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&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;The following is a summary of the stock option activity for the three-months
ended June 30, 2013:&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"&gt;
&lt;tr style="vertical-align: bottom"&gt;
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    &lt;td style="padding-bottom: 1.5pt; text-align: center"&gt;&amp;#160;&lt;/td&gt;
    &lt;td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"&gt;&lt;font style="font-size: 8pt"&gt;&lt;b&gt;Number of Shares&lt;/b&gt;&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="padding-bottom: 1.5pt; text-align: center"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="padding-bottom: 1.5pt; text-align: center"&gt;&amp;#160;&lt;/td&gt;
    &lt;td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"&gt;&lt;font style="font-size: 8pt"&gt;&lt;b&gt;Weighted Average Exercise Price&lt;/b&gt;&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="padding-bottom: 1.5pt; text-align: center"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="padding-bottom: 1.5pt; text-align: center"&gt;&amp;#160;&lt;/td&gt;
    &lt;td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"&gt;&lt;font style="font-size: 8pt"&gt;&lt;b&gt;Weighted Average Remaining Contractual Term&lt;/b&gt;&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="padding-bottom: 1.5pt; text-align: center"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="padding-bottom: 1.5pt; text-align: center"&gt;&amp;#160;&lt;/td&gt;
    &lt;td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"&gt;&lt;font style="font-size: 8pt"&gt;&lt;b&gt;Aggregate Intrinsic value&lt;/b&gt;&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="padding-bottom: 1.5pt"&gt;&amp;#160;&lt;/td&gt;&lt;/tr&gt;
&lt;tr style="vertical-align: bottom; background-color: #CCEEFF"&gt;
    &lt;td&gt;&lt;font style="font-size: 8pt"&gt;Outstanding, December 31, 2012&lt;/font&gt;&lt;/td&gt;
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    &lt;td&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;450,900&lt;/font&gt;&lt;/td&gt;
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    &lt;td style="text-align: right"&gt;&amp;#160;&lt;/td&gt;
    &lt;td&gt;&lt;font style="font-size: 8pt"&gt;$&lt;/font&gt;&lt;/td&gt;
    &lt;td style="text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;2.02&lt;/font&gt;&lt;/td&gt;
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    &lt;td&gt;&amp;#160;&lt;/td&gt;
    &lt;td colspan="2"&gt;&amp;#160;&lt;/td&gt;
    &lt;td nowrap="nowrap"&gt;&amp;#160;&lt;/td&gt;
    &lt;td&gt;&amp;#160;&lt;/td&gt;
    &lt;td colspan="2"&gt;&amp;#160;&lt;/td&gt;
    &lt;td nowrap="nowrap"&gt;&amp;#160;&lt;/td&gt;&lt;/tr&gt;
&lt;tr style="vertical-align: bottom; background-color: white"&gt;
    &lt;td&gt;&lt;font style="font-size: 8pt"&gt;Cancelled&lt;/font&gt;&lt;/td&gt;
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    &lt;td&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;(19,900&lt;/font&gt;&lt;/td&gt;
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    &lt;td&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;1.08&lt;/font&gt;&lt;/td&gt;
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    &lt;td colspan="2"&gt;&amp;#160;&lt;/td&gt;
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    &lt;td colspan="2"&gt;&amp;#160;&lt;/td&gt;
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    &lt;td style="padding-bottom: 1.5pt"&gt;&lt;font style="font-size: 8pt"&gt;Issued&lt;/font&gt;&lt;/td&gt;
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    &lt;td style="border-bottom: black 1.5pt solid"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="border-bottom: black 1.5pt solid; text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;18,000&lt;/font&gt;&lt;/td&gt;
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    &lt;td style="padding-bottom: 1.5pt; text-align: right"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="border-bottom: black 1.5pt solid"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="border-bottom: black 1.5pt solid; text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;1.40&lt;/font&gt;&lt;/td&gt;
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    &lt;td nowrap="nowrap" style="padding-bottom: 1.5pt"&gt;&amp;#160;&lt;/td&gt;
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    &lt;td colspan="2" style="border-bottom: black 1.5pt solid"&gt;&amp;#160;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="padding-bottom: 1.5pt"&gt;&amp;#160;&lt;/td&gt;&lt;/tr&gt;
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    &lt;td style="width: 52%; padding-bottom: 3pt"&gt;&lt;font style="font-size: 8pt"&gt;Outstanding, June 30, 2013&lt;/font&gt;&lt;/td&gt;
    &lt;td style="width: 1%; padding-bottom: 3pt; text-align: right"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="width: 1%; border-bottom: black 2.25pt double"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="width: 9%; border-bottom: black 2.25pt double; text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;449,000&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="width: 1%; padding-bottom: 3pt"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="width: 1%; padding-bottom: 3pt; text-align: right"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="width: 1%; border-bottom: black 2.25pt double"&gt;&lt;font style="font-size: 8pt"&gt;$&lt;/font&gt;&lt;/td&gt;
    &lt;td style="width: 9%; border-bottom: black 2.25pt double; text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;2.03&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="width: 1%; padding-bottom: 3pt"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="width: 1%; padding-bottom: 3pt; text-align: right"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="width: 1%; border-bottom: black 2.25pt double"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="width: 9%; border-bottom: black 2.25pt double; text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;6.9&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="width: 1%; padding-bottom: 3pt"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="width: 1%; padding-bottom: 3pt; text-align: right"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="width: 1%; border-bottom: black 2.25pt double"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="width: 9%; border-bottom: black 2.25pt double; text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;46,700&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="width: 1%; padding-bottom: 3pt"&gt;&amp;#160;&lt;/td&gt;&lt;/tr&gt;
&lt;tr style="vertical-align: bottom; background-color: #CCEEFF"&gt;
    &lt;td style="padding-bottom: 3pt"&gt;&lt;font style="font-size: 8pt"&gt;Vested and exercisable, June 30, 2013&lt;/font&gt;&lt;/td&gt;
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    &lt;td style="border-bottom: black 2.25pt double"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="border-bottom: black 2.25pt double; text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;280,500&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="padding-bottom: 3pt"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="padding-bottom: 3pt; text-align: right"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="border-bottom: black 2.25pt double"&gt;&lt;font style="font-size: 8pt"&gt;$&lt;/font&gt;&lt;/td&gt;
    &lt;td style="border-bottom: black 2.25pt double; text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;2.42&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="padding-bottom: 3pt"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="padding-bottom: 3pt; text-align: right"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="border-bottom: black 2.25pt double"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="border-bottom: black 2.25pt double; text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;5.8&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="padding-bottom: 3pt"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="padding-bottom: 3pt; text-align: right"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="border-bottom: black 2.25pt double"&gt;&amp;#160;&lt;/td&gt;
    &lt;td style="border-bottom: black 2.25pt double; text-align: right"&gt;&lt;font style="font-size: 8pt"&gt;36,800&lt;/font&gt;&lt;/td&gt;
    &lt;td nowrap="nowrap" style="padding-bottom: 3pt"&gt;&amp;#160;&lt;/td&gt;&lt;/tr&gt;
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&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;Aggregate intrinsic value represents the difference between the closing
stock price at June 30, 2013 of the Company's Common Stock and the exercise price of outstanding, in-the-money options. The Company's
closing stock price as reported on the OTCBB as of June 30, 2013 was $1.40.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;At June 30, 2013, there remains $144,018 of unvested expense yet
to be recorded related to all options outstanding.&lt;/p&gt;

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