pt">)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">9,139</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      Accounts receivable, net</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">34,191</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,810</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">32,381</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Inventories, net</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">417,115</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">97,899</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">515,014</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      Current portion of notes receivable, net of allowance</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">38,656</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(38,656</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Prepaid Inventory</font></td>
<td> </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">3,938</font></td>
<td nowrap="nowrap"> </td>
<td> </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">10,838</font></td>
<td nowrap="nowrap"> </td>
<td> </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">14,776</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">            Total Current Assets</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">504,117</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">67,193</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">571,310</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Property and equipment, net</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">55,541</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(722</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">54,819</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Deposits</font></td>
<td> </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">5,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">5,000</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">            Total Assets</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">564,658</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">66,471</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">631,129</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Liabilities and Stockholders' Equity</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">    Current Liabilities</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Accounts payable and accrued expenses</font></td>
<td> </td>
<td><font style="font-size: 10pt">$</font></td>
<td style="text-align: right"><font style="font-size: 10pt">420,636</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td><font style="font-size: 10pt">$</font></td>
<td style="text-align: right"><font style="font-size: 10pt">(250,436</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td><font style="font-size: 10pt">$</font></td>
<td style="text-align: right"><font style="font-size: 10pt">170,200</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      Note payable</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">250,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">250,000</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Loans from Related Party</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">150,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">150,000</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      Due to officers</font></td>
<td> </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">118,792</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(118,292</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">500</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">            Total Current Liabilities</font></td>
<td> </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">939,428</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(368,728</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">570,700</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Commitment and Contingencies</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Stockholders' Equity</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Preferred stock, Convertible Series A, Par value $0.001;</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      authorized and issued 100 shares as of March 31, 2012</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Preferred stock, Convertible Series B, Par value $0.001;</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      authorized 24,999,900 shares; issued and outstanding</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      14,750,000 shares as of March 31, 2012</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">12,750</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">12,750</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Common stock, Par value $0.001; authorized 350,000,000</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      shares; issued 33,848,520 shares as of December 31, 2011</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">48,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(14,151</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">33,849</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">      Additional paid-in capital</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,275,300</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,408,872</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,866,428</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Accumulated Deficit</font></td>
<td> </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">(4,698,070</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">1,845,472</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(2,852,598</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">         Total Stockholders' Equity</font></td>
<td> </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">(374,770</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">435,199</font></td>
<td nowrap="nowrap"> </td>
<td> </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">60,429</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">            Total Liabilities and Stockholders' Equity</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">564,658</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">66,471</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">631,129</font></td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td colspan="24" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>RECONCILIATION OF CONDENSED STATEMENT OF OPERATIONS</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="24" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Unaudited</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As of March 31, 2012</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As of March 31, 2011</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Reported</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Reported</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Previously</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Adjustments</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Restated</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Previously</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Adjustments</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Restated</b></font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 28%"><font style="font-size: 10pt">Total Revenues</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">218,905</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">(7,014</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 10pt">)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">211,891</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">243,936</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">243,936</font></td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">  Cost of Goods Sold</font></td>
<td> </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">136,430</font></td>
<td nowrap="nowrap"> </td>
<td> </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">60,496</font></td>
<td nowrap="nowrap"> </td>
<td> </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">196,926</font></td>
<td nowrap="nowrap"> </td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </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">210,578</font></td>
<td nowrap="nowrap"> </td>
<td> </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">210,578</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">82,475</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(67,510</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">14,965</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">33,358</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">33,358</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Selling, general and administrative expenses</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">16,718,953</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(16,311,170</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">407,783</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">3,798</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">119,691</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">123,489</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Impairment of goodwill</font></td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </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">4,799,965</font></td>
<td nowrap="nowrap"> </td>
<td> </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">4,799,965</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Loss from operations</font></td>
<td> </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">(16,636,478</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">11,443,695</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(5,192,783</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">(3,798</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">(86,333</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">(90,131</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Other Income (Expenses)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">  Interest Expense</font></td>
<td> </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">(15,967</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">(15,967</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(10,527</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">(10,527</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Total Other Income (Expense)</font></td>
<td> </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">(15,967</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(15,967</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(10,527</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">(10,527</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Loss before Provision of Income Taxes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(16,652,445</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">11,443,695</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(5,208,750</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(3,798</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(96,860</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(100,658</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">  Provision for income taxes</font></td>
<td> </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">878</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">878</font></td>
<td nowrap="nowrap"> </td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Net Loss applicable to common shareholders</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(16,653,323</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">11,443,695</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(5,209,628</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(3,798</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(96,860</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(100,658</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Net Loss per Common Share Basic and Diluted</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(0.24</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">0.24</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(0.00</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(0.00</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(0.01</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">(0.01</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Weighted Average Number of Common Shares</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">  Outstanding - Basic and Diluted</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">69,695,760</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">69,695,760</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">69,695,760</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">10,320,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">6,636,853</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">16,956,853</font></td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td colspan="24" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>RECONCILIATION OF CONDENSED STATEMENT OF CASH FLOW</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="24" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Unaudited</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As of March 31, 2012</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As of March 31, 2011</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Reported</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Reported</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Previously</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Adjustments</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Restated</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Previously</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Adjustments</b></font></td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>Restated</b></font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold"><font style="font-size: 10pt"><b>CASH FLOWS FROM OPERATING ACTIVITIES:</b></font></td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 28%"><font style="font-size: 10pt">Net Loss</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">(16,653,323</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 10pt">)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">11,443,695</font></td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">(5,209,628</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 10pt">)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">(3,798</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 10pt">)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">(96,860</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 10pt">)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">(100,658</font></td>
<td nowrap="nowrap" 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">Adjustments to reconcile net loss to net cash</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">  used in operating activities:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Depreciation</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,255</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(11</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,244</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">3,020</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">3,020</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Change in notes receivable reserve</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">20,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(20,000</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Warrants issued with common stock</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">15,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">15,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Preferred stock issued for compensation</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">16,277,200</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(16,077,200</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">200,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Impairment of goodwill</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,799,965</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,799,965</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Changes in operating assets and liabilities:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">  Accounts receivable</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(92,265</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">16,246</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(76,019</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(45,315</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(45,315</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">  Inventory</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">53,887</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">97,899</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">151,786</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(10,277</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(10,277</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">  Prepaid inventory</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(9,523</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(652</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(10,175</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">187</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(4,368</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(4,181</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">  Notes receivable</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">9,232</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(9,232</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(5,765</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(5,765</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">  Accounts payable</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">305,693</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(249,667</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">56,026</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,229</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">101,768</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">102,997</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">  Due to officers</font></td>
<td> </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">(500</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(500</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">37,500</font></td>
<td nowrap="nowrap"> </td>
<td> </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">37,500</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">    Net cash used in operations</font></td>
<td> </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">(70,344</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">1,043</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(69,301</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">(2,382</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">(20,297</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">(22,679</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="font-weight: bold"><font style="font-size: 10pt"><b>CASH FLOW FROM INVESTING ACTIVITIES:</b></font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">  Purchase of property and equipment</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(5,259</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(5,259</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">  Cash assumed in reverse merger</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">35</font></td>
<td nowrap="nowrap"> </td>
<td> </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">35</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">  Net cash used in investing activities</font></td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </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">35</font></td>
<td nowrap="nowrap"> </td>
<td> </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">35</font></td>
<td nowrap="nowrap"> </td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </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">(5,259</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </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">(5,259</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="font-weight: bold"><font style="font-size: 10pt"><b>CASH FLOWS FROM FINANCING ACTIVITIES:</b></font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">  Proceeds from issuance of notes payable to</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">    related parties</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">30,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">30,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Payments on notes payable</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(5,000</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(5,000</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(100,000</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(100,000</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Payments on notes payable to related parties</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Proceeds from issuance of common stock and</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">    warrants</font></td>
<td> </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">50,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">50,000</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </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">183,750</font></td>
<td nowrap="nowrap"> </td>
<td> </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">183,750</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">      Net cash provided by financing activities</font></td>
<td> </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">75,000</font></td>
<td nowrap="nowrap"> </td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </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">75,000</font></td>
<td nowrap="nowrap"> </td>
<td> </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">-</font></td>
<td nowrap="nowrap"> </td>
<td> </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">83,750</font></td>
<td nowrap="nowrap"> </td>
<td> </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">83,750</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">NET CHANGE IN CASH AND CASH EQUIVALENTS</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">4,656</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">1,078</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">5,734</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(2,382</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">58,194</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">55,812</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">CASH AND CASH EQUIVALENTS, beginning</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">10,217</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(1,078</font></td>
<td nowrap="nowrap"><font style="font-size: 10pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">9,139</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">2,447</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">59,724</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">62,171</font></td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">  of period</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">CASH AND CASH EQUIVALENTS, end of period</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">14,873</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">-</font></td>
<td nowrap="nowrap"> </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">14,873</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">65</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">117,918</font></td>
<td nowrap="nowrap"> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">117,983</font></td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s future success is dependent
upon its ability to achieve profitable operations and generate cash from operating activities, and upon additional financing.  Management
believes they can raise the appropriate funds needed to support their business plan and develop an operating company which is cash
flow positive.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">However, the Company has incurred net losses
for the three months ended March 31, 2012 and has accumulated a deficit of approximately $3.04 million at March 31, 2012. The Company
has not been able to generate sufficient cash from operating activities to fund its ongoing operations. There is no guarantee that
the Company will be able to generate enough revenue and/or raise capital to support its operations.  These factors raise
substantial doubt about the Company’s ability to continue as a going concern.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The condensed financial statements do not include
any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the
Company be unable to continue as a going concern.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are filing this Amendment No. 2 on Form 10-Q/A (this “Form
10-Q/A”) to amend our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (the “Original Filing”),
as originally filed with the Securities and Exchange Commission (the “SEC”) on May 21, 2012 (the “Original Filing
Date”) to reflect a restatement of the following previously filed financial statements and data (and related disclosures):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="width: 8%; text-align: justify"> </td>
<td style="vertical-align: top; width: 4%; text-align: justify">•</td>
<td style="vertical-align: top; width: 1%; text-align: justify"> </td>
<td style="vertical-align: top; width: 87%; text-align: justify">our condensed consolidated balance sheet as of March 31, 2012 and December 31, 2011, as discussed in Note 2 to the financial statements included in Item 1 of this 10-Q/A;</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="width: 8%; text-align: justify"> </td>
<td style="vertical-align: top; width: 4%; text-align: justify">•</td>
<td style="vertical-align: top; width: 1%; text-align: justify"> </td>
<td style="vertical-align: top; width: 87%; text-align: justify">our condensed consolidated statements of operations and cash flows for the three months ended March 31, 2012, and March 31, 2011 as discussed in Note 2 to the financial statements included in Item 1 of this Form 10-Q/A; and</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="width: 8%; text-align: justify"> </td>
<td style="vertical-align: top; width: 4%; text-align: justify">•</td>
<td style="vertical-align: top; width: 1%; text-align: justify"> </td>
<td style="vertical-align: top; width: 87%; text-align: justify">our management’s discussion and analysis of financial condition and results of operations as of and for the three months ended March 31, 2012 as discussed in Item 2 of this Form10-Q/A.</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The restatement corrects the accounting treatment for the merger
entered into on February 9, 2012 under the Agreement and Plan of Merger.  The Company treated the convertible Series
A Preferred Stock and the convertible Series B Preferred Stock as an expense in 2012 whereby it was an exchange of stock.  The
Company did not properly reflect the goodwill and the impairment of goodwill in the financials for the first quarter of 2012.  The
restatement reflects the changes.  The Company did not include the operations of GrowOp Technology Ltd. in the financials
for the first quarter of 2011.  The restatement reflects the change.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In connection with the restatement of our financial statements described
herein, we have reported an additional material weakness in our internal controls and procedures with regard to the evaluation
of, and accounting for, mergers. Due to these material weaknesses, our principal executive officer and principal financial officer
also concluded that our disclosure controls and procedures continue not to be effective as of the end of the period covered by
this report. For more information, see Item 4 included in this Form 10-Q/A.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Although this Form 10-Q/A supersedes the Original Filing in its
entirety, this Form 10-Q/A amends and restates only Items 1, 2 and 4 of Part I and the two risk factors set forth in Item 1A of
Part II marked with an asterisk, solely as a result of, and to reflect, the restatement, and no other information in the Original
Filing is amended hereby. This Form 10-Q/A speaks as of the Original Filing Date and does not reflect any events that may have
occurred subsequent to the Original Filing Date. In addition, pursuant to Rule 12b-15 under the Securities Exchange Act of 1934,
as amended, as a result of this Form 10-Q/A, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act
of 2002, filed and furnished, respectively, as exhibits to the Original Report have been re-executed and re-filed as of the date
of this Amended Report and are included as exhibits hereto.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>