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Renewable Energy & Power, Inc.
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Renewable Energy and Power (the Company or
REAP) was incorporated on October 15, 2012, under the laws of the State of Nevada, for the purpose of conducting all legal business.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying unaudited interim financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), as amended for interim financial
information</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">These financial statements should be read in
conjunction with the audited financial statements and the notes thereto included in the Company’s 2014 Annual Report on Form
10-K. The accompanying unaudited financial statements reflect all normal recurring adjustments necessary to present fairly the
financial position, results of operations and cash flows for the interim periods, but are not necessarily indicative of the results
for any subsequent quarter or the entire year ending September 30, 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain information or foot note disclosures
normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules
and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes
necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s
opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary
for a fair financial statement presentation. The interim results for the three and six months ended March 31, 2015 are not necessarily
indicative of results for the full fiscal year.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is engaged in the business of new
and retrofit applications for LED lighting and innovative solar electrical generation. The LED products will lower the use of electrical
power, lower maintenance costs for users and extend the useful life of lighting fixtures.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The solar process will greatly increase the
conversion of heat to electricity, and is patterned after technology that has been used in space exploration for many years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management knows of no material adjustments
needed in these financial statements to conform to Generally Accepted Accounting Principles.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">These financial statements for the three and
six months ending March 31, 2015 were prepared assuming the Company will continue as a going concern. During the three months ending
March 31, 2015, the Company has incurred a loss of $26,196 and has an accumulated deficit of $605,051. The Company will need to
generate significant revenue in order to achieve profitability and may never become profitable.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has begun principal operations
and, as is common with a start-up company, the Company has had recurring losses during its early stage. The Company’s financial
statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization
of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of revenue sufficient to cover its operating costs and to allow
it to continue as a going concern. In the interim, shareholders of the Company have committed to meeting its minimal operating
expenses.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Basis of presentation </u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company reports revenues and expenses using
the accrual method of accounting for financial and tax reporting purposes. These financial statements are presented in United States
dollars and have been prepared in accordance with United States generally accepted accounting principles.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Management estimates</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of financial statements in
conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Revenue recognition</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recognizes revenue from sales at
the time the products are shipped, the price is determinable, the customers are invoiced and payment is reasonably assured. Invoices
are due on a net 30 day basis.<i> </i>Shipping and handling costs are billed to customers and netted against shipping and
handling expenses incurred by the Company, which are included in cost of revenues. All of the Company’s sales are to Multichip
Display, Inc. (MDI), a shareholder of the Company. See Note 4.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Accounts receivable</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company grants credit, generally without
collateral. The Company performs periodic credit evaluations of its customers’ financial condition and believes that its
customer acceptance, billing and collection policies are adequate to minimize potential credit risk. The Company has not incurred
any credit losses to date. The Company provides an allowance for doubtful accounts that is based upon a review of outstanding receivables,
historical collection information, and existing economic conditions. The allowance for bad debt is $0 at December 31, 2014 and
$0 at March 31, 2015. Normal accounts receivable past due more than 30 days are considered delinquent. Delinquent receivables are
written off based on individual credit evaluation and specific circumstances of the customer. All of the Company’s receivables
are from MDI, a related party. (See Note 4.)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Inventories</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Inventories are carried at the lower of cost
(first-in, first-out, FIFO) or market (net realizable value) and include primarily Silicon wafers and displays with drivers. The
inventories, which were purchased from two related parties during 2013 and 2014, consist of parts and supplies. (See Note 4.)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">MDI is owned by a minority shareholder (2,000,000
shares or 2.7%) of the Company as of December 31, 2014 and March 31, 2015. In addition, MDI became a minority shareholder (4,330,000
shares or 5.7%) through debt conversion (see below). The total direct and indirect ownership of REAP by MDI is 8.6% at December
31, 2014 and March 31, 2015.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has an exclusive contract to manufacture
products under contract from MDI. MDI will be the sales agent for certain government and private company contracts; REAP manufactures
products based on bid prices as agreed between the parties. The Company has also agreed to purchase parts from MDI. As part of
the agreement, MDI has agreed to support the operations of the Company through December 31, 2015. MDI is both a significant customer
and significant vendor of the Company. For the three months ending March 31, 2014 and 2015, all of the Company’s sales resulted
from transactions with MDI. The Company had the following related party transactions through March 31, 2015 for the time periods
shown in the tables below. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"> </td>
<td> </td>
<td colspan="6" id="ffc" style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>For the Three Months Ending</b></font><br />
<font style="font-size: 10pt"><b>March 31, </b></font></td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Income & Expense Transactions </b></font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>2015</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>2014</b></font></td>
<td> </td></tr>
<tr>
<td> </td>
<td> </td>
<td colspan="2" style="vertical-align: bottom"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Sales to MDI</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">120,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">112,500</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td><font style="font-size: 10pt">Inventory purchases from MDI*</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">86,400</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">90,235</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Rent expense paid to MDI</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">7,500</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">7,500</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Interest expense</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">5,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">5,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Balance Sheet Accounts as of :</b></font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>March 31,</b></font><br />
<font style="font-size: 10pt"><b>2015</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>September 30,</b></font><br />
<font style="font-size: 10pt"><b>2014</b></font></td>
<td> </td></tr>
<tr>
<td> </td>
<td> </td>
<td colspan="2" style="vertical-align: bottom"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Receivable from MDI</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1,175,900</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">930,900</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Accounts payable to MDI</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,183,823</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,018,831</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Accrued interest payable to MDI</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">48,333</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">38,333</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Convertible note payable to MDI</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">250,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">250,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">* Includes borrowings to pay for direct labor.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The agreement with MDI includes an offset clause
for accounts receivable from MDI and accounts payable to MDI. Neither party has requested to offset the balance.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Consulting fees payable to officers and
shareholder</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the six months ended March 31, 2015
and 2014, the Company incurred $35,000 and $54,002, respectively, of consulting fees which are payable to two officers and to one
shareholder of the Company. Total consulting fees payable to these officers and shareholder as of March 31, 2015 and September
30, 2014 were $156,506 and $129,506 respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are authorized to issue 200,000,000 shares
of common stock and no preferred stock. Upon formation, 42,010,000 shares were issued to the founders of the Company in exchange
for rights to an extensive design of a solar generating process and a prototype of a final product. On October 31, 2012, 2,000,000
shares were issued for $10,000. In February 2013, 4,330,000 shares were issued in a debt conversion for the equipment of MDI Industries,
Inc. In March 2013, 25,000,000 shares were issued in a debt conversion. In June 2013, 1,181,720 restricted common shares were issued
for unpaid wages. Major shareholders of the Company have donated $4,370 to capital and received no additional shares.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The difference between the expected income
tax expense (benefit) and the actual tax expense (benefit) computed by using the Federal statutory rate of 34% is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"> </td>
<td> </td>
<td colspan="6" id="ffc" style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>For the Six Months Ended</b></font><br />
<font style="font-size: 10pt"><b>March 31,</b></font></td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>2015</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>2014 </b></font></td>
<td> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Expected income tax benefit at statutory rate of 34%</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">17,500</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">36,900</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Change in valuation allowance</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(17,500</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt">)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(36,900</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt">)</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Income tax expense (benefit)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Deferred tax assets and liabilities are provided
for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences,
which give rise to a net deferred tax asset, are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Deferred tax assets:</b></font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>March 31,</b></font><br />
<font style="font-size: 10pt"><b>2015</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>September 30,</b></font><br />
<font style="font-size: 10pt"><b>2014</b></font></td>
<td> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Tax benefit of net operating loss carry-forward</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">178,600</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">166,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Book and tax difference for amortization of intangibles</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">27,100</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">22,200</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Less: valuation allowance</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(205,700</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt">)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(188,200</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt">)</font></td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Net deferred tax asset</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company had a federal net operating tax
loss carry-forward of approximately $525,000 as of March 31, 2015. The tax loss carry-forwards are available to offset future
taxable income with the federal carry-forwards beginning to expire in 2033.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At March 31, 2015 the deferred tax valuation
allowance increased by $17,500 from September 30, 2014. The realization of the tax benefits is subject to the sufficiency of taxable
income in future years. The deferred tax assets represent the amounts expected to be realized before expiration. The Company periodically
assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence,
both positive and negative, including historical levels of income, expectations and risks associated with estimates of future
taxable income and ongoing prudent and feasible profits. As of March 31, 2015 and September 30, 2014, the Company established
valuation allowances equal to the full amount of the net deferred tax assets due to the uncertainty of the utilization of the
operating losses in future periods.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the six months ended March 31, 2015
and 2014, no amounts have been recognized for uncertain tax positions and no amounts have been recognized related to interest or
penalties related to uncertain tax positions. The Company has determined that it is not reasonably likely for the amounts of unrecognized
tax benefits to significantly increase or decrease within the next twelve months. The Company is currently subject to a three year
statute of limitations by major tax jurisdictions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of financial statements in
conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recognizes revenue from sales at
the time the products are shipped, the price is determinable, the customers are invoiced and payment is reasonably assured. Invoices
are due on a net 30 day basis.<i> </i>Shipping and handling costs are billed to customers and netted against shipping and
handling expenses incurred by the Company, which are included in cost of revenues. All of the Company’s sales are to Multichip
Display, Inc. (MDI), a shareholder of the Company. See Note 4.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company grants credit, generally without
collateral. The Company performs periodic credit evaluations of its customers’ financial condition and believes that its
customer acceptance, billing and collection policies are adequate to minimize potential credit risk. The Company has not incurred
any credit losses to date. The Company provides an allowance for doubtful accounts that is based upon a review of outstanding receivables,
historical collection information, and existing economic conditions. The allowance for bad debt is $0 at December 31, 2014 and
$0 at March 31, 2015. Normal accounts receivable past due more than 30 days are considered delinquent. Delinquent receivables are
written off based on individual credit evaluation and specific circumstances of the customer. All of the Company’s receivables
are from MDI, a related party. (See Note 4.)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Inventories are carried at the lower of cost
(first-in, first-out, FIFO) or market (net realizable value) and include primarily Silicon wafers and displays with drivers. The
inventories, which were purchased from two related parties during 2013 and 2014, consist of parts and supplies. (See Note 4.)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company reports revenues and expenses using
the accrual method of accounting for financial and tax reporting purposes. These financial statements are presented in United States
dollars and have been prepared in accordance with United States generally accepted accounting principles.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The difference between the expected income
tax expense (benefit) and the actual tax expense (benefit) computed by using the Federal statutory rate of 34% is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"> </td>
<td> </td>
<td colspan="6" id="ffc" style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>For the Six Months Ended</b></font><br />
<font style="font-size: 10pt"><b>March 31,</b></font></td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>2015</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>2014 </b></font></td>
<td> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Expected income tax benefit at statutory rate of 34%</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">17,500</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">36,900</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Change in valuation allowance</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(17,500</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt">)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(36,900</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt">)</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Income tax expense (benefit)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Deferred tax assets and liabilities are provided
for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences,
which give rise to a net deferred tax asset, are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Deferred tax assets:</b></font></td>
<td> </td>
<td colspan="2" id="ffc" style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>March 31,</b></font><br />
<font style="font-size: 10pt"><b>2015</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>September 30,</b></font><br />
<font style="font-size: 10pt"><b>2014</b></font></td>
<td> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Tax benefit of net operating loss carry-forward</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">178,600</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">166,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Book and tax difference for amortization of intangibles</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">27,100</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">22,200</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Less: valuation allowance</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(205,700</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt">)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">(188,200</font></td>
<td style="vertical-align: bottom"><font style="font-size: 10pt">)</font></td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Net deferred tax asset</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; vertical-align: bottom; text-align: right"><font style="font-size: 10pt">0</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
525000
17500
36900
1175900
1183823
48333
250000
930900
1018831
38333
250000
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"> </td>
<td> </td>
<td colspan="6" id="ffc" style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>For the Three Months Ending</b></font><br />
<font style="font-size: 10pt"><b>March 31, </b></font></td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Income & Expense Transactions </b></font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>2015</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>2014</b></font></td>
<td> </td></tr>
<tr>
<td> </td>
<td> </td>
<td colspan="2" style="vertical-align: bottom"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Sales to MDI</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">120,000</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">112,500</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td><font style="font-size: 10pt">Inventory purchases from MDI*</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">86,400</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">90,235</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Rent expense paid to MDI</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">7,500</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">7,500</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Interest expense</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">5,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">5,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom; border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Balance Sheet Accounts as of :</b></font></td>
<td> </td>
<td colspan="2" id="ffc" style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>March 31,</b></font><br />
<font style="font-size: 10pt"><b>2015</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: center"><font style="font-size: 10pt"><b>September 30,</b></font><br />
<font style="font-size: 10pt"><b>2014</b></font></td>
<td> </td></tr>
<tr>
<td> </td>
<td> </td>
<td colspan="2" style="vertical-align: bottom"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Receivable from MDI</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">1,175,900</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 10pt">930,900</font></td>
<td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Accounts payable to MDI</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,183,823</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">1,018,831</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font-size: 10pt">Accrued interest payable to MDI</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">48,333</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">38,333</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font-size: 10pt">Convertible note payable to MDI</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">250,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 10pt">250,000</font></td>
<td style="vertical-align: bottom; text-align: justify"> </td></tr>
</table>
2000000
2000000
0.086
0.086
120000
7500
112500
7500
5000
5000
68370
48007
33600
22265
176630
194445
86400
90235
245000
242452
120000
112500
109846
146612
54796
49327
35000
54002
17000
11000
24551
21900
13601
10950
24126
25002
11625
12501
26169
45708
12570
14876
-51476
-108605
-26196
-32062
-51476
-108605
-26196
-32062
10000
10000
5000
5000
-41476
-98605
-21196
-27062
74521720
60021900
74521720
74521720
-0.00
-0.00
-0.00
-0.00
-370
-69
27000
49500
10000
10000
-41859
20000
164992
269168
87296
-44582
-245000
-242452
48677
46902
-370
-69
0.027
0.027
35000
54002
-17500
-36900
0
0
-205700
-188200
27100
22200
178600
166000
Includes borrowings to pay for direct labor.