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iso4217:USD
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Minerco Resources, Inc.
0001451514
10-Q
2012-04-30
false
--07-31
No
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Smaller Reporting Company
Q3
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<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>1. Basis
of Presentation</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
accompanying unaudited interim financial statements of Minerco Resources, Inc. (“Minerco” or the “Company”),
have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission (the “SEC”), and should be read in conjunction with the audited financial statements
and notes thereto contained in Minerco’s Annual Report filed with the SEC on Form 10-K.  In the opinion of management,
all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results
of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods
are not necessarily indicative of the results to be expected for the full year.  Consolidated Notes to the Financial
Statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2011 as reported
in Minerco’s Form 10-K have been omitted.</font></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>2. Going
Concern</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">These
financial statements have been prepared on a going concern basis, which implies the Company will continue to realize it assets
and discharge its liabilities in the normal course of business. During the period ended April 30, 2012, the Company has an accumulated
deficit and no revenue. The Company is in the business of developing, producing and providing clean, renewable energy solutions
in Central America. The Company participates in and invests in development projects with other companies in clean, renewable energy
projects. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders,
the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations.  These
factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements
do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going concern.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company intends to fund operations through equity and debt financing arrangements, which may be insufficient to fund its capital
expenditures, working capital and other cash requirements for the year ending July 31, 2012.</font></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>3.  Fair
Value of Financial Instruments</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">ASC
820, “Fair Value Measurements ”, requires an entity to maximize the use of observable inputs and minimize the use
of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent,
objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the
fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes
the inputs into three levels that may be used to measure fair value:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">Level 1</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">Level 1 applies
to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">Level 2</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability
such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in
markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant
inputs are observable or can be derived principally from, or corroborated by, observable market data.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">Level 3</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to
the measurement of the fair value of the assets or liabilities.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and due to related
party. Pursuant to ASC 820, the fair value of our cash equivalents is determined based on “Level 1” inputs, which
consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other
financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">The following
table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair
value on April 30, 2012.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
1</b></font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
2</b></font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
3</b></font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Total</b></font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="width: 43%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Assets</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 4%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 4%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 4%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 17%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 17%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif">Chiligatoro Rights</td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">715,500</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">715,500</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Liabilities</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Derivative Financial
Instruments</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,411,656</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,411,656</font></td>
<td nowrap="nowrap" style="font: bold 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">The following
table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair
value on July 31, 2011.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
1</b></font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
2</b></font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
3</b></font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Total</b></font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="width: 52%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Assets</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Chiligatoro
Rights</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">715,500</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">715,500</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Liabilities</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Derivative Financial
Instruments</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">191,216</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">191,216</font></td>
<td nowrap="nowrap" style="font: bold 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>4. Common
Stock</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">On December
16, 2010, the Company entered into an employment contract with its Chief Financial Officer for 30,000,000 common shares valued
at $255,000 amortized over the term of the agreement, 5.5 years. As of April 30, 2012, the Company recognized $38,264 in compensation
expense and $184,896 is unamortized as of April 30, 2012.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
August 8, 2011, the Company issued 47,059 common shares at a conversion rate of $0.255 for the conversion of $12,000 of debt pursuant
to a convertible promissory note dated February 3, 2011.   </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
August 28, 2011, the Company entered into a consulting agreement with SE Media for two months with an option to extend for
an additional one month. SE Media will be issued 266,667 shares at $0.255 of Minerco Resources, Inc for a total compensation expense
of $38,000.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
August 28, 2011, the Company issued 266,667 common shares to our Chief Financial Officer pursuant to an amendment to his employment
agreement for a total expense of $76,000 which will be amortized using the straight line method over the remainder of the 5 year
contract. The expense recognized as of April 30, 2012 is $11,950 and $64,050 is unamortized as of April 30, 2012.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
September 1, 2011, the Company issued 880,000 common shares at a conversion rate of $0.06 for the conversion of $52,800 of debt
pursuant to a convertible promissory note dated September 1, 2011.    </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
September 2, 2011, the Company issued 133,334 common shares at a conversion rate of $0.075 for the conversion of $10,000 of debt
pursuant to a convertible promissory note to dated February 3, 2011.    </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
September 12, 2011, the Company issued 80,000 common shares at a conversion rate of $0.075 for the conversion of $6,000 of debt
pursuant to a convertible promissory note to dated February 3, 2011.   </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
September 16, 2011, the Company issued 133,334 common shares at a conversion rate of $0.06 for the conversion of $8,000 of debt
pursuant to a convertible promiss6ory note to dated February 3, 2011.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
October 10, 2011, the Company issued 100,000 common shares at a conversion rate of $0.045 for the conversion of $4,500 of debt
pursuant to a convertible promissory note to dated February 3, 2011.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
October 24, 2011, the Company issued 200,000 common shares at a conversion rate of $0.03 for the conversion of $6,000 of debt
pursuant to a convertible promissory note to dated February 3, 2011.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
October 31 2011, the Company issued 200,000 common shares at a conversion rate of $0.03 for the conversion of $6,000 of debt pursuant
to a convertible promissory note to dated February 3, 2011.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
November 9, 2011, the Company issued 97,038 common shares at a conversion rate of $0.027 for the conversion of $500 of debt pursuant
to a convertible promissory note to dated February 3, 2011 along with accrued interest of $2,120.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
November 15, 2011, the Company issued 238,096 common shares at a conversion rate of $0.021 for the conversion of $5,000 of debt
pursuant to a convertible promissory note to dated March 29, 2011.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">On November
21, 2011, the Company issued 222,223 common shares at a conversion rate of $0.018 for the conversion of $4,000 of debt pursuant
to a convertible promissory note to dated March 29, 2011.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">On December
6, 2011, the Company issued 222,223 common shares at a conversion rate of $0.009 for the conversion of $2,000 pursuant to a convertible
promissory note to dated March 29, 2011.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">On December
28, 2011, the Company issued 283,334 common shares at a conversion rate of $0.006 for the conversion of $1,700 pursuant to a convertible
promissory note to dated March 29, 2011.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">On January
17, 2012, the Company issued 283,334 common shares at a conversion rate of $0.006 for the conversion of $1,700 pursuant to a convertible
promissory note to dated March 29, 2011.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 99%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">On February
3, 2012, the Company issued 283,333 common shares at a conversion rate of $0.006 for the conversion of $1,700 of debt pursuant
to a convertible promissory note dated March 29, 2011.</font></td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">On February 15,
2012, the Company issued 10,690,000 common shares at a conversion rate of $0.001 for the conversion of $10,690 of debt pursuant
to a convertible promissory note dated June 6, 2011. </font></td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">On February 15,
2012, the Chief Executive Officer converted 2,500,000 shares of Class A Preferred Convertible Stock to 25,000,000 shares of
common stock. </font></td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">On
February 15, 2012, the Chief Financial Officer converted 2,500,000 shares of Class A Preferred Convertible Stock to 25,000,000
shares of common stock. </font></p></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 99%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">On March
9, 2012, the Company issued 1,774,193 common shares at a conversion rate of $0.0062 for the conversion of $11,000 pursuant
to a convertible promissory note to dated March 29, 2011.</font></td></tr>
</table>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>5. Preferred
Stock</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
preferred stock may be divided into and issued in series. The Board of Directors of the Company is authorized to divide the authorized
shares of preferred stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from
the shares of all other series and classes.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
January 11, 2011, the Company designated 5,000,000 shares of its preferred stock as Class A Convertible Preferred Stock (“Class
A Stock”). Each share of Class A Stock is convertible into 10 shares of common stock, has 100 votes, has no dividend rights
except as may be declared by the Board of Directors, and has a liquidation preference of $1.00 per share.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
January 11, 2011, the Company issued 10,000,000 preferred shares to its Chief Executive Officer valued at $720,000. As of April
30, 2012 $108,030 was recorded as stock compensation expense and $532,320 is unamortized as of April 30, 2012.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
August 28, 2011, the Company issued 5,000,000 shares of its Class A Convertible Preferred stock to its Chief Financial Officer
pursuant to an amendment to his employment agreement.  The compensation expense for the stock grant will be amortized
evenly over the remainder of the 5 year employment agreement based on the closing stock price of the Company’s common stock
on the date of the grant ($0.0019). Total expense to be recognized over the 5 year term is $95,000, whereby Company recognized
$14,936 as of April 30, 2012 and $80,064 is unamortized as of April 30, 2012. If Mr. Messina voluntarily terminates his employment
with us or if a petition for Chapter 7 bankruptcy is filed by us resulting in an adjudication of bankruptcy within 12 months of
the date of the agreement, all shares granted will be cancelled. If Mr. Messina voluntarily terminates his employment with us
or if a petition for Chapter 7 bankruptcy is filed by the Company resulting in an adjudication of bankruptcy after twelve months
and before 24 months of the date of the agreement, 3,000,000 shares granted to him will be returned.  If Mr. Messina
voluntarily terminates his employment with us or if a petition for Chapter 7 bankruptcy is filed by us resulting in an adjudication
of bankruptcy after twenty four months and before 36 months of the date of the agreement, 2,000,000 shares granted to him will
be returned.  If Mr. Messina voluntarily terminates his employment with us or if a petition for Chapter 7 bankruptcy
is filed by us resulting in an adjudication of bankruptcy after thirty six months and before 48 months of the date of the agreement,
1,000,000 shares granted to him will be returned.</font></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt"><font style="font: 8pt Times New Roman, Times, Serif"><b>6.
Related Parties</b></font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">As
of April 30, 2012, the Company was indebted to the current Chief Executive Officer for $254,390 ($127,674 at July 31, 2011) relating
to accrued salary and $15,797 for the expenses paid on behalf of the Company. The Company is also indebted to the current Chief
Financial Officer for $214,016 ($83,515 at July 31, 2011) relating to accrued salary and $16,387 for the expenses paid on behalf
of the Company for a total of $505,589.</font></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt"><font style="font: 8pt Times New Roman, Times, Serif"><b>7.  Convertible
Note Payable</b></font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">As
of April 30, 2012, the Company was indebted to an unrelated third party for $147,200, for monies loaned to the Company.  On
October 12, 2010, the Company granted a promissory note to this party in the amount of $200,000 in consideration for monies loaned
to the Company.  The promissory note is non-interest bearing and due on demand.  On September 1, 2011, the
Company entered  into two agreements, each of which provide for the exchange of the two promissory notes dated October
12, 2010 in the principal amount of $100,000 for convertible promissory notes (the “Convertible Notes”) in the aggregate
principal amount of $100,000.  Each Convertible Note plus accrued interest of 0% may be converted into shares of common
stock of the Company at any time before the maturity date by the Convertible Note holder at a conversion price of $0.0004 per
share at the time of conversion. In the event of a default by the Company, each Convertible Note plus accrued interest may be
converted into shares of common stock of the Company at any time after the default date by the Convertible Note holder at a conversion
price of the lower of (i) par value or (ii) half of the average bid price over the five trading days prior to the conversion date,
but in no case for an amount less than a 51% interest in the Company.</font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt"><font style="font: 8pt Times New Roman, Times, Serif">The
Company is obligated to register the shares underlying the Convertible Notes under the Securities Act of 1933 until shares become
available for resale under Rule 144(k). On September 1, 2011, a note holder converted $52,800 of principal into 880,000 shares
of the Company.</font></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt"><font style="font: 8pt Times New Roman, Times, Serif"><b>8.
Derivative Liabilities</b></font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
February 3, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company
and Asher Enterprises for $53,000.  The convertible note carries an 8% rate of interest and is convertible into common
stock at a variable conversion price of 31% of the market price which shall be calculated as the average of the lowest 3 days
during the preceding 10 days before conversion.  The Promissory Note was due on November 7, 2011.  On August
8, 2011, the Company and Asher Enterprises entered into an amendment whereas the note converts at a variable conversion price
of 31% of the market price which shall be calculated as the average of the lowest 3 days during the preceding 10 days before the
conversion.</font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
March 29, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and
Asher Enterprises for $27,500.  The convertible note carries an 8% rate of interest and is convertible into common stock
at a variable conversion price of 31% of the market price which shall be calculated as the average of the lowest 3 days during
the preceding 10 days before conversion.  The Promissory Note was due on December 29, 2011.  On September
27, 2011, the Company and Asher Enterprises entered into an amendment whereas the note converts at a variable conversion price
of 31% of the market price which shall be calculated as the average of the lowest 3 days during the preceding 10 days before the
conversion.</font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
June 6, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and
SE Media Partners, Inc. for $36,000.  The convertible note carries a 5% rate of interest and is convertible into common
stock at a variable conversion price of 50% of the market price which shall be calculated as the lowest day during the preceding
5 days before conversion.  The Promissory Note was due on December 6, 2011.</font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
June 22, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and
Asher Enterprises for $32,500.  The convertible note carries an 8% rate of interest and is convertible into common stock
at a variable conversion price of 55% of the market price which shall be calculated as the average of the lowest 3 days during
the preceding 10 days before conversion.  The Promissory Note was due on March 26, 2012.</font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
August 6, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and
SE Media Partners, Inc. for $18,000.  The convertible note carries an 5% rate of interest and is convertible into common
stock at a variable conversion price of 50% of the market price which shall be calculated as the lowest day during the preceding
5 days before conversion.  The Promissory Note was due on February 6, 2012.</font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
August 8, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and
Asher Enterprises for $27,500.  The convertible note carries an 8% rate of interest and is convertible into common stock
at a variable conversion price of 55% of the market price which shall be calculated as the average of the lowest 3 days during
the preceding 10 days before conversion.  The Promissory Note was due on May 11, 2012. </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
September 27, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company
and Asher Enterprises for $35,000.  The convertible note carries an 8% rate of interest and is convertible into common
stock at a variable conversion price of 51% of the market price which shall be calculated as the average of the lowest 3 days
during the preceding 10 days before conversion.  The Promissory Note is due on June 29, 2012.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
November 6, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company
and SE Media Partners, Inc. for $27,000.  The convertible note carries an 5% rate of interest and is convertible into
common stock at a variable conversion price of 50% of the market price which shall be calculated as the lowest day during the
preceding 5 days before conversion.  The Promissory Note is due on May 6, 2012. </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Due
to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options embedded
in the Convertible Promissory Notes, the options are classified as derivative liabilities and recorded at fair value.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">A summary
of changes in Convertible Promissory Notes payable for the period ended April 30, 2012 is as follows:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="width: 88%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Beginning
balance</font></td>
<td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">261,659</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Gross proceeds from
the notes payable</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">62,500</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Accounts payable
re-classed to note payable</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">45,000</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Less: debt discount
from conversion options</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(307,022</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Less: Conversion
of notes payable</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(143,990</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Add:
amortization of discount</font></td>
<td style="padding-bottom: 1.5pt; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">348,284</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total
notes payable</font></td>
<td style="padding-bottom: 3pt; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">266,431</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">Derivative
Liability:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
fair values of the instruments were determined to be $383,067 using a Black-Scholes option-pricing model.  Upon the
issuance dates of the new Convertible Promissory Notes, $280,022 was recorded as debt discount and $616,027 was recorded as day
one loss on derivative liability.  During the three months April 30, 2012, the Company recorded a net loss on mark-to-market
of the conversion options of $1,566,419.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">The following
table summarizes the derivative liabilities included in the consolidated balance sheet at April 30, 2012:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="width: 82%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Beginning
Balance</font></td>
<td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">191,216</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">New issuance derivative
value accounted for as debt discount</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">307,022</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Write off of Discount</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">22,083</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Day one loss on
excess of fair value over proceeds received</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">630,281</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Derivative re-classed
to equity upon conversion of notes payable to common stock</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(1,176,139</font></td>
<td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">April
30, 2012 loss on change in fair value</font></td>
<td style="padding-bottom: 1.5pt; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,437,193</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Balance
at April 30, 2012</font></td>
<td style="padding-bottom: 3pt; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,411,656</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">The following
table summarizes the derivative liabilities included in the consolidated statement of expenses at April 30, 2012:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="width: 82%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Day
one loss on fair value</font></td>
<td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 15%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">630,281</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">April
30, 2012 loss on change in fair value</font></td>
<td style="padding-bottom: 1.5pt; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,437,193</font></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> Total
loss on derivative as of April 30, 2012</font></td>
<td style="padding-bottom: 3pt; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,067,474</font></td>
<td nowrap="nowrap" style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
valuation of the above derivative instruments are determined primarily using the Black-Scholes option pricing model. To determine
the fair value of the derivatives, Minerco evaluates assumptions regarding the probability of certain future events. The fair
values of the derivatives as of April 30, 2012 were estimated using the Black-Sholes model with the following assumptions: $0.0082
quoted stock price; $0.001 to $0.006 conversion price; 93.40% to 912.57% volatility; less than 1 year estimated life; zero dividends
and a 0.04% to 0.07% discount rate.</font></p>
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<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>9. Commitments</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Employment
Agreements</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
August 28, 2011, the Company amended an exclusive employment agreement with Sam J Messina III to serve as our Chief Financial
Officer, Secretary and Treasurer.  Mr. Messina is paid a salary of $150,000 per annum as of August 28, 2011. If revenues
exceed $10 million, then Mr. Messina’s salary will be increased to $300,000 per annum. If revenues exceed $20 million, then
Mr. Messina’s salary will be increased to $450,000 per annum.  Mr. Messina was issued 466,667 shares of common
stock and 5,000,000 share of Class A Convertible Preferred Stock, upon the effective date of the agreement.</font></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>10. Subsequent
Events</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 48px; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">a)  </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">On May 10, 2012,
the Company issued 3,333,333 common shares at a conversion rate of $0.0039 for the conversion of $13,000 of debt pursuant
to a convertible promissory note dated June 22, 2011.</font></td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">b)  </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">On May 16, 2012,
the Company issued 3,200,000 common shares at a conversion rate of $0.0025 for the conversion of $8,000 of debt pursuant to
a convertible promissory note dated June 22, 2011.</font></td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">c)  </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">On May 30, 2012,
the Company issued 3,333,333 common shares at a conversion rate of $0.0015 for the conversion of $5,000 of debt pursuant to
a convertible promissory note dated June 22, 2011.</font></td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">d)  </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
June 14, 2012, the Company and Asher Enterprises entered into an amendment
of the June 22, 2011 convertible promissory note for $32,500 whereas the
note converts at a variable conversion price of 35% of the market price
which shall be calculated as the lowest market price during the 120 day
period prior to the conversion date. </font></p></td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">e)  </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><p style="font: 8pt/11pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
June 14, 2012, the Company and Asher Enterprises entered into an amendment
of the August 8, 2011 convertible promissory note for $27,500 whereas
the note converts at a variable conversion price of 35% of the market
price which shall be calculated as the lowest market price during the
120 day period prior to the conversion date.</font></p></td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">f)  </font></td>
<td style="padding-bottom: 8pt; text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">On
June 14, 2012, the Company and Asher Enterprises entered into an amendment of the September 27, 2011 convertible promissory
note for $35,000 whereas the note converts at a variable conversion price of 35% of the market price which shall be calculated
as the lowest market price during the 120 day period prior to the conversion date.</font></td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">g)  </font></td>
<td style="padding-bottom: 8pt; text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">On
June 18, 2012, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company
and Asher Enterprises for $11,500.  The convertible note carries an 8% rate of interest and is convertible into
common stock at a variable conversion price of 35% of the market price which shall be calculated as the average of the lowest
market price during 120 day period prior to the conversion date.  The Promissory Note is due on March 20, 2013. </font></td></tr>
</table>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>