~~UNITED STATESSECURITIES~~SECURITIES AND EXCHANGE ~~COMMISSIONWashington, D.C. 20549~~COMMISSION

~~_________________~~Washington, D.C. 20549

FORM 10-K

~~_________________~~[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~S ANNUAL REPORT~~For ~~PURSUANT~~the TOfiscal ~~SECTION~~year 13ended: ORAugust 31, ~~15(d)OF THE SECURITIES EXCHANGE ACT OF 1934~~2012

~~For~~OR ~~the fiscal year ended: August 31, 2011~~

or[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~o TRANSITION REPORT~~For ~~PURSUANT~~the TOtransition ~~SECTION~~period ~~13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934~~from to

~~For the~~Commission ~~transition~~File ~~period~~No. ~~from: _____________ to _____________~~000-50480

~~_________________~~LYYNKS INC.

~~EN2GO~~(Exact ~~INTERNATIONAL,~~name ~~INC.~~of Registrant as Specified in Its Charter)

(Exact name of registrant as specified in its charter)

Nevada	98-0389557
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

_________________

644-1812 West Burbank Blvd., Burbank, CA	91506
(Address of principal executive offices)	(Zip Code)

Nevada	000-50480	98-0389557
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation or Organization)	File Number)	Identification No.)

Registrant’s Telephone Number, Including Area Code: (818) 478-2260

644-1812 West Burbank Blvd., Burbank, CA 91506(Address of Principal Executive Offices) (Zip Code)

818-478-2260(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each className of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.00001 par value per share

~~Title of~~Indicate ~~each~~by ~~className~~check ofmark ~~each~~if ~~exchange~~the onregistrant ~~which~~is ~~registered~~a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

~~_________________~~Indicate by checkmark if the registrant is not required to file reports to Section 13 or 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark ifwhether the registrant is(1) has afiled ~~well-known~~all ~~seasoned~~reports ~~issuer,~~required asto ~~defined~~be infiled ~~Rule~~by Section ~~405~~ 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o [X] No S [ ]

Indicate by check mark if ~~the~~disclosure ~~registrant~~of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not ~~required~~contained toherein, ~~file~~and ~~reports~~will ~~pursuant~~not be contained, to ~~Section~~the 13best of registrant’s knowledge, in definitive proxy or ~~Section 15(d)~~ information statements incorporated by reference in Part III of ~~the~~this ~~Act~~Form 10-K or any amendment to this Form 10-K. ~~Yes o No S~~ [ ]

Indicate by check mark whether the registrant ~~(1)~~ has ~~filed~~submitted ~~all~~electronically ~~reports~~and posted on its corporate Web site, if any, every Interactive Data File required to be ~~filed~~submitted ~~by Section~~and 13posted orpursuant ~~15(d)~~to ofRule ~~the~~405 ~~Securities~~of ~~Exchange~~Regulation ~~Act~~S-T (§232.405 of ~~1934~~this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to ~~file~~submit ~~such reports),~~ and ~~(2)~~ ~~has~~post ~~been subject to~~ such ~~filing requirements for the past 90 days~~files). Yes S [ ] No £ [ ]

Indicate by check mark whether the registrant ~~has~~is ~~submitted~~a ~~electronically~~large ~~and~~accelerated ~~posted~~filer, onan ~~its~~accelerated ~~corporate Web site~~filer, ifor ~~any,~~a ~~every~~smaller ~~Interactive~~reporting ~~Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229~~company.~~405~~ ~~of this chapter) during the preceding 12 months~~ (orCheck ~~for such shorter period that the registrant was required to submit and post such files~~One)~~. Yes o No £~~:

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark if~~[ ~~disclosure~~] ofAccelerated ~~delinquent~~filer ~~filers~~[ ~~pursuant~~] toNon-accelerated ~~Item~~filer ~~405~~[ of] ~~Regulation S-K~~ (~~§229.405~~Do ~~of this chapter) is~~ not ~~contained~~check ~~herein, and~~if ~~will~~a ~~not~~smaller bereporting ~~contained,~~company) toSmaller ~~the~~reporting ~~best~~company ~~of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. £~~[X]

Indicate by check mark whether the registrant is a ~~large~~shell ~~accelerated~~company ~~filer,~~(as andefined ~~accelerated~~in ~~filer, a~~Rule ~~non~~12b-~~accelerated~~2 ~~filer,~~of orthe aExchange ~~smaller~~Act). Yes ~~reporting~~[ ] No ~~company.~~[X]

~~Large~~The ~~accelerated~~aggregate ~~filer~~market ovalue ~~Accelerated~~of ~~filer~~the ovoting ~~Non~~and non-~~accelerated~~voting ~~filer~~common oequity ~~Smaller~~held ~~reporting~~by ~~company~~non-affiliates Sas of the last business day of the registrant’s most recently completed second fiscal quarter was $2,427,810.

~~Indicate by~~Number ~~check~~of ~~mark~~shares ~~whether~~of ~~the~~Common ~~registrant~~Stock isoutstanding ~~a shell company (~~as ~~defined~~of inNovember ~~Rule~~29, ~~12b-2 of the Act)~~2012: 66,580,913. ~~Yes o No S~~

Documents incorporated by reference: None

~~The~~Table ~~aggregate market value~~ of ~~the voting and non-voting common equity held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter was $2,178,642.~~Contents

Number of shares of Common Stock outstanding as of December 5, 2011: 49,656,627.

TABLE OF CONTENTS

PART I	1
Item 1. Business	1
Item 1A. Risk Factors	3
Item 1B. Unresolved Staff Comments	8
Item 2. Properties	8
Item 3. Legal Proceedings	8
Item 4. [Removed and Reserved.]	8
Item 4. Mine Safety Disclosures	8
PART II	9
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	9
Item 6. Selected Financial Data	109
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	1312
Item 8. Financial Statements and Supplementary Data	1412
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	1613
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	3833
Item 9A. Controls and Procedures	3833
Item 9B. Other Information	3833
PART III	3834
Item 10. Directors, Executive Officers, and Corporate Governance	3934
Item 11. Executive Compensation	4136
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	4238
Item 13. Certain Relationships and Related Transactions, and Director Independence	4339
PART IV	4339
Item 14. Principal Accountant Fees and Services	4339
Item 15. Exhibits and Financial Statement Schedules	4441

-i-

Table of Contents

PART I

NOTE REGARDING FORWARD LOOKING STATEMENTS

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS

OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Annual Report contains historical information as well as forward-looking statements. Statements looking forward in time are included in this Annual Report pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to be materially different from any future performance suggested herein.

We wish to caution readers that in addition to the important factors described elsewhere in this Form 10-K, the following forward-looking statements, among others, sometimes have affected, and in the future could affect, our actual results and could cause our actual consolidated results during ~~2012~~2013, and beyond, to differ materially from those expressed in any forward-looking statements made by or on our behalf.

Item 1. Business.

General

~~En2Go~~Lyynks ~~International,~~ Inc., a Nevada corporation (“~~En2Go~~Lyynks”, “we”, “us” or “the Company”), is an entertainment software technology company that is developing media and entertainment related distribution applications for the online distribution of any content, including audio and video content. Our software application under development is called Lyynks, an application that delivers any content to a user’s computer desktop television set, tablet or smart phone. Lyynks is being developed as a global ~~Internet~~ internet content broadcast platform that can facilitate for its customers the online distribution of music, television, movies, graphics, interactive advertising and social media.

Our business is subject to several significant risks, any of which could materially adversely affect our business, our operating results, our financial condition and the actual outcome of matters as to which we make forward-looking statements. (See “Risk Factors”.)

History

~~En2Go~~Lyynks was incorporated under the laws of the State of Nevada on August 23, 2002 under the name Medusa Style Corporation for the purpose of an ~~Internet~~internet distribution business. We reevaluated our business and acquired in June 2007 all of the outstanding equity securities of ~~En2Go~~Lyynks Nevada, a company in the entertainment technology industry.

Business

We are developing software products for the online distribution of audio and video content. We would intend to capitalize on the worldwide growth of digital media. Our management and outside consultants determined the ~~types of software that would~~ most ~~appeal~~effective tointerface ~~the internet public, and utilizing developmental resources~~ to ~~complete~~deliver the ~~commercial~~type ~~versions~~ of ~~such~~content ~~programs~~that ~~and~~we ~~applications~~plan to distribute. We believe our planned programs and applications will enhance the user’s experience with ~~Internet~~internet content. ~~Our~~We ~~emphasis~~plan onto ~~video~~provide ~~and~~a ~~communication~~service ~~technologies~~that ~~has~~end ~~enabled us~~users tocan ~~pursue~~use ~~digital~~to ~~delivery,~~deliver their content ~~development~~with ~~and~~potentially ~~merging~~a ~~desktop~~global ~~technologies~~reach. Additionally ~~through~~end users can use our ~~software~~social ~~applications~~network integration to share content links to promote content or content providers.

We are focusing ~~exclusively~~initially on the internet delivery of entertainment, like music, ~~games,~~and interactive content~~, movies and television programs~~. One of the areas on which we plan to concentrate initially is the music business. We believe that our demographic for music content will be attractive to marketers and advertisers seeking interactive marketing opportunities. We intend to earn interactive marketing revenues through a variety of traditional ad units ~~such~~ ~~as banner, skyscraper, pop-up, rich media,~~ and ~~interstitial ads,~~ targeted permission-based E-mail marketing, paid search marketing~~, lead~~ ~~generation marketing~~ and affiliate marketing.

~~En2go~~Lyynks platforms and applications have been developed ~~with our Lyynks application~~ for cross-platform use with Apple’s Mac ~~OSX~~OS X and ~~IOS~~iOS, Microsoft Windows and the Android operating system. Working prototypes of some of these applications have been completed, although no assurance can be given that the final versions of such applications will be successfully completed and operational. We direct and manage our product development and maintenance internally, including website development with content customer and user interfaces, and maintenance and hosting functions.

Looking forward, we plan to pursue targeted opportunities for partnerships, joint ventures and other forms of investment with industry partners.

-1-

~~Intellectual~~Table ~~Property~~of Contents

WeIntellectual plan to proceed with the registration in the U.S. and in certain international jurisdictions of the trademark “Lyyn ks” for our website and related applications. We believe that we presently have, or are capable of acquiring, ownership and control of the intellectual property rights that are necessary to conduct our operations.Property

~~Regulation~~We are proceeding with the registration in the U.S. and in certain international jurisdictions of the trademark “Lyynks” for our website and related applications. We believe that we presently have, or are capable of acquiring, ownership and control of the intellectual property rights that are necessary to conduct our operations.

We will be subject to various federal, state and local laws that govern the conduct of our proposed business, including state and local advertising, consumer protection, credit protection, licensing, and other labor and employment regulations. Online video content, games and mobile services traffic is projected to increase substantially over the next three to four years according to an industry forecast, and the Company expects regulation of that online traffic will increase.Regulation

~~The~~We ~~Federal~~will ~~Communications~~be ~~Commission~~subject ~~(“FCC”) on~~to ~~December 21,~~various ~~2010~~federal, ~~issued~~state ~~“net~~and ~~neutrality”~~local ~~rules~~laws ~~which prohibit Internet providers from interfering with legal Web traffic. The new rule provides~~ that ~~land-line~~govern ~~broadband~~the ~~providers~~conduct ~~may~~of ~~not~~our ~~block~~proposed ~~legal content from websites~~business, orincluding ~~“unreasonably discriminate”~~state ~~against companies using broadband networks to provide delivery of video content~~ and ~~voice~~local ~~services. However~~advertising, ~~broadband~~ ~~providers~~consumer ~~will~~protection, becredit ~~allowed~~protection, tolicensing, ~~engage~~and inother ~~“reasonable~~labor ~~network~~and ~~management”~~employment ~~to regulate heavy traffic on the network~~regulations. ~~Under~~ ~~the~~Online ~~new~~video ~~rule~~content, ~~there~~games ~~is a potential for broadband providers charging consumers for how much data they consume,~~ and ~~phone~~mobile ~~and cable~~services ~~companies~~traffic ~~will~~is beprojected ~~allowed~~ to ~~sell~~increase tosubstantially ~~Internet~~over ~~companies~~the ~~faster~~next ~~data~~three ~~delivery~~to ~~for~~four ~~additional~~years ~~fees,~~according ~~which priority arrangements would have~~ to bean ~~disclosed.~~industry ~~Wireless providers~~forecast, ~~facing~~and ~~greater congestion issues, are less restricted under~~ the ~~FCC’s~~Company ~~new rules~~expects ~~and~~regulation ~~are~~of ~~allowed~~that ~~more~~online ~~leeway~~traffic inwill ~~managing their networks, including blocking access to applications for congestion reasons~~increase.

~~Any~~The ~~additional~~Federal ~~fees~~Communications ~~imposed~~Commission (“FCC”) on ~~consumers~~December 21, ~~based~~2010, onissued “net neutrality” rules which prohibit internet providers from interfering with legal Web ~~usage or~~traffic. ~~network~~The ~~fast~~new rule provides that land-~~track~~line broadband providers may not block legal content from websites, or “unreasonably discriminate” against companies using broadband networks to provide delivery ~~options~~of video content and voice services. However, broadband providers will be allowed to engage in “reasonable network management” to regulate heavy traffic on the network. Under the new rule, there is a potential for broadband providers charging consumers for how much data they consume, and phone and cable companies will be allowed to sell to internet companies faster data delivery for additional fees, ~~could~~which ~~adversely~~priority ~~impact~~arrangements ~~our~~would ~~proposed~~have ~~business~~to be disclosed. Wireless providers, facing greater congestion issues, are less restricted under the FCC’s new rules and are allowed more leeway in managing their networks, including blocking access to applications for congestion reasons.

~~Competition~~Any additional fees imposed on consumers based on Web usage or network fast-track delivery options for additional fees could adversely impact our proposed business.

The internet content distribution industry is extremely competitive and is dominated by several large companies with worldwide name brand recognition and substantial financial resources. In attempting to attract content customers to our proposed applications and products, we will be competing with online providers of audio and video entertainment, such as Netflix, Amazon, Blockbuster, Google, YouTube and Apple’s iTunes, home systems providing digital delivery of movies, web-based video channels, cable and satellite television providers, movie theaters, live theater, sporting events, and other similar businesses that compete for the general public’s entertainment dollar, as well as large software developers. In the market of internet delivery of music content, we will be competing with companies such as Spotify, TuneCore, CD Baby and ReverbNation. There can be no assurance that our technology will succeed in the marketplace in face of this competition, where technologies are rapidly changing and advancing, or that other companies will not develop technologies superior to ours. New technologies may emerge that render our technology obsolete. Many of the companies with which we will be competing have worldwide name recognition and substantially greater capital resources for program and application development and for marketing and advertising than we do.Competition

~~Further,~~The ~~many~~internet ~~consumers~~content ~~maintain~~distribution ~~simultaneous~~industry ~~relationships with~~is ~~multiple~~extremely ~~in-home~~competitive ~~entertainment~~and ~~video~~is ~~providers~~dominated ~~and~~by ~~can~~several ~~easily~~large ~~shift~~companies ~~spending~~with ~~from~~worldwide ~~one~~name ~~provider~~brand torecognition ~~another~~and substantial financial resources. ~~For~~In ~~example,~~attempting ~~consumers may~~to ~~subscribe~~attract content customers to ~~cable~~our proposed applications and products, ~~rent~~we awill ~~DVD~~be ~~from~~competing ~~Redbox~~with oronline ~~Blockbuster,~~providers ~~buy~~of aaudio ~~DVD~~and ~~from~~video ~~Wal-Mart~~entertainment, orsuch as Netflix, Amazon, ~~download~~Blockbuster, aGoogle, ~~movie~~YouTube ~~from~~and Apple ’s iTunes, ~~watch~~ ahome ~~television~~systems ~~show~~providing ondigital ~~Hulu.com~~delivery of movies, web-based video channels, cable and ~~subscribe~~satellite totelevision ~~Netflix~~providers, ormovie ~~some~~theaters, ~~combination~~live ~~thereof~~theater, ~~all~~sporting inevents, ~~the~~and ~~same~~other ~~month.~~similar ~~New~~businesses ~~competitors may~~that becompete ~~able~~for tothe ~~launch~~general ~~new~~public’s ~~businesses~~entertainment atdollar, aas ~~relatively~~well ~~low~~as ~~cost~~large software developers. In ~~Internet~~the market of internet delivery of music content, ~~represents~~we ~~only~~will ~~one~~be competing with companies such as Spotify, TuneCore, CD Baby and ReverbNation. There can be no assurance that our technology will succeed in the marketplace in face of ~~many~~this ~~existing~~ competition, where technologies are rapidly changing and ~~potential~~advancing, ~~new~~or that other companies will not develop technologies superior to ours. New technologies may emerge that render our technology obsolete. Many of the companies with which we will be competing have worldwide name recognition and substantially greater capital resources for ~~viewing~~program ~~entertainment~~and ~~video~~application development and for marketing and advertising than we do.

~~Employees~~ Further, many consumers maintain simultaneous relationships with multiple in-home entertainment video providers and can easily shift spending from one provider to another. For example, consumers may subscribe to cable, rent a DVD from Redbox or Blockbuster, buy a DVD from Wal-Mart or Amazon, download a movie from Apple iTunes, watch a television show on Hulu.com, and subscribe to Netflix, or some combination thereof, all in the same month. New competitors may be able to launch new businesses at a relatively low cost. internet delivery of content represents only one of many existing and potential new technologies for viewing entertainment video.

~~The~~Employees Company currently has four employees. The Company engages the services of independent consultants to assist with management, software programming and development. We plan to engage full-time employees in this area as our business develops.

~~Available~~The ~~Information~~Company currently has 12 employees. The Company engages the services of independent consultants to assist with management, software programming and development. We plan to engage full-time employees in this area as our business develops.

WeAvailable plan to make available on our corporate website free of charge (other than an investor’s own Internet access charges) through our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file such material with the Securities and Exchange Commission.Information

2We plan to make available on our corporate website free of charge (other than an investor’s own internet access charges) through our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file such material with the Securities and Exchange Commission.

~~Item 1A. Risk Factors.~~-2-

~~Risks~~Table ~~related to our lack~~ of ~~liquidity~~ Contents

WEItem ~~HAVE NO REVENUES AND HAVE INCURRED AND EXPECT TO CONTINUE TO INCUR SUBSTANTIAL LOSSES~~1A. Risk ~~WE WILL NOT BE SUCCESSFUL UNLESS WE REVERSE THIS TREND.~~Factors

~~Through~~Risks ~~August 31,~~related ~~2011, we have not generated any revenues. As a result, we have generated significant operating losses since our formation and expect~~ to ~~incur substantial losses and negative operating cash flows for the foreseeable future. For the year ended August 31, 2011~~ our ~~net~~lack ~~loss was $529,705 and as~~ of August 31, 2011 we had we had an accumulated deficit of $15,035,229. We anticipate that our existing cash and cash equivalents will not be sufficient to fund our business needs over the next 12 months and estimate that we will require approximately $2,000,000 in additional capital in that period to finance our software development activities. Although our major shareholders have provided financial support over the past fiscal year, there is no assurance that they will continue to make equity investments in the Company or that, if our shareholders do not continue to make equity investments in the Company, we will be able to negotiate an alternate source of capital.liquidity

~~GOING~~WE ~~CONCERN~~HAVE NO REVENUES AND HAVE INCURRED AND EXPECT TO CONTINUE TO INCUR SUBSTANTIAL LOSSES. WE WILL NOT BE SUCCESSFUL UNLESS WE REVERSE THIS TREND.

~~Primarily~~Through asAugust 31, 2012, we have not generated any revenues. As a result, ofwe have generated significant operating losses since our ~~recurring~~formation and expect to incur substantial losses and ~~our~~negative ~~lack of~~operating ~~liquidity~~cash inflows ~~connection~~for ~~with~~the ~~our~~foreseeable ~~fiscal~~future. For the year ended August 31, ~~2010~~2012 our net loss was $1,687,614 and as of August 31, 2012 we ~~received~~had awe ~~report~~had ~~from~~an ~~our~~accumulated ~~independent~~deficit ~~auditors~~ of $16,722,843. We anticipate that ~~includes~~our anexisting ~~explanatory~~cash ~~paragraph~~and ~~describing~~cash equivalents will not be sufficient to fund our business needs over the ~~substantial~~next ~~uncertainty~~12 asmonths and estimate that we will require approximately $2,000,000 in additional capital in that period to finance our ~~ability~~software development activities. Although our major shareholders have provided financial support over the past fiscal year, there is no assurance that they will continue to make equity investments in the Company or that, if our shareholders do not continue asto amake ~~going~~equity ~~concern~~investments in the Company, we will be able to negotiate an alternate source of capital.

~~Risks~~GOING ~~related to our business~~ CONCERN

~~THIS~~Primarily ISas Aa ~~NEW~~result ~~BUSINESS~~of ~~CATEGORY~~our ~~AND~~recurring ~~MANAGEMENT~~losses ~~HAS~~and NOour ~~EXPERIENCE WITH~~lack ~~THIS~~of ~~BUSINESS~~liquidity in connection with our fiscal year ended August 31, 2012, we received a report from our independent auditors that includes an explanatory paragraph describing the substantial uncertainty as to our ability to continue as a going concern.

~~Management~~Risks ~~has~~related ~~begun efforts~~ to engage in the business of online distribution of audio and video content. We have no experience in this business category, and we have no way to determine whether it will be successful. To date, we have received no revenues from this business. We will have to obtain significant additional capital to develop our business~~. There is no assurance that we will be able to obtain sufficient capital for this purpose.~~

WETHIS ~~ARE~~IS INA ~~THE~~NEW ~~EARLY~~BUSINESS ~~STAGES~~CATEGORY OFAND ~~PRODUCT~~MANAGEMENT ~~DEVELOPMENT~~HAS ~~AND~~NO ~~OUR SUCCESS~~EXPERIENCE ISWITH ~~UNCERTAIN.~~THIS BUSINESS

WeManagement ~~are~~has abegun ~~development~~efforts ~~stage~~to ~~company~~engage ~~and are~~ in the ~~early~~business ~~stages~~ of ~~developing~~online ~~our~~distribution ~~products~~of audio and ~~services~~video content. We have ~~not~~no ~~yet~~experience ~~successfully~~in ~~developed~~this ~~any~~business ofcategory, ~~our products~~ and ~~services~~we tohave ~~the~~no ~~final~~way ~~completion stage.~~to Wedetermine ~~may~~whether ~~fail~~it towill ~~develop~~be ~~any~~successful. ~~products~~To ~~or services~~date, towe ~~implement~~have ~~our~~received ~~business~~no ~~model~~revenues ~~and~~from ~~strategy~~this ~~successfully or to revise our~~ business ~~model and strategy should industry conditions and competition change~~. We ~~cannot~~will ~~make~~have ~~any~~to ~~assurances~~obtain ~~that~~significant ~~any~~additional ofcapital ~~our product candidates, if successfully developed, would generate sufficient revenues~~ to ~~enable~~develop usour ~~to be profitable~~business. ~~Furthermore,~~There ~~we cannot~~is ~~make~~no ~~any~~assurance ~~assurances~~ that we will be ~~successful~~able into ~~addressing~~obtain ~~these~~sufficient ~~risks.~~capital Iffor wethis ~~are not, our business, results of operations and financial condition will be materially adversely affected~~purpose.

WE ~~HAVE~~ARE AIN ~~LIMITED~~THE ~~OPERATING~~EARLY ~~HISTORY~~STAGES ~~AND~~OF WEPRODUCT ~~MAY~~DEVELOPMENT ~~NOT~~AND BEOUR ~~ABLE TO~~SUCCESS ~~SUCCESSFULLY~~IS ~~DEVELOP OUR BUSINESS~~UNCERTAIN.

~~Our~~We ~~limited~~are ~~operating~~a ~~history~~development ~~makes~~stage ~~predicting~~company and are in the early stages of developing our ~~future operating~~products ~~results~~and ~~difficult~~services. AsWe ahave ~~software~~not ~~development~~yet ~~company~~successfully ~~with~~developed aany ~~limited~~of ~~history~~our products and services to the final completion stage. We may fail to develop any products or services, weto ~~face~~implement ~~numerous~~our ~~risks~~business model and ~~uncertainties in~~strategy ~~the~~successfully ~~competitive~~or ~~markets~~to revise our business model and strategy should industry conditions and competition change. InWe ~~particular~~cannot make any assurances that any of our product candidates, if successfully developed, would generate sufficient revenues to enable us to be profitable. Furthermore, we ~~have~~cannot ~~not~~make ~~proven~~any assurances that we ~~can:~~will be successful in addressing these risks. If we are not, our business, results of operations and financial condition will be materially adversely affected.

~~• develop~~WE ~~online audio~~HAVE ~~and~~A ~~video~~LIMITED ~~distribution~~OPERATING ~~software~~HISTORY inAND aWE ~~manner~~MAY ~~that~~NOT ~~enables~~BE usABLE toTO beSUCCESSFULLY ~~profitable~~DEVELOP ~~and~~OUR ~~meet strategic partner and customer requirements;~~BUSINESS.

~~• develop~~Our ~~and~~limited ~~maintain relationships~~operating ~~with~~history ~~key~~makes ~~customers~~predicting ~~and~~our ~~strategic~~future ~~partners~~operating ~~that~~results ~~will~~difficult. beAs ~~necessary~~a tosoftware ~~optimize~~development ~~the~~company ~~market~~with ~~value~~a oflimited ~~our~~history, ~~products~~we face numerous risks and ~~services;~~ uncertainties in the competitive markets. In particular, we have not proven that we can:

• ~~raise~~ ~~sufficient capital~~develop online audio and video distribution software in ~~the~~a ~~public~~manner that enables us to be profitable and~~/or~~ ~~private~~meet ~~markets;~~strategic orpartner and customer requirements;

• ~~respond~~ ~~effectively~~ develop and maintain relationships with key customers and strategic partners that will be necessary to ~~competitive~~optimize ~~pressures.~~the market value of our products and services;

If• weraise ~~are~~sufficient ~~unable~~capital toin ~~accomplish these goals, our business is unlikely to succeed. Even if we are able to license certain of our technology to generate revenue we will still be operating at a significant loss during~~ the ~~course~~public ofand/or ~~our~~private ~~software~~markets; ~~development program.~~or

3• respond effectively to competitive pressures.

IFIf WEwe ~~ARE~~are ~~UNABLE~~unable TOto ~~ESTABLISH~~accomplish ~~SALES~~these ~~AND~~goals, ~~MARKETING~~our ~~CAPABILITIES~~business ~~OR ENTER~~is ~~INTO~~unlikely ~~AGREEMENTS~~to ~~WITH~~succeed. ~~THIRD~~Even ~~PARTIES~~if TOwe ~~SELL~~are ~~AND~~able ~~MARKET~~to ~~PRODUCTS~~license ~~AND~~certain ~~SERVICES~~of WEour ~~DEVELOP,~~technology WEto ~~MAY~~generate ~~NOT~~revenue BEwe ~~ABLE~~will TOstill ~~GENERATE~~be ~~PRODUCT REVENUE~~operating at a significant loss during the course of our software development program.

We do not currently have an organization for the sales, marketing and distribution of software products and related services. We anticipate that we will seek to enter into strategic alliances, distribution agreements or other arrangements with third parties to market any products or services we develop. If we are unable to enter into such agreements, we would have to build sales, marketing, managerial and other non-technical capabilities and develop, train and or manage a sales force, all of which would cause us to incur substantial additional expenses. If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and may not become profitable. 3-

~~OUR~~Table ~~SOFTWARE~~of ~~PRODUCTS AND SERVICES ARE SUBJECT TO THE RISK OF FAILURE INHERENT IN THE DEVELOPMENT OF PRODUCTS OR SERVICES BASED ON NEW AND UNPROVED TECHNOLOGIES.~~Contents

~~Because~~IF ~~our~~WE ~~software~~ARE ~~is and~~UNABLE ~~will~~TO beESTABLISH ~~based~~SALES onAND ~~new~~MARKETING ~~technologies,~~CAPABILITIES itOR isENTER ~~subject~~INTO toAGREEMENTS ~~risk~~WITH ofTHIRD ~~failure.~~PARTIES ~~These~~TO ~~risks~~SELL ~~include~~AND ~~the~~MARKET ~~possibility~~PRODUCTS ~~that:~~AND SERVICES WE DEVELOP, WE MAY NOT BE ABLE TO GENERATE PRODUCT REVENUE.

~~• our~~We ~~new~~do ~~approaches~~ not currently have an organization for the sales, marketing and distribution of software products and related services. We anticipate that we will ~~not~~seek ~~result~~to inenter into strategic alliances, distribution agreements or other arrangements with third parties to market any products or services ~~that~~we ~~gain~~develop. ~~market~~If ~~acceptance;~~we are unable to enter into such agreements, we would have to build sales, marketing, managerial and other non-technical capabilities and develop, train and or manage a sales force, all of which would cause us to incur substantial additional expenses. If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and may not become profitable.

~~• our~~OUR ~~software~~SOFTWARE ~~will unfavorably~~PRODUCTS ~~interact~~AND ~~with~~SERVICES ~~other~~ARE ~~types~~SUBJECT ofTO ~~commonly~~THE ~~used~~RISK ~~software,~~OF ~~thus~~FAILURE ~~restricting~~INHERENT ~~the~~IN ~~circumstances~~THE inDEVELOPMENT ~~which~~OF itPRODUCTS ~~may~~OR beSERVICES ~~used;~~BASED ON NEW AND UNPROVED TECHNOLOGIES.

~~• proprietary~~Because ~~rights of~~our ~~third~~software ~~parties~~is and will ~~preclude~~be usbased ~~from~~on ~~marketing~~new atechnologies, ~~new~~it ~~product;~~is orsubject to risk of failure. These risks include the possibility that:

• ~~third~~ ~~parties will~~our ~~market~~new ~~superior~~approaches orwill ~~more~~not ~~cost-effective~~result in any products or services. that gain market acceptance;

As• aour ~~result,~~software ~~our~~will ~~activities, either~~unfavorably ~~directly~~interact orwith ~~through~~other ~~corporate~~types ~~partners~~of commonly used software, ~~may~~thus ~~not~~restricting ~~result~~the circumstances in ~~any~~which ~~commercially~~it ~~viable~~may ~~products~~be ~~or services.~~used;

~~OUR~~• ~~SOFTWARE~~proprietary ~~PRODUCTS~~rights ~~AND~~of ~~RELATED~~third ~~SERVICES~~parties ~~MAY~~will BEpreclude ~~SUBJECT TO~~us ~~FUTURE~~from ~~PRODUCT~~marketing ~~LIABILITY~~a ~~CLAIMS.~~new ~~SUCH~~product; ~~PRODUCT LIABILITY CLAIMS COULD RESULT IN EXPENSIVE AND TIME-CONSUMING LITIGATION AND PAYMENT OF SUBSTANTIAL DAMAGES.~~or

~~The~~• ~~development,~~third ~~testing, marketing,~~parties ~~sale~~will ~~and~~market ~~use~~superior ~~of software runs a risk that product liability claims may be asserted against us if it is believed that the use~~ or ~~testing~~more ofcost-effective ~~our~~ products ~~and services have caused adverse technology problems to existing systems. We cannot make assurances that claims, suits~~ or complaints relating to the use of our technology will not be asserted against us in the future. If a product liability claim asserted against us was successful, we may be required to limit commercialization of our technology. Regardless of merit or outcome, claims against us may result in significant diversion of our management’s time and attention, expenditure of large amounts of cash on legal fees, expenses and damages and a decreased demand for our products and services. ~~We cannot make any assurances that we will be able to acquire or maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us.~~

WEAs DOa ~~NOT~~result, ~~HOLD~~our ~~ANY~~activities, ~~PATENTS~~either ONdirectly ~~OUR~~or ~~TECHNOLOGY~~through ~~AND~~corporate ITpartners, ~~MAY~~may ~~BE DIFFICULT~~not TOresult ~~PROTECT~~in ~~OUR~~any ~~TECHNOLOGY~~commercially viable products or services.

~~We do~~OUR ~~not~~SOFTWARE ~~have~~PRODUCTS ~~any~~AND ~~patents~~RELATED ~~issued~~SERVICES orMAY ~~patents~~BE ~~pending.~~SUBJECT WeTO doFUTURE ~~have~~PRODUCT ~~development~~LIABILITY ~~work or source code which we believe has the potential for patent protection~~CLAIMS. WeSUCH ~~will~~PRODUCT ~~evaluate~~LIABILITY ~~our~~CLAIMS ~~business~~COULD ~~benefits~~RESULT inIN ~~pursuing~~EXPENSIVE ~~patents~~AND inTIME-CONSUMING ~~the~~LITIGATION ~~future.~~AND WePAYMENT ~~protect~~OF ~~all~~SUBSTANTIAL ~~of our development work with confidentiality agreements with our engineers, employees and any outside contractors~~DAMAGES. However, third parties may, in an unauthorized manner, attempt to use, copy or otherwise obtain and market or distribute our intellectual property or technology or otherwise develop a product with the same functionality as our software. Policing unauthorized use of our software and intellectual property rights is difficult, and nearly impossible on a worldwide basis. Therefore, we cannot be certain that the steps we have taken or will take in the future will prevent misappropriation of our technology or intellectual property, particularly in foreign countries where we plan to do business or where our software will be sold or used, where the laws may not protect proprietary rights as fully as do the laws of the United States or where the enforcement of such laws is not common or effective.

AThe ~~DISPUTE~~development, ~~CONCERNING~~testing, ~~THE~~marketing, ~~INFRINGEMENT~~sale ORand ~~MISAPPROPRIATION OF~~use ~~OUR~~of ~~PROPRIETARY~~software ~~RIGHTS~~runs ORa ~~THE~~risk ~~PROPRIETARY~~that ~~RIGHTS~~product OFliability ~~OTHERS~~claims ~~COULD~~may BEbe ~~TIME~~asserted ~~CONSUMING~~against ~~AND~~us ~~COSTLY~~if ~~AND~~it ANis ~~UNFAVORABLE~~believed ~~OUTCOME~~that ~~COULD HARM~~the ~~OUR~~use ~~BUSINESS~~or testing of our products and services have caused adverse technology problems to existing systems. We cannot make assurances that claims, suits or complaints relating to the use of our technology will not be asserted against us in the future. If a product liability claim asserted against us was successful, we may be required to limit commercialization of our technology. Regardless of merit or outcome, claims against us may result in significant diversion of our management’s time and attention, expenditure of large amounts of cash on legal fees, expenses and damages and a decreased demand for our products and services. We cannot make any assurances that we will be able to acquire or maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us.

~~There~~WE isDO ~~significant~~NOT ~~litigation in~~HOLD ~~the~~ANY ~~software~~PATENTS ~~field~~ON ~~regarding~~OUR ~~patents~~TECHNOLOGY ~~and~~AND ~~other~~IT ~~intellectual~~MAY ~~property~~BE ~~rights.~~DIFFICULT ~~Recently,~~TO ~~for~~PROTECT ~~example,~~OUR ~~litigation has been filed against Apple Inc~~TECHNOLOGY., Google Inc., Facebook Inc., Yahoo Inc., Netflix Inc. and AOL Inc. alleging infringement of technology developed by the plaintiff company in the litigation. Accordingly, we may be exposed to future litigation by third parties based on claims that our software, technologies or activities infringe the intellectual property rights of others. Although we try to avoid infringement, there is the risk that we will use a patented technology owned or licensed by another person or entity and/or be sued for infringement of a patent owned by a third party. If our products are found to infringe any patents, we may have to pay significant damages or be prevented from making, using, selling, offering for sale or importing such products or services or from practicing methods that employ such products and services.

4We do not have any patents issued or patents pending. We do have development work or source code which we believe has the potential for patent protection. We will evaluate our business benefits in pursuing patents in the future. We protect all of our development work with confidentiality agreements with our engineers, employees and any outside contractors. However, third parties may, in an unauthorized manner, attempt to use, copy or otherwise obtain and market or distribute our intellectual property or technology or otherwise develop a product with the same functionality as our software. Policing unauthorized use of our software and intellectual property rights is difficult, and nearly impossible on a worldwide basis. Therefore, we cannot be certain that the steps we have taken or will take in the future will prevent misappropriation of our technology or intellectual property, particularly in foreign countries where we plan to do business or where our software will be sold or used, where the laws may not protect proprietary rights as fully as do the laws of the United States or where the enforcement of such laws is not common or effective.

Further, third parties, including persons involved in the founding of the Company, may assert claims as to purported license rights or agreements with respect to the software that the Company has under development, and we may be required to litigate the validity of or settle any such claims.-4-

~~CONFIDENTIALITY~~Table ~~AGREEMENTS~~of ~~WITH EMPLOYEES AND OTHERS MAY NOT ADEQUATELY PREVENT DISCLOSURE OF OUR TRADE SECRETS AND OTHER PROPRIETARY INFORMATION AND MAY NOT ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY.~~Contents

~~Our~~A ~~success~~DISPUTE ~~also~~CONCERNING ~~depends~~THE ~~upon the~~INFRINGEMENT ~~skills,~~OR ~~knowledge~~MISAPPROPRIATION ~~and~~OF ~~experience~~OUR ofPROPRIETARY ~~our~~RIGHTS ~~technical~~OR ~~personnel,~~THE ~~our~~PROPRIETARY ~~consultants~~RIGHTS ~~and~~OF ~~advisors~~OTHERS asCOULD ~~well~~BE asTIME ~~our~~CONSUMING ~~licensors~~AND ~~and~~COSTLY ~~contractors. Because~~AND weAN ~~operate~~UNFAVORABLE inOUTCOME aCOULD ~~highly~~HARM ~~competitive~~OUR ~~field, we rely almost wholly on trade secrets to protect our proprietary technology and processes~~BUSINESS. However, trade secrets are difficult to protect. We enter into confidentiality and intellectual property assignment agreements with our corporate partners, employees, consultants, outside scientific collaborators, developers and other advisors. These agreements generally require that the receiving party keep confidential and not disclose to third parties all confidential information developed by the receiving party or made known to the receiving party by us during the course of the receiving party’s relationship with us. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to us will be our exclusive property. However, these agreements may be breached and may not effectively assign intellectual property rights to us. Our trade secrets also could be independently discovered by competitors, in which case we would not be able to prevent use of such trade secrets by our competitors. The enforcement of a claim alleging that a party illegally obtained and used our trade secrets could be difficult, expensive and time consuming and the outcome unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failure to obtain or maintain meaningful trade secret protection could adversely affect our competitive position.

WEThere ~~WILL~~is ~~RELY~~significant ONlitigation ~~THIRD~~in ~~PARTIES~~the TOsoftware ~~PROVIDE~~field ~~SOFTWARE~~regarding ~~DEVELOPMENT AND~~patents ~~MAINTENANCE~~and other intellectual property rights. Recently, ~~BANDWIDTH~~for ~~PROVIDERS~~example, ~~DATA~~litigation ~~CENTERS~~has ~~(HOSTING)~~been ~~AND~~filed ~~OTHER~~against ~~THIRD~~Apple ~~PARTIES~~Inc., ~~INTERRUPTION~~Google ORInc., ~~FAILURE~~Facebook INInc., ~~THE~~Yahoo ~~SERVICES~~Inc., ~~AND PRODUCTS~~Netflix ~~PROVIDED~~Inc. BYand ~~THESE~~AOL ~~THIRD~~Inc. ~~PARTIES~~alleging ~~COULD~~infringement ~~SERIOUSLY~~of ~~HARM~~technology ~~OUR~~developed ~~BUSINESS~~by the plaintiff company in the litigation. Accordingly, ~~REPUTATION~~we ~~AND~~may ~~OPERATING~~be ~~RESULTS~~exposed to future litigation by third parties based on claims that our software, technologies or activities infringe the intellectual property rights of others. Although we try to avoid infringement, there is the risk that we will use a patented technology owned or licensed by another person or entity and/or be sued for infringement of a patent owned by a third party. If our products are found to infringe any patents, we may have to pay significant damages or be prevented from making, using, selling, offering for sale or importing such products or services or from practicing methods that employ such products and services.

WeFurther, ~~will rely on~~ third~~-party~~ ~~vendors~~parties, including ~~software~~persons ~~development and~~involved ~~maintenance, data center (hosting) and bandwidth providers. Any disruption~~ in the ~~services~~founding ~~provided~~of bythe ~~these~~Company, ~~third-party~~may ~~providers or~~assert ~~any~~claims ~~failure~~as ~~of these third-party providers~~ to ~~handle~~purported ~~current~~license orrights ~~higher volumes of use could significantly harm our business. Any financial~~ or ~~other~~agreements ~~difficulties~~with ~~our~~respect ~~providers~~to ~~face~~the ~~may~~software ~~have~~that ~~negative~~the ~~effects~~Company onhas ~~our~~under ~~business~~development, ~~the nature~~ and ~~extent of which~~ we ~~cannot~~may ~~predict.~~be Werequired ~~expect~~ to ~~experience~~litigate ~~interruptions~~the ~~and~~validity ~~delays~~of inor ~~service~~settle ~~and availability;~~ any ~~errors,~~such failures, interruptions or delays experienced in connection with these third-party vendors could negatively impact our relationship with customers, could adversely affect our brand, reputation and business, could adversely harm our business, and could expose us to liabilities to third partiesclaims.

~~OUR~~CONFIDENTIALITY ~~BUSINESS~~AGREEMENTS ~~DEPENDS~~WITH ONEMPLOYEES ~~OUR~~AND ~~SOFTWARE~~OTHERS ~~AND~~MAY ~~SERVER~~NOT ADEQUATELY PREVENT DISCLOSURE OF OUR TRADE SECRETS AND ~~NETWORK HARDWARE~~OTHER ASPROPRIETARY ~~WELL~~INFORMATION ASAND ~~OUR~~MAY ~~ABILITY~~NOT TOADEQUATELY ~~SCALE~~PROTECT OUR ~~TECHNOLOGY~~INTELLECTUAL ~~INFRASTRUCTURE CAPACITY~~PROPERTY.

~~The~~Our ~~performance~~success ofalso ~~our~~depends ~~software,~~upon ~~server~~the skills, knowledge and ~~networking~~experience ~~hardware infrastructure~~of isour ~~critical~~technical topersonnel, our ~~business~~consultants and ~~reputation~~advisors ~~and~~as well as our ~~ability~~licensors toand ~~attract~~contractors. ~~users,~~Because ~~advertisers~~we operate in a highly competitive field, ~~members~~we rely almost wholly on trade secrets to protect our proprietary technology and ~~e-commerce partners~~processes. AnHowever, ~~unexpected~~trade ~~and/or~~secrets ~~substantial~~are ~~increase~~difficult into ~~the~~protect. ~~use~~We ofenter ~~our~~into ~~website(s)~~confidentiality ~~could~~and ~~strain~~intellectual ~~the~~property ~~capacity~~assignment ofagreements with our ~~systems~~corporate partners, ~~which could~~employees, ~~lead~~consultants, tooutside ~~slower~~scientific ~~response~~collaborators, ~~time~~developers orand ~~system~~other ~~failures~~advisors. ~~Any~~These ~~slowdowns~~agreements orgenerally ~~system~~require ~~failures~~that ~~could~~the ~~adversely~~receiving ~~affect~~party ~~the~~keep ~~speed~~confidential and ~~responsiveness of~~not ~~our~~disclose ~~website(s)~~to ~~and~~third ~~diminish~~parties all confidential information developed by the ~~experience~~receiving ~~for~~party ~~our~~or ~~customers~~made ~~and~~known ~~members.~~to Ifthe receiving party by us during the ~~usage~~course of ~~our~~the ~~website(~~receiving party’s) ~~substantially~~relationship ~~increases, we~~with ~~may~~us. ~~need~~These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to ~~procure~~us ~~additional~~will ~~servers~~be our exclusive property. However, ~~networking~~these ~~equipment~~agreements may be breached and ~~bandwidth~~may ~~from~~not ~~third~~effectively ~~parties~~assign intellectual property rights to ~~maintain~~us. ~~adequate~~Our ~~data~~trade ~~transmission speeds,~~secrets ~~the~~also ~~availability~~could ofbe independently discovered by competitors, in which ~~may~~case we would not be ~~limited~~able orto ~~the~~prevent ~~cost~~use of ~~which~~such ~~may~~trade besecrets ~~significant.~~by ~~Any~~our ~~system~~competitors. ~~failure~~The ~~that~~enforcement ~~causes~~of ana ~~interruption in~~claim ~~service~~alleging orthat a ~~decrease~~party inillegally ~~the~~obtained ~~responsiveness~~and ofused our ~~website(s)~~trade secrets could ~~reduce~~be ~~traffic~~difficult, onexpensive ~~our~~and ~~website(s)~~time consuming and, ifthe ~~sustained~~outcome orunpredictable. ~~repeated~~In addition, ~~could~~ ~~impair~~courts ~~our~~outside ~~reputation~~the ~~and~~United ~~the~~States ~~attractiveness~~may ofbe ~~our~~less ~~brand~~willing asto ~~well~~protect astrade ~~reduce~~secrets. ~~revenue~~The ~~and~~failure ~~negatively~~to ~~impact~~obtain or maintain meaningful trade secret protection could adversely affect our ~~operating~~competitive ~~results~~position.

~~COMPUTER~~WE ~~VIRUSES~~WILL RELY ON THIRD PARTIES TO PROVIDE SOFTWARE DEVELOPMENT AND MAINTENANCE, ~~COMPUTER~~BANDWIDTH ~~ATTACKS~~PROVIDERS, DATA CENTERS (HOSTING) AND ~~SECURITY~~OTHER ~~BREACHES~~THIRD PARTIES. INTERRUPTION OR FAILURE IN THE SERVICES AND PRODUCTS PROVIDED BY THESE THIRD PARTIES COULD SERIOUSLY HARM OUR BUSINESS, REPUTATION AND OPERATING RESULTS.

~~The~~We ~~networks~~will ~~are~~rely ~~vulnerable~~on tothird-party ~~damaging~~vendors, including software ~~programs~~development and maintenance, ~~such~~ asdata ~~computer~~center ~~viruses~~(hosting) and ~~worms~~bandwidth providers. ~~Certain~~Any ofdisruption ~~these~~in ~~programs~~the ~~have~~services ~~disabled~~provided ~~the~~by ~~ability~~these ofthird-party ~~computers~~providers toor ~~access~~any ~~the~~failure ~~Internet,~~of ~~requiring users~~these third-party providers to ~~obtain~~handle ~~technical~~current ~~support~~or inhigher ~~order~~volumes toof ~~gain~~use ~~access~~could tosignificantly ~~the~~harm ~~Internet~~our business. ~~Other~~Any ~~programs~~financial ~~have~~or ~~had~~other ~~the~~difficulties ~~potential~~our toproviders ~~damage~~face ormay ~~delete computer~~have ~~programs.~~negative ~~The~~effects ~~development~~on ~~and~~our ~~widespread~~business, ~~dissemination~~the ofnature ~~harmful~~and ~~programs~~extent ~~has~~of ~~the~~which ~~potential~~we tocannot ~~seriously~~predict. ~~disrupt~~We ~~Internet usage.~~expect Ifto ~~Internet~~experience ~~usage~~interruptions isand ~~significantly~~delays ~~disrupted~~in ~~for~~service anand ~~extended~~availability; ~~period~~any oferrors, ~~time~~failures, interruptions or ifdelays ~~the~~experienced ~~prevalence~~in ofconnection with these ~~programs~~third-party ~~results in~~vendors ~~decreased~~could ~~residential~~negatively ~~Internet~~impact ~~usage~~our relationship with customers, could adversely affect our ~~proposed~~brand, reputation and business, could beadversely ~~materially~~harm our business, and ~~adversely~~could ~~impacted~~expose us to liabilities to third parties.

ToOUR ~~succeed,~~BUSINESS ~~online~~DEPENDS ~~communications~~ON ~~must~~OUR ~~provide~~SOFTWARE aAND ~~secure~~SERVER ~~transmission of~~AND ~~confidential~~NETWORK ~~information~~HARDWARE ~~over~~AS ~~public~~WELL ~~networks.~~AS ~~Our~~OUR ~~security~~ABILITY ~~measures~~TO ~~may~~SCALE ~~not~~OUR ~~detect~~TECHNOLOGY orINFRASTRUCTURE ~~prevent security breaches that could harm our business~~CAPACITY. ~~An increasing number of websites have reported breaches of their security. Any compromise of our security could harm our reputation and, therefore, our business.~~

5The performance of our software, server, and networking hardware infrastructure is critical to our business and reputation and our ability to attract users, advertisers, members and e-commerce partners. An unexpected and/or substantial increase in the use of our website(s) could strain the capacity of our systems, which could lead to slower response time or system failures. Any slowdowns or system failures could adversely affect the speed and responsiveness of our website(s) and diminish the experience for our customers and members. If the usage of our website(s) substantially increases, we may need to procure additional servers, networking equipment and bandwidth from third parties to maintain adequate data transmission speeds, the availability of which may be limited or the cost of which may be significant. Any system failure that causes an interruption in service or a decrease in the responsiveness of our website(s) could reduce traffic on our website(s) and, if sustained or repeated, could impair our reputation and the attractiveness of our brand as well as reduce revenue and negatively impact our operating results.

~~CHANGES IN GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD REDUCE DEMAND FOR OUR PRODUCTS AND SERVICES OR INCREASE THE COST OF DOING BUSINESS.~~-5-

~~Government~~Table ~~regulation and legal uncertainties could increase our costs and risks~~ of doing business on the Internet. There are currently few laws or regulations that specifically regulate commerce on the Internet. Moreover, it may take years to determine the extent to which existing laws relating to issues such as property ownership, defamation, taxation and personal privacy are applicable to the Internet. However, the application of existing laws, the adoption of new laws and regulations in the future, or increased regulatory scrutiny with respect to issues such as user privacy, pricing, taxation and the characteristics and quality of products and services, could create uncertainty in the Internet marketplace.Contents

~~Network~~COMPUTER neutrality is the principle that Internet users should be in control of what content they view and what applications they use on the Internet. The Internet has operated according to this neutrality principle since its earliest days. The FCC on December 21VIRUSES, ~~2010,~~COMPUTER ~~issued~~ATTACKS ~~“net~~AND ~~neutrality”~~SECURITY ~~rules which~~BREACHES ~~prohibit~~COULD ~~Internet~~HARM ~~providers~~OUR ~~from interfering with legal Web traffic~~BUSINESS. The new rule provides that land-line broadband providers may not block legal content from websites, or “unreasonably discriminate” against companies using broadband networks to provide delivery of video content and voice services. However, under these rules there is the potential for networks charging consumers based on Internet usage and for fast-track delivery for content providers for extra fees. Any additional fees imposed on consumers based on Web usage or network fast-track delivery options for additional fees could adversely impact our proposed business.

~~Our~~The ~~proposed~~networks ~~business~~are ~~operations~~vulnerable ~~could~~to bedamaging ~~materially~~software ~~impacted if~~programs, such as computer viruses and worms. Certain of these programs have disabled the ~~FCC~~ability ~~rules~~of orcomputers ~~legislation~~to doaccess ~~not~~the ~~safeguard~~internet, ~~net~~requiring ~~neutrality~~users asto itobtain ~~has~~technical ~~been~~support in ~~effect,~~order ~~and~~to ~~our~~gain ~~proposed~~access ~~operations~~to ~~could~~the ~~be adversely~~internet. ~~affected~~Other inprograms anhave ~~environment~~had ~~where~~the ~~net~~potential ~~neutrality~~to ~~was~~damage ~~not~~or ~~required~~delete computer programs. The development and widespread dissemination of harmful programs has the potential to beseriously ~~observed~~disrupt byinternet ~~telecommunications~~usage. ~~carriers~~If internet usage is significantly disrupted for an extended period of time, or if the prevalence of these programs results in ~~their pricing~~decreased residential internet usage, our proposed business could be materially and adversely impacted.

InTo ~~addition~~succeed, ~~the~~online ~~FTC~~communications ~~has~~must ~~issued~~provide a ~~report~~secure ~~that~~transmission ~~has~~of ~~faulted the~~confidential ~~industry~~information ~~for~~over ~~not~~public ~~doing~~networks. ~~enough~~Our tosecurity ~~protect~~measures ~~consumer~~may ~~online~~not ~~privacy~~detect ~~and~~or ~~supporting~~prevent asecurity ~~“do-not-track”~~breaches ~~system~~that ~~for~~could ~~users~~harm our business. ~~Legislation~~ isAn ~~set~~increasing tonumber beof ~~introduced~~websites inhave ~~2011~~reported tobreaches ~~prohibit~~of ~~companies~~their ~~from~~security. ~~tracking~~Any ~~children~~compromise onof ~~the~~our ~~Internet~~security ~~without~~could ~~parental~~harm ~~consent~~our reputation and, therefore, our business.

~~“Content~~CHANGES ~~delivery~~IN ~~networks”~~GOVERNMENT ~~that~~REGULATION ~~distribute~~AND ~~video online~~LEGAL ~~and~~UNCERTAINTIES ~~own~~COULD ~~the~~REDUCE ~~fiber-optic~~DEMAND ~~highways~~FOR ~~that~~OUR ~~move~~PRODUCTS ~~video~~AND ~~traffic~~SERVICES ~~among~~OR ~~networks~~INCREASE ~~have~~THE ~~“peering~~COST ~~arrangements”~~OF ~~for~~DOING moving video traffic, but in certain situations these companies are imposing fees on other networks if traffic moved for the other network or networks is out of balance with traffic moved by the network that is imposing the feeBUSINESS. ~~The imposition of such fees could have an adverse effect on online distribution of video, in that costs could go up for some networks and the content providers using such networks.~~

~~The~~Government ~~CAN-SPAM~~regulation ~~Act~~and legal uncertainties could increase our costs and risks of ~~2003,~~doing ~~a federal~~business ~~law~~on the internet. There are currently few laws or regulations that ~~impacts~~specifically regulate commerce on the ~~way~~internet. ~~certain~~Moreover, ~~commercial~~it ~~E-mails~~may ~~are~~take ~~sent~~years ~~over~~to determine the ~~Internet,~~extent ~~took~~to ~~effect~~which ~~January 1~~existing laws relating to issues such as property ownership, ~~2004~~defamation, taxation and ~~preempted most~~personal ~~state~~privacy ~~commercial~~are ~~E-mail~~applicable ~~laws~~to the internet. ~~Penalties~~However, ~~for~~the ~~failure~~application toof ~~comply~~existing ~~with~~laws, the ~~CAN-SPAM~~adoption ~~Act~~of ~~include~~new ~~significant~~laws ~~fines~~and regulations in the future, ~~forfeiture of~~or ~~property~~increased ~~and~~regulatory ~~imprisonment.~~scrutiny ~~This~~with ~~law~~respect to issues such as user privacy, pricing, taxation and ~~other~~the ~~laws~~characteristics orand ~~regulations~~quality ~~that~~of ~~impact~~products ~~E-mail~~and ~~advertising~~services, could ~~reduce~~create ~~our~~uncertainty ~~revenues~~in the internet marketplace.

~~The~~Network ~~Children’s~~neutrality ~~Online~~is ~~Protection Act and~~ the ~~Children’s Online~~principle ~~Privacy~~that ~~Protection~~internet ~~Act~~users ~~restrict~~should ~~the~~be ~~distribution~~in control of ~~materials~~what ~~considered~~content ~~harmful~~they toview ~~children~~ and ~~impose~~what ~~additional~~applications ~~restrictions~~ they use on the ~~ability~~internet. ofThe ~~online~~internet ~~services~~has operated according to ~~collect~~this ~~information~~neutrality ~~from~~principle ~~minors~~since its earliest days. InThe ~~addition~~FCC on December 21, ~~the~~2010, ~~Protection~~issued of“net ~~Children~~neutrality” rules which prohibit internet providers from ~~Sexual~~interfering ~~Predators Act~~with oflegal ~~1998~~Web ~~requires~~traffic. ~~online~~The ~~service~~new rule provides that land-line broadband providers may not block legal content from websites, or “unreasonably discriminate” against companies using broadband networks to ~~report~~provide ~~evidence~~delivery of ~~violations~~video ofcontent ~~federal~~and ~~child~~voice ~~pornography~~services. ~~laws~~However, under ~~certain circumstances~~these rules there is the potential for networks charging consumers based on internet usage and for fast-track delivery for content providers for extra fees. Any ~~failure~~additional onfees ~~our~~imposed ~~part~~on toconsumers ~~comply~~based ~~with~~on ~~these~~Web ~~laws~~usage ~~and~~or ~~regulations~~network ~~may~~fast-track ~~subject~~delivery usoptions tofor additional ~~liabilities~~fees could adversely impact our proposed business.

InOur ~~our~~ proposed business ~~activities~~operations ascould anbe ~~online~~materially ~~distributor of~~impacted ~~audio~~if ~~and video content,~~ the ~~Internal~~FCC ~~Revenue~~rules ~~Service~~or ~~may~~legislation ~~take~~do ~~the~~not ~~position~~safeguard ~~that~~net weneutrality ~~are~~as ait ~~“broker”~~has ~~and~~been ~~required to~~in ~~report users’ sales to the IRS~~effect, ifand aour ~~certain~~proposed ~~sales~~operations ~~volume is surpassed. A requirement such as this~~ could ~~have~~be adversely ~~affect~~ ~~the~~affected ~~growth~~in ofan ~~e-commerce~~environment inwhere ~~our~~net ~~network~~neutrality ~~and~~was ~~have~~not anrequired ~~adverse~~to ~~impact~~be onobserved ~~our~~by ~~members~~telecommunications ~~and~~carriers onin ~~our~~their ~~business~~pricing.

~~OUR~~In ~~BUSINESS~~addition, ~~AND~~the ~~OUR~~FTC ~~USERS~~has ~~AND~~issued ~~MEMBERS~~a ~~MAY~~report BEthat ~~SUBJECT~~has TOfaulted ~~SALES TAX~~the ~~AND~~industry ~~OTHER~~for ~~TAXES~~not doing enough to protect consumer online privacy and supporting a “do-not-track” system for users. Legislation is set to be introduced in 2011 to prohibit companies from tracking children on the internet without parental consent.

~~The~~“Content ~~application~~delivery ofnetworks” ~~indirect~~that ~~taxes~~distribute ~~(such~~video asonline ~~sales~~ and ~~use~~own ~~tax, value~~the fiber-~~added~~optic ~~tax,~~highways orthat ~~VAT,~~move ~~goods~~video ~~and~~traffic ~~services~~among ~~tax,~~networks ~~business~~have ~~tax,~~“peering ~~and~~arrangements” ~~gross~~for ~~receipt~~moving ~~tax)~~video totraffic, ~~e-commerce~~but ~~businesses~~in ~~and~~certain tosituations ~~our~~these ~~users is~~companies aare ~~complex~~imposing ~~and~~fees ~~evolving~~on ~~issue.~~other ~~Many~~networks ofif ~~the~~traffic ~~fundamental~~moved ~~statutes~~for ~~and regulations that impose these taxes were established before~~ the ~~growth~~other ofnetwork ~~the~~or ~~Internet~~networks ~~and e-commerce. In many cases, it~~ is ~~not~~out ~~clear~~of ~~how~~balance ~~existing~~with ~~statutes~~traffic ~~apply~~moved toby the ~~Internet~~network orthat ~~electronic commerce~~is orimposing ~~communications conducted over~~ the ~~Internet~~fee. InThe ~~addition,~~imposition ~~some~~of ~~jurisdictions~~such ~~have~~fees ~~implemented~~could orhave ~~may~~an ~~implement~~adverse ~~laws specifically~~effect ~~addressing~~on ~~the~~online ~~Internet~~distribution ~~or some aspect~~ of ~~electronic~~video, ~~commerce~~in orthat ~~communications~~costs oncould ~~the~~go ~~Internet.~~up ~~The~~for ~~application~~some ~~of existing,~~networks ~~new,~~and orthe ~~future~~content ~~laws~~providers ~~could~~using ~~have~~such ~~adverse effects on our business~~networks.

~~Several~~The ~~proposals~~CAN-SPAM ~~have~~Act ~~been~~of ~~made~~2003, ata ~~the~~federal ~~U.S.~~law ~~federal,~~that ~~state and~~impacts ~~local~~the ~~levels~~way ~~that~~certain ~~would~~commercial ~~impose~~E-mails ~~additional~~are ~~taxes~~sent onover the ~~sale~~internet, oftook ~~goods~~effect January 1, 2004 and ~~services~~preempted ~~through~~most ~~the~~state ~~Internet~~commercial E-mail laws. ~~These~~Penalties ~~proposals,~~for ~~if adopted,~~failure ~~could~~to ~~substantially~~comply ~~impair~~with the ~~growth~~CAN-SPAM ofAct ~~e-commerce~~include significant fines, forfeiture of property and ~~could~~imprisonment. ~~diminish~~This ~~our~~law ~~opportunity~~and toother ~~derive~~laws ~~financial~~or ~~benefit~~regulations ~~from~~ that impact E-mail advertising could reduce our ~~activities~~revenues.

6The Children’s Online Protection Act and the Children’s Online Privacy Protection Act restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from minors. In addition, the Protection of Children from Sexual Predators Act of 1998 requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances. Any failure on our part to comply with these laws and regulations may subject us to additional liabilities.

~~OUR~~In ~~TECHNOLOGY~~our ~~MAY~~proposed ~~BECOME~~business ~~OBSOLETE~~activities ORas ~~LOSE~~an ~~ITS~~online ~~COMPETITIVE ADVANTAGE~~distributor of audio and video content, the Internal Revenue Service may take the position that we are a “broker” and required to report users’ sales to the IRS, if a certain sales volume is surpassed. A requirement such as this could have adversely affect the growth of e-commerce in our network and have an adverse impact on our members and on our business.

The software and services business is very competitive, fast moving and intense, and we expect it to be increasingly so in the future. Other companies have developed and are developing software technologies and related services that, if not similar in type to our software and services, are designed to address the same end user or customer. Therefore, there is no assurance that our products or services and any other products or services we may offer will be the best, the first to market, or the most economical to make or use. If competitors’ products or services are better than ours, for whatever reason, our sales could decrease, our margins could decrease and our products and services may become obsolete. -6-

~~There~~Table ~~are~~of ~~many reasons why a competitor might be more successful than we are or will be, including:~~Contents

~~• Competitors~~OUR ~~may already~~BUSINESS ~~have~~AND ~~established~~OUR ~~and~~USERS ~~profitable~~AND ~~distribution~~MEMBERS ~~networks~~MAY ~~and~~BE ~~customer~~SUBJECT ~~bases~~TO ~~for~~SALES ~~audio~~TAX ~~and~~AND ~~video~~OTHER ~~content~~TAXES.

~~• Competitors~~The ~~may have~~application ~~greater~~of ~~financial~~indirect ~~resources~~taxes (such as sales and ~~can~~use ~~afford~~tax, ~~more~~value-added ~~technical~~tax, or VAT, goods and ~~development~~services ~~setbacks than~~tax, webusiness ~~can~~tax, and gross receipt tax) to e-commerce businesses and to our users is a complex and evolving issue. Many of the fundamental statutes and regulations that impose these taxes were established before the growth of the internet and e-commerce. In many cases, it is not clear how existing statutes apply to the internet or electronic commerce or communications conducted over the internet. In addition, some jurisdictions have implemented or may implement laws specifically addressing the internet or some aspect of electronic commerce or communications on the internet. The application of existing, new, or future laws could have adverse effects on our business.

~~• Competitors~~Several ~~may~~ proposals have been inmade at the ~~software~~U.S. ~~business~~federal, ~~longer~~state ~~than~~and welocal ~~have.~~levels ~~They~~that ~~may~~would ~~have~~impose ~~greater~~additional ~~experience~~taxes ~~than us~~on inthe ~~critical~~sale ~~areas~~of ~~like~~goods ~~testing, sales~~ and ~~marketing~~services through the internet. ~~This~~These ~~experience~~proposals, orif ~~their~~adopted, ~~name~~could ~~recognition~~substantially ~~may~~impair ~~give~~the ~~them~~growth aof ~~competitive~~e-commerce, ~~advantage~~and ~~over~~could usdiminish our opportunity to derive financial benefit from our activities.

~~• Competitors~~OUR ~~may have~~TECHNOLOGY aMAY ~~better~~BECOME ~~patent~~OBSOLETE ~~position~~OR ~~protecting~~LOSE ~~their~~ITS ~~technology~~COMPETITIVE ~~than we either have or will have~~ADVANTAGE. If we cannot prevent others from copying our technology or developing similar technology, or if we cannot obtain a critical license to another’s patent that we need to make and use our technology, we would expect our competitive position to lessen. Because the company that is “first to market” often has a significant advantage over latecomers, a second place position could result in less than anticipated sales.

~~Risks~~The software and services business is very competitive, fast moving and intense, and we expect it to be increasingly so in the future. Other companies have developed and are developing software technologies and related services that, if not similar in type to our ~~common~~software ~~stock~~and services, are designed to address the same end user or customer. Therefore, there is no assurance that our products or services and any other products or services we may offer will be the best, the first to market, or the most economical to make or use. If competitors’ products or services are better than ours, for whatever reason, our sales could decrease, our margins could decrease and our products and services may become obsolete.

~~Because~~There ~~certain existing~~are ~~stockholders~~many ~~own~~reasons why a ~~large~~competitor ~~percentage~~might ofbe ~~our~~more ~~voting~~successful ~~stock,~~than ~~other~~we ~~stockholders’~~are ~~voting~~or ~~power~~will ~~may~~ be, ~~limited.~~ including:

~~Our~~• ~~controlling~~Competitors ~~stockholders~~may ~~and~~already ~~directors and their affiliates beneficially own or control a majority of the outstanding shares of our Common Stock. As a result, if those stockholders act together, they will~~ have ~~the~~established ~~ability to control all matters submitted to our stockholders for approval, including the election~~ and ~~removal of~~profitable ~~directors~~distribution ~~and~~networks the approval of any merger, consolidation or sale of all or substantially all of our assets. These stockholders may make decisions that are adverse to your interests. See our discussion under the caption in Item 12 “Security Ownership of Certain Beneficial Owners and ~~Management~~customer ~~and~~bases ~~Related Stockholder Matters”~~ for ~~more~~audio ~~information~~and ~~about~~video ~~ownership of our outstanding shares~~content.

WE• DOCompetitors ~~NOT~~may ~~INTEND~~have TOgreater ~~PAY~~financial ~~DIVIDENDS~~resources ONand ~~OUR~~can ~~COMMON~~afford ~~STOCK~~more technical and development setbacks than we can.

We• ~~have~~Competitors ~~never~~may ~~declared~~have orbeen ~~paid~~in ~~any~~the ~~cash~~software ~~dividend~~business onlonger ~~our~~than ~~Common Stock~~we have. WeThey ~~currently~~may ~~intend~~have togreater ~~retain~~experience ~~any~~than ~~future~~us ~~earnings~~in critical areas like testing, sales and domarketing. ~~not~~This ~~expect~~experience toor ~~pay~~their ~~any~~name ~~dividends~~recognition inmay ~~the~~give ~~foreseeable~~them ~~future~~a competitive advantage over us.

~~OUR~~• ~~STOCK~~Competitors ~~PRICE~~may ~~MAY~~have BEa ~~HIGHLY~~better ~~VOLATILE~~patent ~~BECAUSE~~position OFprotecting ~~SEVERAL FACTORS~~their technology than we either have or will have. If we cannot prevent others from copying our technology or developing similar technology, ~~INCLUDING~~or Aif ~~LIMITED~~we ~~PUBLIC~~cannot ~~FLOAT~~obtain a critical license to another’s patent that we need to make and use our technology, we would expect our competitive position to lessen. Because the company that is “first to market” often has a significant advantage over latecomers, a second place position could result in less than anticipated sales.

~~The~~Risks ~~market~~related ~~price of our stock may be highly volatile because there has been a relatively thin trading market for our stock, which causes trades of small blocks of stock~~ to ~~have a significant impact on~~ our ~~stock price. You may not be able to resell our~~ common stock ~~following periods of volatility because of the market’s adverse reaction to volatility.~~

~~Other~~BECAUSE ~~factors~~CERTAIN ~~that~~EXISTING ~~could~~STOCKHOLDERS ~~cause~~OWN ~~such~~A ~~volatility~~LARGE ~~may~~PERCENTAGE ~~include~~OF OUR VOTING STOCK, ~~among~~ ~~other~~OTHER ~~things:~~STOCKHOLDERS’ VOTING POWER MAY BE LIMITED.

~~• announcements~~Our ~~concerning~~ controlling stockholders and directors and their affiliates beneficially own or control a majority of the outstanding shares of our ~~strategy;~~Common Stock. As a result, if those stockholders act together, they will have the ability to control all matters submitted to our stockholders for approval, including the election and removal of directors and the approval of any merger, consolidation or sale of all or substantially all of our assets. These stockholders may make decisions that are adverse to your interests. See our discussion under the caption in Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for more information about ownership of our outstanding shares.

~~• litigation;~~WE ~~and~~DO NOT INTEND TO PAY DIVIDENDS ON OUR COMMON STOCK.

~~• general~~We ~~market conditions~~have never declared or paid any cash dividend on our Common Stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.

7OUR STOCK PRICE MAY BE HIGHLY VOLATILE BECAUSE OF SEVERAL FACTORS, INCLUDING A LIMITED PUBLIC FLOAT.

~~OUR~~The ~~COMMON~~market ~~STOCK~~price ISof “Aour ~~PENNY~~stock ~~STOCK”~~may ~~AND~~be IShighly ~~SUBJECT TO~~volatile ~~SPECIAL~~because ~~REGULATIONS~~there ~~PROMULGATED~~has BYbeen ~~THE~~a ~~SEC~~relatively thin trading market for our stock, which causes trades of small blocks of stock to have a significant impact on our stock price. You may not be able to resell our common stock following periods of volatility because of the market’s adverse reaction to volatility.

The SEC has adopted regulations that generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and therefore we are a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of holders of our common stock to sell their shares.-7-

WETable ~~MAY~~of ~~EXPERIENCE DIFFICULTIES IN THE FUTURE IN COMPLYING WITH SECTION 404 OF THE SARBANES-OXLEY ACT.~~Contents

AsOther afactors ~~public~~that company, we are required to evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002. In this regard, we have and will continue to comply with the internal control requirements of Section 404 of the Sarbanes-Oxley Act. If we fail to maintain the adequacy of our internal controls, we could because ~~subject~~such tovolatility ~~regulatory~~may ~~scrutiny~~include, ~~civil~~among orother criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations.things:

If• weannouncements ~~fail~~concerning ~~to maintain proper and effective internal controls in future periods, it could adversely affect~~ our ~~operating results, financial condition and our ability to run our business effectively and could cause investors to lose confidence in our financial reporting.~~strategy;

~~Item~~• ~~1B.~~litigation; ~~Unresolved Staff Comments.~~and

~~Not~~• ~~applicable~~general market conditions.

~~Item~~OUR 2.COMMON ~~Properties~~STOCK IS “A PENNY STOCK” AND IS SUBJECT TO SPECIAL REGULATIONS PROMULGATED BY THE SEC.

~~Executive~~The ~~Offices~~SEC has adopted regulations that generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and therefore we are a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of holders of our common stock to sell their shares.

InWE ~~May~~MAY ~~2010,~~EXPERIENCE weDIFFICULTIES ~~entered~~IN ~~into~~THE aFUTURE ~~month~~IN toCOMPLYING ~~month~~WITH ~~lease~~SECTION ~~for our~~404 ~~principal~~OF ~~office~~THE inSARBANES-OXLEY ~~Burbank, California, at a monthly rental of $3,500~~ACT. ~~We anticipate that our current office space will accommodate our operations for the foreseeable future.~~

~~Item~~As 3a public company, we are required to evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002. In ~~Legal~~this ~~Proceedings~~regard, we have and will continue to comply with the internal control requirements of Section 404 of the Sarbanes-Oxley Act. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations.

~~Stride &~~If ~~Associates.~~we ~~We are~~fail ato ~~defendant~~maintain inproper aand ~~suit~~effective ~~filed~~internal ~~September 2,~~controls ~~2009 by Stride & Associates, Inc.~~ in ~~the~~future ~~Superior Court of California~~periods, ~~Los~~it ~~Angeles~~could ~~Superior~~adversely ~~Court-North~~affect ~~Central~~our ~~District,~~operating ~~for the amount of $19~~results,~~500,~~ ~~plus~~financial ~~interest,~~condition ~~for~~and ~~services allegedly~~our ~~rendered~~ability ~~by the plaintiff~~ to ~~the~~run ~~Company~~our inbusiness ~~connection~~effectively ~~with~~and ~~personnel~~could ~~placement.~~cause ~~The~~investors ~~plaintiff~~to ~~has~~lose ~~filed~~confidence ~~a judgment~~ in ~~the~~our ~~amount~~financial ~~of $21,620 against us in this litigation, and the Company has accrued the full amount~~reporting. ~~We intend to settle this matter.~~

Item 41B. Unresolved ~~[Removed~~Staff ~~and Reserved.]~~Comments

8Not applicable

~~PART~~Item II 2. Properties

~~Item~~Executive ~~5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.~~Offices

~~Public~~In ~~Market~~May 2010, we entered into a month to month lease for ~~Common~~our ~~Stock~~principal office in Burbank, California, at a monthly rental of $3,500. We anticipate that our current office space will accommodate our operations for the foreseeable future.

~~Our~~Item ~~common stock is quoted on the OTC Bulletin Board under the symbol “ETGI~~3. Legal ~~OB.” Our Common Stock, is par value $0.00001 per share (“Common Stock”).~~Proceedings

~~The~~Stride & ~~following~~Associates. ~~table~~We ~~sets~~are ~~forth~~a defendant in a suit filed September 2, ~~for~~2009 by Stride & Associates, Inc. in the ~~fiscal~~Superior ~~quarters~~Court ~~indicated~~of California, ~~the~~ ~~high~~Los ~~and~~Angeles ~~low~~Superior ~~sale~~Court-North ~~price~~Central District, for ~~our~~the ~~common~~amount ~~stock~~of $19,500, asplus ~~reported~~interest, onfor services allegedly rendered by the ~~OTCBB~~plaintiff to the Company in connection with personnel placement. The ~~quotations~~plaintiff ~~below~~has ~~reflect~~filed ~~inter-dealer~~a ~~prices, without~~judgment ~~retail~~in ~~mark-up~~the amount of $21,620 ~~markdown~~against orus ~~commission~~in this litigation, and ~~may~~the ~~not~~Company ~~represent~~has ~~actual~~accrued ~~transactions~~the full amount. We intend to settle this matter.

	High	Low
Fiscal Year ended August 31, 2010
Fourth Quarter	$ .38	$ .06
Third Quarter	$ .40	$ .20
Second Quarter	$ .90	$ .40
First Quarter(1)	$ .96	$ .40
Fiscal Year ended August 31, 2011
Fourth Quarter	$ .10	$ .07
Third Quarter	$ .11	$ .04
Second Quarter	$ .11	$ .02
First Quarter	$ .38	$ .05
Fiscal Year ended August 31, 2012
First Quarter	$ .11	$ .02

Item 4. Mine Safety Disclosures

~~(1) Prices reflect the 1-for-10 reverse stock split effective September 14, 2009.~~None

~~Shareholders~~ -8-

~~The~~Table ~~approximate number~~ of ~~holders of record of our Common Stock as of December 5, 2011 was 101.~~Contents

~~Dividends~~PART II

WeItem ~~have~~5. Market ~~never~~for ~~declared~~Registrant's orCommon ~~paid~~Equity, aRelated ~~cash~~Shareholder ~~dividend~~Matters ~~on our common stock~~ and doIssuer ~~not~~Purchases ~~anticipate~~of ~~declaring~~Equity ~~or paying cash dividends to shareholders in the foreseeable future.~~Securities

~~Securities~~Public ~~Authorized~~Market for ~~Issuance~~Common ~~under Equity Compensation Plans~~ Stock

~~The~~Our ~~Amended~~common ~~and Restated En2Go International~~stock, ~~Inc.~~par ~~2007 Stock~~value ~~Plan (the “Plan”) was originally authorized and approved by the Company’s board of directors on November 12, 2007 and was amended and restated effective July 1, 2008~~$.00001 Aper ~~total of 750~~share,~~000 shares~~ ~~of the Company’s Common Stock have been authorized for issuance under the Plan. The following~~ is aquoted ~~summary~~on ~~description of~~ the ~~Plan~~Pink ~~and~~Sheets isunder ~~qualified in its entirety by reference to~~ the ~~full~~symbol ~~text of the Plan~~“LYYN.”

The following table sets forth, ~~certain~~for ~~information~~the ~~regarding~~ fiscal quarters indicated, the ~~Company’s~~high ~~equity~~and ~~compensation~~low ~~plans~~sale price for our common stock, as ofreported ~~August~~on the OTCBB and Pink Sheets. 31The quotations below reflect inter-dealer prices, ~~2010~~without retail mark-up, markdown or commission, and may not represent actual transactions.

Equity compensation plans approved by stockholders		Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price	Number of securities remaining available for issuance under equity compensation plan
	High		Low
2007 Stock Option Plan		25,000	$	6.66	725,000
Fiscal Year ended August 31, 2010
Total		25,000			725,000
Fourth Quarter	$	.38	$	.06
Third Quarter	$	.40	$	.20
Second Quarter	$	.90	$	.40
First Quarter(1)	$	.96	$	.40
Fiscal Year ended August 31, 2011
Fourth Quarter	$	.10	$	.07
Third Quarter	$	.11	$	.04
Second Quarter	$	.11	$	.02
First Quarter	$	.38	$	.05
Fiscal Year ended August 31, 2012
Fourth Quarter	$	.30	$	.11
Third Quarter	$	.11	$	.11
Second Quarter	$	.11	$	.11
First Quarter	$	.11	$	.02
Fiscal Year ended August 31, 2013
First Quarter	$	.35	$	.16

9(1) Prices reflect the 1-for-10 reverse stock split effective September 14, 2009.

~~Recent Sales of Unregistered Securities~~ Shareholders

The ~~following~~approximate ~~table~~number ~~sets~~of ~~forth~~holders ~~the~~of ~~unreported~~record ~~sales~~ of ~~unregistered securities~~our incommon ~~our~~stock ~~2011~~as ~~fiscal~~of ~~year~~November 29, 2012 was 101.

Date

Title and Amount (1)

Purchaser

Principal Underwriter

Total Offering Price/ Underwriting Discounts

July 26, 2011

500,000 shares of common stock

Private investor

$0.05 per share/NA

Dividends

~~Item~~We 6.have ~~Selected~~never ~~Financial~~declared ~~Data~~or paid a cash dividend on our common stock and do not anticipate declaring or paying cash dividends to shareholders in the foreseeable future.

~~Not~~Securities ~~applicable.~~Authorized for Issuance under Equity Compensation Plans

~~Item~~Our 7.Amended ~~Management’s~~and ~~Discussion~~Restated 2007 Stock Plan (the “Plan”) was originally authorized and ~~Analysis~~approved by the Company’s board of ~~Financial~~directors ~~Condition~~on November 12, 2007 and ~~Results~~was amended and restated effective July 1, 2008. A total of ~~Operations~~750,000 shares of the Company’s common stock have been authorized for issuance under the Plan.

~~The~~At ~~following~~August ~~discussion~~31, of2012, ~~our~~no ~~consolidated~~options ~~financial~~were ~~condition and~~outstanding ~~results~~under ofany ~~operations~~equity ~~should~~compensation ~~be read in conjunction with the consolidated financial statements and notes thereto and the other financial information included elsewhere in this report~~plans.

~~Certain~~Item statements contained in this report, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 19956. Selected ~~Such~~Financial ~~forward-looking statements involve known and unknown risks and uncertainties. Our actual results may differ~~Data materially from those anticipated in these forward-looking statements as a result of certain factors, including our ability to create, sustain, manage or forecast our growth; our ability to attract and retain key personnel; changes in our business strategy or development plans; competition; business disruptions; adverse publicity; and international, national and local general economic and market conditions.

~~EN2GO~~Not ~~Overview~~applicable

We are an entertainment software technology company that is developing media and entertainment related distribution applications for the online distribution of any content, including audio and video content. Our software application under development is called Lyynks, an application that delivers any content to a user’s computer desktop television set, tablet or smart phone. Lyynks is being developed as a global Internet content broadcast platform that can facilitate for its customers the online distribution of music, television, movies, graphics, interactive advertising and social media.-9-

~~Critical~~Table ~~Accounting~~of ~~Policies and Estimates~~Contents

~~Financial~~Item ~~Reporting Release No~~7. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" ("FRR60") issued by the SEC, suggests that companies provide additional disclosure and commentary on those accounting policies considered most critical. FRR 60 considers an accounting policy to be critical if it is important to the Company Management's ~~financial~~Discussion ~~condition~~ and ~~results~~Analysis of ~~operations,~~Financial ~~and~~Condition ~~requires significant judgment~~ and ~~estimates~~Results ~~on the part~~ of ~~management in its application. For a summary of the Company's significant accounting policies,~~Operations ~~including the critical accounting policies discussed below, see the accompanying notes to the consolidated financial statements.~~

The ~~preparation~~following discussion of our consolidated financial ~~statements in~~condition ~~conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates, judgments~~ and ~~assumptions~~results ~~that affect the reported amounts~~ of ~~assets~~operations ~~and~~should ~~liabilities,~~be ~~disclosure~~read ofin ~~contingent assets~~conjunction ~~and~~with ~~liabilities at~~ the ~~date~~consolidated ~~of the~~ financial statements and ~~the~~notes ~~reported~~thereto ~~amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates which are based on historical experience~~ and ~~on various other assumptions that are believed to be reasonable under~~ the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other ~~sources. Actual~~financial ~~results~~information ~~may~~included ~~differ~~elsewhere ~~from~~in ~~these~~this ~~estimates under different assumptions~~report. ~~The following accounting policies require significant management judgments and estimates:~~

~~The~~Certain ~~Company~~statements ~~records~~contained ~~impairment~~in ~~losses~~this onreport, ~~long-lived assets~~including, ~~used~~without inlimitation, ~~operations~~statements ~~when~~containing ~~events~~the words “believes,” “anticipates,” “expects” and ~~circumstances~~words ~~indicate~~of ~~that~~similar ~~the~~import, ~~assets~~constitute ~~might~~“forward belooking ~~impaired~~statements” ~~and~~within the ~~undiscounted~~meaning ~~cash~~of ~~flows expected~~the toPrivate beSecurities ~~generated~~Litigation byReform ~~those~~Act ~~assets~~of ~~are~~1995. ~~less~~Such ~~than~~forward-looking ~~the~~statements ~~carrying~~involve ~~amount~~known ofand ~~those~~unknown ~~items~~risks and uncertainties. ~~The~~Our ~~Company’s~~actual ~~cash~~results ~~flow~~may ~~estimates are~~differ ~~based~~materially onfrom ~~limited~~those ~~operating~~anticipated ~~history~~in ~~and~~these ~~have~~forward-looking ~~been~~statements ~~adjusted~~as a result of certain factors, including our ability to ~~reflect~~create, ~~management’s~~sustain, ~~best~~manage ~~estimate~~or offorecast ~~future~~our ~~market~~growth; ~~and operating~~our ~~conditions.~~ability ~~The~~to ~~net~~attract ~~carrying~~and ~~values~~retain ofkey ~~assets~~personnel; ~~deemed~~changes ~~not~~in ~~recoverable~~our ~~are~~business ~~reduced~~strategy toor ~~fair~~development ~~value.~~plans; ~~The~~competition; ~~Company’s~~business ~~estimates of~~disruptions; ~~fair~~adverse ~~value~~publicity; ~~represent~~and ~~management’s~~international, ~~best~~national ~~estimates~~and ~~based~~local ongeneral ~~industry~~economic ~~trends~~and market conditions.

We LYYNKS account for equity instruments issued to consultants and vendors in exchange for goods and services in accordance with the provisions of ASC topic 505-50, “Equity Based Payments to Non-Employees”, (formerly EITF Issue No. 96-18,Overview

10We are developing software products for the online distribution of audio and video content. We would intend to capitalize on the worldwide growth of digital media. We believe our planned programs and applications will enhance the user’s experience with internet content. We plan to provide a service that users can use to deliver their content with a potential global reach. Additionally end users would be able to use our social network integration to share content links to promote content or content providers.

“ Critical Accounting ~~for~~Policies ~~Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods or Services”),~~ and ASC 470-20-25, “Debt with Conversion and Other Options (“ASC 470-20-25”). The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. In accordance with ASC 470-20-25, an asset acquired in exchange for the issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor’s balance sheet once the equity instrument is granted for accounting purposes. Accordingly, the Company records the fair value of the fully vested, non-forfeitable common stock issued for future consulting services as prepaid expenses in its consolidated balance sheet. Estimates

WeFinancial ~~base~~Reporting ~~our~~Release ~~estimates~~No. on60, ~~historical~~"Cautionary ~~experience~~ Advice Regarding Disclosure About Critical Accounting Policies" ("FRR60") issued by the SEC, suggests that companies provide additional disclosure and commentary on ~~various~~those ~~other~~accounting ~~assumptions~~policies ~~that~~considered ~~are~~most ~~believed~~critical. FRR 60 considers an accounting policy to be ~~reasonable~~critical ~~under~~if it is important to the ~~circumstances~~Company's financial condition and results of operations, and requires significant judgment and estimates on the ~~results~~part of ~~which~~management ~~form~~in its application. For a summary of the ~~basis for~~Company's ~~making~~significant ~~judgments~~accounting ~~about~~policies, including the critical accounting policies discussed below, see the accompanying notes to the consolidated financial statements.

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. ~~There~~Actual isresults nomay ~~assurance~~differ ~~that~~from ~~actual~~these ~~results~~estimates ~~will~~under ~~not~~different ~~differ~~assumptions. ~~from~~The ~~these~~following accounting policies require significant management judgments and estimates.:

~~See~~The ~~footnotes~~Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the ~~accompanying~~assets ~~financial statements~~might ~~regarding~~be ~~recent~~impaired ~~financial~~and ~~accounting~~the ~~developments~~undiscounted cash flows expected to be generated by those assets are less than the carrying amount of those items. The Company’s cash flow estimates are based on limited operating history and have been adjusted to reflect management’s best estimate of future market and operating conditions. The net carrying values of assets deemed not recoverable are reduced to fair value. The Company’s estimates of fair value represent management’s best estimates based on industry trends.

~~Results~~We account for equity instruments issued to consultants and vendors in exchange for goods and services in accordance with the provisions of ~~Operations~~ASC topic 505-50, “Equity Based Payments to Non-Employees”, (formerly EITF Issue No. 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods or Services”), and ASC 470-20-25, “Debt with Conversion and Other Options (“ASC 470-20-25”). The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. In accordance with ASC 470-20-25, an asset acquired in exchange for the issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor’s balance sheet once the equity instrument is granted for accounting purposes. Accordingly, the Company records the fair value of the fully vested, non-forfeitable common stock issued for future consulting services as prepaid expenses in its consolidated balance sheet.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There is no assurance that actual results will not differ from these estimates.

~~For the Years Ended August 31, 2011 and 2010~~-10-

WeTable ~~had a net loss~~ of ~~$529,705 for the year ended August 31, 2011 compared to a net loss of $3,089,142 for the year ended August 31, 2010. The change is explained below.~~Contents

~~Operating~~See ~~Expenses:~~footnotes ~~Operating~~in ~~expenses were $1,034,484 and $1,860,721 for~~ the ~~years~~accompanying ~~ended~~financial ~~August~~statements ~~31,~~regarding ~~2011~~recent ~~and~~financial ~~2010,~~accounting ~~respectively~~developments. The decrease of $826,237 was primarily due to a decrease of $1.1 million impairment loss taken in 2010 to write off software that no longer would be used offset by an increase in professional fees of approximately $220,000 in 2011.

~~Other~~Results ~~income (expense): Other income (expense) was $504,779 for the year ended August 31, 2011 compared to an expense~~ of $1,228,421 recorded for the year ended August 31, 2010. The difference was primarily due to interest expense on the amortization costs of the convertible debt in 2010 offset by the settlement of certain payables to reflect the acceptance by these creditors of lessor amounts of $508,457 in 2011.Operations

AsFor of the ~~date~~Years ofEnded ~~this~~August ~~report~~31, we2012 ~~have not generated any revenues. As a result, we have generated significant operating losses since our formation~~ and ~~expect to incur substantial losses and negative operating cash flows for the foreseeable future as we attempt to expand our infrastructure and development activities~~2011. ~~Our ability to continue may prove more expensive than we currently anticipate and we may incur significant additional costs and expenses.~~

We ~~are~~had a ~~development~~net ~~stage~~loss ~~company~~of ~~and~~$1,687,684 ~~are in~~for the ~~early~~year ~~stages~~ended ofAugust ~~developing~~31, ~~our~~2012 ~~products~~compared ~~and~~to ~~services.~~a Wenet ~~have~~loss ~~not~~of ~~yet~~$529,705 ~~successfully~~for ~~developed~~the ~~any~~year ofended ~~our~~August ~~products~~31, ~~and~~2011. The ~~services to~~change ~~the~~is ~~final~~explained ~~completion stage~~below.

~~The~~Operating ~~diversity~~Expenses: Operating ofexpenses ~~our~~were ~~products~~$1, ~~the competitive entertainment industry~~687,614 ~~lack of liquidity~~ and ~~the current economic downturn~~$1,034,484 ~~make~~for itthe ~~difficult~~years ~~for~~ended usAugust to31, ~~project~~2012 ~~our~~and ~~near-term results~~2011, ~~of operations~~respectively. The ~~These~~increase ~~conditions~~of ~~could~~$653,130 ~~further~~was ~~impact~~primarily ~~our~~due ~~business~~to ~~and have~~ an ~~adverse~~increase ~~effect~~of ~~on our financial position~~$653, ~~results~~130 ofin ~~operations~~General and~~/or~~ ~~cash~~Administrative ~~flows~~expenses.

~~Liquidity~~Other income (expense): Other income (expense) was $-0- for the year ended August 31, 2012, as compared to $504,779 for the year ended August 31, 201. The decrease was primarily due to other income of $508,457 primarily from the settlement of prior liabilities in 2011, as compared with other income of $-0- in 2012. Other income in 2011 also reflected a gain on sale of equipment of $9,000 and ~~Capital~~interest ~~Resources~~expense and the amortization costs of the notes payable of approximately $12,678.

~~Net~~As ~~cash~~of ~~used~~the indate ~~operating~~of ~~activities~~this ~~was $1~~report,~~080,180~~ ~~and~~we ~~$531,899~~have ~~for~~not ~~the~~generated ~~years~~any ~~ended August 31, 2011 and 2010, respectively~~revenues. As ~~The~~a ~~increase of $548~~result,~~281~~ inwe ~~cash~~have ~~used~~generated bysignificant operating ~~activities~~ ~~was~~losses ~~primarily~~since ~~due~~our toformation ~~the increase in accounts payable. Net cash used in investing activities was $35,614~~ and ~~$141,500 for~~expect ~~the~~to ~~years~~incur ~~ended~~substantial ~~August~~losses ~~31, 2011~~ and ~~2010,~~negative ~~respectively.~~operating ~~Investing~~cash ~~activities~~flows for the ~~years~~foreseeable ~~ended~~future ~~August~~as ~~31,~~we ~~2011~~attempt ~~and~~to ~~2010 resulted~~expand ~~from~~our ~~the~~infrastructure ~~purchase~~and ofdevelopment ~~computers~~activities. ~~and~~Our ~~furniture~~ability ~~and~~to ~~software~~continue ~~development~~may ~~costs.~~prove ~~Net~~more ~~cash~~expensive ~~provided~~than bywe ~~financing~~currently ~~activities was$1,144,500~~ anticipate and ~~$675,209~~we ~~for~~may ~~the~~incur ~~years~~significant ~~ended~~additional ~~August~~costs ~~31, 2011~~ and ~~2010, respectively~~expenses.

~~The~~We ~~Company~~are ~~suffered recurring losses from operations and has an accumulated deficit of $ 15,035,229 at August 31, 2011. Primarily as~~ a ~~result~~development ofstage ~~our~~company ~~recurring losses~~ and ~~our~~are ~~lack~~in ~~of liquidity,~~ the ~~Company~~early ~~has~~stages ~~received~~of adeveloping ~~report from~~ our ~~independent~~products ~~auditors~~and ~~that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern~~services. We have ~~delayed~~not ~~payment~~yet ofsuccessfully adeveloped ~~substantial~~any ~~amount~~ of ~~accounts~~ ~~payable and accrued expenses and reduced~~ our ~~expenses~~products ~~to a minimum level. Our existing cash~~ and ~~cash~~services ~~equivalents will not be sufficient~~ to ~~fund~~the ~~our~~final ~~operations~~completion stage.

11The diversity of our products, the competitive entertainment industry, lack of liquidity and the current economic downturn, make it difficult for us to project our near-term results of operations. These conditions could further impact our business and have an adverse effect on our financial position, results of operations and/or cash flows.

~~Unless~~Liquidity ~~we receive liquidity from new purchase orders, obtain additional capital, loans or sell or license assets, we may be required to seek to reorganize our business or discontinue operations~~ and ~~liquidate~~Capital our assets. There can be no assurance that the Company will be able to secure sufficient financing or on terms acceptable to the Company. If additional funds are raised through the issuance of equity securities, the percentage ownership of our current stockholders is likely to or will be reduced.Resources

InNet ~~September~~cash ~~2008~~used in operating activities was $1,713,209 weand ~~entered~~$1,080,180 ~~into~~for athe ~~subscription agreement~~years ~~with~~ended ~~Richard~~August ~~Genovese~~31, 2012 and~~/or~~ ~~his~~2011, ~~affiliates~~respectively. ~~(collectively~~The ~~“Genovese”) whereby~~increase ~~Genovese~~of ~~purchased~~$633,029 ~~100~~in cash used by operating activities was primarily higher general and administrative expenses, financed by an increase in cash flows from financings from related parties of $395,500, from $630,500 in 2011 to $1,026,000 ~~shares~~in or2012, ~~our~~and an increase in proceeds of issuance of common stock and ~~100~~warrants provided by financing activities of $415,000, ~~warrants~~from $505,000 in 2011 to $920,000 in 2012. Net cash used in investing activities was $29,274 in 2012, as compared with an$35,614 ~~exercise~~in ~~price~~2011. Investing activities for the years ended August 31, 2012 and 2011 resulted from the purchase of computers and furniture and software development costs. Net cash provided by financing activities was $1~~.50~~,946,00 ~~for~~in 2012, as compared with $~~150~~1,~~000~~144,500 for 2011.

InGoing ~~October~~Concern 2008, we entered into an agreement with Euro Trend Trader, Inc. (“ETT”) to provide investor relations and public relations. We agreed to pay ETT $5,000 start up fees and $3,000 per month thereafter. Additionally, we paid ETT 20,000 shares of our common stock for coverage of the Company by a registered market maker and an additional 10,000 for investor relations services.Uncertainties

InThe ~~November~~Company ~~2008,~~suffered werecurring ~~borrowed~~losses from operations and has an accumulated deficit of $516,~~000~~722,843 ~~from~~at ~~a consultant~~August 31, 2012. Our existing cash and cash equivalents will not be sufficient to ~~the~~fund ~~Company~~our ~~which~~operations. ~~was~~Unless ~~payable~~we byreceive ~~December~~liquidity 6from new purchase orders, ~~2008.~~obtain ~~The~~additional ~~lender~~capital, ~~was~~loans or sell or license assets, we may be required to ~~receive~~seek ~~200~~to ~~shares~~reorganize ofour business or discontinue operations and liquidate our ~~common~~assets. ~~stock~~There ~~per~~can ~~month as~~be ~~interest~~no ~~and~~assurance anthat ~~additional~~the ~~consideration~~Company ofwill ~~25,000~~be ~~warrants~~able ~~with~~to ansecure ~~exercise~~sufficient ~~price~~financing ofor $0on terms acceptable to the Company.~~25.~~ InIf ~~February~~additional ~~2009~~funds weare ~~repaid~~raised through the ~~principal~~ ~~and~~issuance ~~interest~~of inequity ~~full~~securities, ~~and~~the ~~did~~percentage ~~not~~ownership ~~issue~~of ~~any~~our ~~shares~~current stockholders is likely to or ~~warrants~~will be reduced.

InAs ~~November~~of ~~2008~~the wedate ~~issued~~of 5this report,~~000~~ ~~shares~~there ~~of our~~is ~~common~~doubt ~~stock~~regarding toour ~~Howard~~ability ~~Family~~to ~~Trust~~continue as a ~~bonus~~going inconcern ~~consideration~~as ofwe ~~the~~have ~~Company’s~~not ~~failure~~generated sufficient cash flow to ~~pay~~fund ~~rent~~our onbusiness aoperations ~~timely~~and ~~basis~~loan commitments. ~~The~~ Our ~~shares~~future ~~were~~success ~~valued~~and atviability, ~~$14~~therefore,~~000~~ ~~based~~are ondependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon the ~~fair~~Company ~~market~~and ~~value~~our shareholders. Primarily as a result of ~~the~~our ~~stock~~recurring onlosses and our lack of liquidity, the ~~date~~Company has received a report from our independent auditors that includes an explanatory paragraph describing the ~~shares~~uncertainty ~~were~~as ~~issued~~to our ability to continue as a going concern.

InCommitments ~~May 2009, we entered into a subscription agreement with Robert Kolson; whereby Mr. Kolson purchased 75,000 shares of our common stock~~ and ~~37,500~~Contractual ~~warrants with an exercise price of $3.00 for $150,000.~~ Obligations

~~During~~We ~~the~~did ~~year~~not ~~ended~~have ~~August~~any ~~31,~~commitments ~~2009, the Company issued an aggregate of $1,750,000 in 2009 Convertible Debentures. At the holder's sole discretion, the holder was entitled to convert the Debentures, in whole~~ or incontingencies ~~part~~as ~~into common shares of the Company~~ at aAugust ~~conversion price of $0.10 per share. As additional compensation~~31, ~~in conjunction with the issuance of the 2009 Convertible Debentures, the Company issued 17,500,000 share purchase warrant certificates with each warrant exercisable into one common share at $0~~2012.15 per share for a period of three years commencing from the date of the issuance of the warrant certificate. On September 25, 2009 all of the $1,750,000 of 2009 Convertible Debentures were converted into 17,500,000 common shares and 17,500,000 share purchase warrants exercisable at $0.15 per share remained outstanding.

OnOff-Balance ~~September 15~~Sheet 2009, the Company completed a reverse stock split on a one to ten (1:10) basis, such that each shareholder now holds one new share for every ten shares previously held. The Company’s share transactions disclosed in the financial statements have been restated retroactively to reflect the reverse stock split for all periods presented.Arrangements

On As ~~October~~of 30August 31, ~~2009~~2012, we ~~entered~~did ~~into~~not ahave ~~subscription agreement~~any ~~with~~off-balance ~~Janspec~~sheet ~~Holdings~~arrangements ~~Limited~~as ~~("Janspec");~~defined ~~whereby~~in ~~Janspec~~Item ~~purchased~~303(a)(4)(ii) ~~428,572 common shares and 428,572 warrants with an exercise price~~ of ~~$0.60~~Regulation ~~for $150,000~~S-K.

On November 7, 2009 we entered into a subscription agreement with Peninsula Merchant Syndications Corp. ("Peninsula") where Peninsula purchased 285,715 shares of our common stock and 285,715 warrants with an exercise price of $0.60 for $100,000.-11-

OnTable ~~November 9, 2009, we issued 32,000 common shares to Weintraub Genshlea Chediak in lieu~~ of ~~outstanding legal services provided to the Company. The shares were valued at $11,200 based on the fair market value of the stock on the date that the shares were issued.~~Contents

Item 7A. Quantities and Qualitative Disclosures About Market Risk

OnNot November 13, 2009 we entered into a subscription agreement with Robert Kolson; whereby Mr. Kolson purchased 285,715 shares of our common stock and 285,715 warrants with an exercise price of $0.60 for $100,000.applicable

OnItem ~~January~~8. Financial ~~20,~~Statements ~~2010 we issued 170,000 common shares to Howard Family Trust in lieu of outstanding rent, property taxes~~ and ~~insurance.~~Supplementary ~~The shares were valued at $85,000 reflective of the fair market value of the stock on the date the shares were issued.~~Data

OnLYYNKS ~~November 8, 2010, we entered into a subscription agreement with Janst Limited; whereby Janst purchased 1,250,000 shares of our common stock and 1,250,000 warrants with an exercise price of $~~INC.30 ~~for~~AND ~~$250,000.~~ SUBSIDIARIES

OnINDEX ~~November~~TO 8,FINANCIAL ~~2010, we entered into a subscription agreement with NSC Investments Ltd.; whereby NSC purchased 250,000 shares of our common stock and 250,000 warrants with an exercise price of $.30 for $50,000.~~ STATEMENTS

	Page

Report of Independent Registered Public Accounting Firms	13

Consolidated Balance Sheets as of August 31, 2012 and 2011	14

Consolidated Statements of Operations for the years ended August 31, 2012 and 2011	15

Consolidated Statements of Stockholders’ Equity (Deficiency) as of August 31, 2012	16

Consolidated Statements of Cash Flows for the years ended August 31, 2012 and 2011	18

Notes to Consolidated Financial Statements	19

On November 8, 2010, we entered into a subscription agreement with Richard Genovese, whereby Mr. Genovese purchased 250,000 shares of our common stock and 250,000 warrants with an exercise price of $.30 for $50,000.-12-

OnTable ~~December 13, 2010, we entered into a subscription agreement with Musgrave Investments Ltd.; whereby Musgrave purchased 500,000 shares~~ of ~~our common stock and 500,000 warrants with an exercise price of $.30 for $100,000.~~Contents

OnMadsen & ~~May 6~~Associates, ~~2011,~~CPA’s ~~we entered into a subscription agreement with Richard Genovese~~Inc.~~; whereby Mr. Genovese purchased 600,000 shares of our common stock and 600,000 warrants with an exercise price of $.10 for $30,000.~~

On684 ~~July~~East ~~26,~~Vine ~~2011, we entered into a subscription agreement with a private investor. the investor purchased 500,000 shares of our common stock and 500,000 warrants with an exercise price of $.10 for $25,000.~~Street

~~Going~~Murray, ~~Concern~~UT ~~Uncertainties~~84107

AsREPORT ofOF ~~the~~INDEPENDENT ~~date~~REGISTERED ofPUBLIC ~~this~~ACCOUNTING report, there is doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our business operations and loan commitments. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect uponFIRM

~~the~~Board ~~Company~~of ~~and our shareholders.~~Directors

~~Commitments~~Lyynks Inc. and ~~Contractual Obligations~~Subsidiary

We(formerly ~~did~~En2go ~~not have any commitments or contingencies as at August 31~~International, ~~2011~~ Inc.)

~~Off-Balance~~Burbank, ~~Sheet Arrangements~~CA 91506

AsWe have audited the accompanying consolidated balance sheet of Lyynks Inc. and Subsidiary (formerly En2go International, Inc.) (collectively, the “Company”) (a development stage company) as of August 31, 2012 and 2011, weand ~~did~~the ~~not~~related ~~have~~statements ~~any off-balance~~of ~~sheet~~operations, ~~arrangements~~stockholders’ asdeficiency ~~defined~~and incash ~~Item~~flows ~~303~~for the years then ended and for the period from January 31, 2007 (adate of inception)~~(4)(ii)~~ through August 31, 2012. These financial statements are the responsibility of ~~Regulation~~the ~~S-K~~Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

~~Item~~We 7Aconducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those ~~Quantitative~~standards require that we plan and ~~Qualitative~~perform ~~Disclosures~~the ~~About~~audit ~~Market~~to ~~Risk~~obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

~~Not~~In ~~applicable~~our opinion, the 2012 and 2011 financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended and for the period from January 31, 2007 (date of inception) through August 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

13The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a working capital deficiency, is dependent on financing to continue operations, has little or no operating revenue, and has suffered recurring losses to date, which raise substantial doubt for its ability to continue as a going concern. Management’s plans in regard to these factors are also described in Note 1.

~~Item~~These 8.financial ~~Financial~~statements ~~Statements~~do not include any adjustments relating to the recoverability and ~~Supplementary~~classification ~~Data~~of recorded assets, or the amounts and classifications of liabilities that might result from the outcome of these uncertainties.

~~EN2GO~~/s/ ~~INTERNATIONAL~~Madsen & Associates, ~~INC.~~CPA's Inc.

~~CONSOLIDATED~~ Madsen ~~FINANCIAL~~& ~~STATEMENTS~~Associates, CPA's Inc.

~~AUGUST~~December 315, ~~2011~~ 2012

14-13-

~~EN2GO~~Table ~~INTERNATIONAL,~~of ~~INC. AND SUBSIDIARIES~~ Contents

~~INDEX~~LYYNKS TOINC. ~~FINANCIAL~~AND ~~STATEMENTS~~ SUBSIDIARY

	Page
Reports of Independent Registered Public Accounting Firms	16
Consolidated balance sheets as of August 31, 2011 and 2010	17
Consolidated statements of operations for the years ended August 31, 2011 and 2010	18
Consolidated statements of stockholders’ equity (deficiency) as of August 31, 2011	19
Consolidated statements of cash flows for the years ended August 31, 2011 and 2010	21
Notes to consolidated financial statements	22

(Formerly En2go International, Inc. and Subsidiary)

15(a development stage company)

~~Madsen &~~Consolidated ~~Associates,~~Balance ~~CPA’s Inc.~~ Sheets

684 East Vine Street

	August 31,
	2012			2011

ASSETS
Current Assets:
Cash	$	237,165		$	33,648

Property and equipment - net		38,372			29,490
Total Assets	$	275,537		$	63,138


LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable	$	500,211		$	555,836
Accrued expenses		19,493			9,855
Due to related parties		761,510			330,510
Total Current Liabilities		1,281,214			896,201


Commitments and Contingencies

Stockholders' Deficiency:
Common stock, $.00001 par value, 1,000,000,000 shares authorized, 54,256,626 and 38,656,627 shares issued and outstanding atAugust 31, 2012 and 2011, respectively		544			387
Capital in excess of par value		15,716,622			14,201,779
Deficit accumulated during the development stage		(16,722,843	)		(15,035,229	)
Total Stockholders' Deficiency		(1,005,677	)		(833,063	)

Total Liabilities and Stockholders' Deficiency	$	275,537		$	63,138

~~Murray,~~See UTnotes ~~84107~~to consolidated financial statements.

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~ -14-

~~Board~~Table of ~~Directors~~Contents

~~En2Go~~LYYNKS ~~International Inc~~INC. ~~and~~AND ~~Subsidiary~~SUBSIDIARY

~~Burbank~~(Formerly En2go International, CAInc. ~~91506~~and Subsidiary)

~~We have audited the accompanying consolidated balance sheet of En2Go International Inc. and Subsidiary~~ (~~collectively,~~a ~~the~~development ~~“Company”)~~stage ~~as of August 31, 2011 and 2010, and the related statements of operations, stockholders’ deficiency and cash flows for the years then ended and for the period from January 31, 2007 (date of inception~~company) ~~through August 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.~~

WeConsolidated ~~conducted~~Statements ~~our audits in accordance with the standards~~ of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.Operations

In our opinion, the 2011 and 2010 financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended and for the period from January 31, 2007 (date of inception) through August 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

							Period from
							inception
	For the Year Ended						(January 31, 2007) through
	August 31,						August 31,
	2012			2011			2012
Revenues	$	-		$	-		$	-
Costs and Expenses:
General and administrative expenses		1,687,614			1,034,484			8,594,450
Stock issued for services		-			-			1,762,617
Non-cash compensation		-			-			3,990,692
Impairment loss		-			-			1,104,914
Total operating expenses		1,687,614			1,034,484			15,452,673

Loss from operations		(1,687,614	)		(1,034,484	)		(15,452,673	)


Other Income (Expense):
Other income (primarily from the settlement of prior liabiltities)		-			508,457			538,277
Interest expense		-			(6,845	)		(212,314	)
Interest expense on amortization of note discount		-			(5,833	)		(1,605,133	)
Gain on sale of equipment		-			9,000			9,000
Total other income (expense)		-			504,779			(1,270,170	)

Loss before provision for income taxes		(1,687,614	)		(529,705	)		(16,722,843	)

Provision for income taxes		-			-			-

Net loss	$	(1,687,614	)	$	(529,705	)	$	(16,722,843	)

Net loss per share of common stock -
Basic and diluted	$	(0.03	)	$	(0.02	)

Weighted Average Shares Outstanding -
Basic and diluted		48,288,048			32,080,545

~~The~~See ~~accompanying~~notes ~~financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1~~ to ~~the~~consolidated financial statements, the Company has a working capital deficiency, is dependent on financing to continue operations, has little or no operating revenue, and has suffered recurring losses to date, which raise substantial doubt for its ability to continue as a going concern. ~~Management’s plans in regard to these factors are also described in Note 1.~~

These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might result from the outcome of these uncertainties.-15-

~~/s/~~Table ~~Madsen~~of ~~& Associates, CPA’s Inc.~~Contents

~~Madsen~~LYYNKS &INC. ~~Associates,~~AND ~~CPA's Inc.~~SUBSIDIARY

~~December~~(Formerly 9En2go International, ~~2011~~Inc. and Subsidiary)

16(a development stage company)

~~EN2GO~~Consolidated ~~INTERNATIONAL,~~Statements ~~INC.~~of ~~AND~~Stockholders' ~~SUBSIDIARY (a development stage company) Consolidated Balance Sheets~~Deficiency

	August 31,
													Deficit
	2011			2010
													Accumulated			Total
ASSETS
							Capital in						During			Stockholders'
Current Assets:
	Common			Stock			Excess of			Subscription			Development			Equity
Cash	$	33,648		$	4,942
	Shares			Amount			Par Value			Receivable			Stage			(Deficiency)
Property and equipment - net		29,490			—
Balance - August 31, 2007		4,980,460			50		$	999,950		$	-		$	(602,659	)	$	397,341
Total Assets	$	63,138		$	4,942
Issuance of options and warrants
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
issued for services rendered		-			-			3,686,768			-			-			3,686,768
Current Liabilities:
Common stock issued for $10.00
Accounts payable	$	555,836		$	1,124,248
per share in January 2008		135,000			1			1,349,999			-			-			1,350,000
Accrued expenses		9,855			65,000
Offering costs on issuance of
Due to related party		330,510			562,010
common stock		-			-			(91,401	)		-			-			(91,401	)
Covertible debt (net of discount)		—			344,167
Issuance of common stock
Total Current Liabilities		896,201			2,095,425
for services rendered		100,000			1			1,849,999			-			-			1,850,000
Total Liabilities		896,201			2,095,425
Issuance of common stock as
Commitments and Contingencies
consideration for debt financing		16,600			-			144,600			(6,400	)		-			138,200
Stockholders' Deficiency:
Net loss for the year ended
Common stock, $.00001 par value, 90,000,000 shares authorized,
August 31, 2008		-			-			-			-			(7,830,062	)		(7,830,062	)
38,656,627 and 24,216,002 shares issued and outstanding at
Balance - August 31, 2008		5,232,060			52			7,939,915			(6,400	)		(8,432,721	)		(499,154	)
August 31, 2011 and 2010 , respectively		387			242
Common stock and warrants
Capital in excess of par value		14,201,779			12,414,798
issued for $1.50 per unit in
Deficit accumulated during the development stage		(15,035,229	)		(14,505,523	)
October 2008		100,000			1			149,999			-			-			150,000
Total Stockholders' Deficiency		(833,063	)		(2,090,483	)
Common stock issued for services
Total Liabilities and Stockholders' Deficiency	$	63,138		$	4,942
rendered in October 2008		30,000			-			63,000			-			-			63,000
See notes to consolidated financial statements
Common stock issued for services
in November 2008		5,000			-			14,000			-			-			14,000
Common stock issued in
consideration of debt financing -
Sept - April 2009		71,940			1			174,999			-			-			175,000
Common stock issued for $2.00
per share in May 2009		75,000			1			149,999			-			-			150,000
Discount on notes payable net of
amortization		-			-			1,593,729			-			-			1,593,729
Interest and stock based
compensation		-			-			133,141			6,400			-			139,541
Net loss for the year ended
August 31, 2009		-			-			-			-			(2,983,660	)		(2,983,660	)
Balance - August 31, 2009		5,514,000			55			10,218,782			-			(11,416,381	)		(1,197,544	)

17See notes to consolidated financial statements.

~~EN2GO INTERNATIONAL, INC. AND SUBSIDIARY (a development stage company) Consolidated Statements of Operations~~-16-

								Period from
								inception
								(January 31, 2007)
	For the Year Ended							through
	August 31,							August 31,
		2011			2010			2011
Revenues	$	—		$	—		$	—
Costs and Expenses:
General and administrative expenses		1,034,484			755,804			6,906,833
Stock issued for services		—			—			1,762,617
Non-cash compensation		—			—			3,990,692
Impairment loss		—			1,104,917			1,104,917
Total operating expenses		1,034,484			1,860,721			13,765,059
Loss from operations		(1,034,484	)		(1,860,721	)		(13,765,059	)
Other Income (Expense):
Other income (primarily from the settlement of					—			—
prior liabiltities)		508,457						538,277
Interest expense		(6,845	)		(49,497	)		(212,314	)
Interest expense on amortization of note discount		(5,833	)		(1,178,924	)		(1,605,133	)
Gain on sale of equipment		9,000			—			9,000
Total other income (expense)		504,779			(1,228,421	)		(1,270,170	)
Loss before provision for income taxes		(529,705	)		(3,089,142	)		(15,035,229	)
Provision for income taxes		—			—			—
Net loss	$	(529,705	)	$	(3,089,142	)	$	(15,035,229	)
Net loss per share of common stock -
Basic and diluted	$	(0.02	)	$	(0.14	)
Weighted Average Shares Outstanding -
Basic and diluted		32,080,545			22,612,025
See notes to consolidated financial statements

Table of Contents

18LYYNKS INC. AND SUBSIDIARY

~~EN2GO~~(Formerly ~~INTERNATIONAL~~En2go International, ~~INC~~Inc. ~~AND~~and ~~SUBSIDIARY~~ Subsidiary)

(a development stage company)

Consolidated Statements of Stockholders’ ' Deficiency

	Common Shares		Stock Amount		Capital in Excess of Par Value			Prepaid Stockholders’ Equity			Deficit Accumulated During the Development Stage			Total Stockholders’ Equity
Balance – August 31, 2007		4,980,460		50		999,950			—			(602,659	)		397,341
Issuance of options and warrants issued for services rendered		—		—		3,686,768			—			—			3,686,768
Common stock issued for $10.00 per share in January 2008		135,000		1		1,349,999			—			—			1,350,000
Offering costs on issuance of common stock		—		—		(91,401	)		—			—			(91,401	)
Issuance of common stock for services rendered		100,000		1		1,849,999			—			—			1,850,000
Issuance of common stock as consideration for debt financing		16,600		—		144,600			(6,400	)		—			138,200
Net loss for the year ended August 31, 2008		—		—		—			—			(7,830,062	)		(7,830,062	)
Balance – August 31, 2008		5,232,060		52		7,939,915			(6,400	)		(8,432,721	)		(499,154	)
Common stock and warrants issued for $1.50 per unit in October 2008		100,000		1		149,999			—			—			150,000
Common stock issued for services rendered in October 2008		30,000		—		63,000			—			—			63,000
Common stock issued for services rendered in November 2008		5,000		—		14,000			—			—			14,000
Common stock issued in consideration of debt financing – Sept 2008 – April 2009		71,940		1		174,999			—			—			175,000
Common stock issued for $2.00 per share in May 2009		75,000		1		149,999			—			—			150,000
Discount on notes payable net of amortization		—		—		1,593,729			—			—			1,593,729
Interest and stock based compensation		—		—		133,141			6,400			—			139,541
Net loss for the year ended August 31, 2009		—		—		—			—			(2,983,660	)		(2,983,660	)
Balance – August 31, 2009		5,514,000		55		10,218,782			—			(11,416,381	)		(1,197,544	)
Issuance of common stock upon conversion of convertible debt		17,500,000		175		1,749,825			—			—			1,750,000
Sale of common stock		1,000,002		10		349,990			—			—			350,000

(Continued)

									Deficit
									Accumulated			Total
					Capital in				During			Stockholders'
	Common		Stock		Excess of		Subscription		Development			Equity
	Shares		Amount		Par Value		Receivable		Stage			(Deficiency)
Issuance of common stock upon
conversion of convertible debt		17,500,000		175		1,749,825							1,750,000

Sale of common stock		1,000,002		10		349,990							350,000

Issuance of common stock as
consideration for payment of
accounts payable		202,000		2		96,201							96,203

Net loss for the year ended
August 31, 2010		-		-		-		-		(3,089,142	)		(3,089,142	)

Balance - August 31, 2010		24,216,002		242		12,414,798		-		(14,505,523	)		(2,090,483	)

Issuance of common stock upon
conversion of convertible debt		11,090,625		111		897,232							897,343

Sale of common stock		3,350,000		34		353,465							353,499

Allocation of sale of common stock
and conversion of debt to warrants
issued						536,284							536,284

Net loss for the year ended
August 31, 2011		-		-		-		-		(529,706	)		(529,706	)

Balance - August 31, 2011		38,656,627		387		14,201,779		-		(15,035,229	)		(833,063	)

Issuance of common stock upon
conversion of convertible debt		7,933,333		79		594,921							595,000

Sale of common stock		7,666,666		78		855,722							855,800

Allocation of sale of common
stock to warrants issued						64,200							64,200

Net loss for the year ended
August 31, 2012		-		-		-		-		(1,687,614	)		(1,687,614	)

Balance - August 31, 2012		54,256,626	$	544	$	15,716,622	$	-	$	(16,722,843	)	$	(1,005,677	)

EN2GO INTERNATIONAL, INC. AND SUBSIDIARY (a development stage company) Consolidated Statements of Stockholders’ Deficiency (Continued)
	Common Shares		Stock Amount		Capital in Excess of Par Value	Prepaid Stockholders’ Equity		Deficit Accumulated During Development Stage			Total Stockholders’ Equity
Issuance of common stock as consideration for payment of accounts payable	202,000		2		96,201	—		—			96,203
Net loss for the year ended August 31, 2010	—		—		—	—		(3,089,142	)		(3,089,142	)
Balance – August 31, 2010	24,216,002		242		12,414,798	—		(14,505,523	)		(2,090,483	)
Issuance of common stock upon conversion of convertible debt	11,090,625		111		897,232	—		—			897,343
Sale of common stock	3,350,000		34		353,465	—		—			353,499
Allocation of sale of common stock and conversion of debt to warrants issued	—		—		536,284	—		—			536,284
Net loss for the year ended August 31, 2011	—		—		—	—		(529,706	)		(529,706	)
Balance - August 31, 2011	38,656,627	$	387	$	14,201,779	$—	$	(15,035,229	)	$	(833,063	)

See notes to consolidated financial statements.

20-17-

~~EN2GO~~Table ~~INTERNATIONAL, INC. AND SUBSIDIARY (a development stage company) Consolidated Statements~~ of ~~Cash Flows~~Contents

							Period from
							inception
							(January 31, 2007)
	For the Year Ended						through
	August 31,						August 31,
	2011			2010			2011
Cash Flows From Operating Activities:
Net loss	$	(529,705	)	$	(3,089,142	)	$	(15,035,229	)
Adjustments to reconcile net loss to net cash used in operating activities:
Debt financing costs		5,833			1,178,924			1,906,933
Depreciation expense		6,124			71,592			150,928
Impairment loss		—			1,104,917			1,104,917
Options, warrants and common stock issued for services rendered		—			—			5,753,309
Gain on settlement of prior liabilities		(508,457	)					(508,457	)
Gain on sale of equipment		(9,000	)		—			(9,000	)
Changes in operating assets and liabilities:
Prepaid expense		—			20,336			—
Accounts payable		(59,955	)		152,310			1,164,994
Accrued expense		14,980			29,164			79,980
Net cash used in operating activities		(1,080,180	)		(531,899	)		(5,391,625	)
Cash Flows From Investing Activities:
Purchase of property and equipment		(35,614	)		—			(218,116	)
Software development		—			(141,500	)		(1,109,417	)
Net cash used in investing activities		(35,614	)		(141,500	)		(1,327,533	)
Cash Flows From Financing Activities:
Proceeds from related party		630,500			287,512			1,192,510
Proceeds from sale of equipment		9,000			37,697			46,697
Proceeds from issuance of notes payable		—			—			2,600,000
Repayment of notes payable		—			—			(500,000	)
Proceeds from issuance of common stock and warrants, net of offering costs		505,000			350,000			3,413,599
Net cash provided by financing acitivities		1,144,500			675,209			6,752,806
Net increase in cash		28,706			1,810			33,648
Cash beginning of year		4,942			3,132			—
Cash end of year	$	33,648		$	4,942		$	33,648
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest	$	—		$	—
Income taxes		—			—
Common stock and warrants issued for payment of accounts payable	$	70,125		$	96,200		$	166,325
Common stock and warrants issued upon conversion of convertible debt	$	1,212,000		$	1,750,000		$	2,912,000
See notes to consolidated financial statements

LYYNKS INC. AND SUBSIDIARY

21(Formerly En2go International, Inc. and Subsidiary)

~~EN2GO~~(a ~~INTERNATIONAL,~~development ~~INC.~~stage ~~AND SUBSIDIARY~~ company)

(aConsolidated ~~development~~Statements ~~stage~~of ~~company)~~Cash Flows

Notes to Consolidated Financial Statements

							Period from
							inception
							(January 31, 2007)
	For the Year Ended August 31,						through August 31,
	2012			2011			2012
Cash Flows From Operating Activities:
Net loss	$	(1,687,614	)	$	(529,705	)	$	(16,722,843	)

Adjustments to reconcile net loss to net cash used in operating activities:
Debt financing costs		-			5,833			1,906,933
Depreciation expense		20,392			6,124			171,320
Impairment loss		-			-			1,104,917
Options, warrants and common stock issued for services rendered		-			-			5,753,309
Gain on settlement of prior liabilties		-			(508,457	)		(508,457	)
Gain on sale of equipment		-			(9,000	)		(9,000	)

Changes in operating assets and liabilities:
Accounts payable		(55,625	)		(59,955	)		1,109,369
Accrued expense		9,638			14,980			89,618
Net cash used in operating activities		(1,713,209	)		(1,080,180	)		(7,104,834	)

Cash Flows From Investing Activities:
Purchase of property and equipment		(29,274	)		(35,614	)		(247,390	)
Software development		-			-			(1,109,417	)

Net cash used in investing activities		(29,274	)		(35,614	)		(1,356,807	)

Cash Flows From Financing Activities:
Proceeds from related parties		1,026,000			630,500			2,218,510
Proceeds from sale of equipment		-			9,000			46,697
Proceeds from issuance of notes payable		-			-			2,600,000
Repayment of notes payable		-			-			(500,000	)
Proceeds from issuance of common stock and warrants, net of offering costs		920,000			505,000			4,333,599
Net cash provided by financing acitivities		1,946,000			1,144,500			8,698,806

Net increase in cash		203,517			28,706			237,165
Cash beginning of period		33,648			4,942			-
Cash end of period	$	237,165		$	33,648		$	237,165



SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest	$	-		$	-
Income taxes		-			-

Common stock and warrants issued for payment of accounts payable	$	-		$	70,125		$	166,325

Common stock and warrants issued upon conversion of covertible debt
and related party debt	$	595,000		$	1,212,000		$	3,507,000

AsSee ofnotes ~~and~~to ~~for~~consolidated ~~the~~financial ~~Year Ended August 31, 2011~~statements.

~~NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION~~-18-

~~The~~Table ~~accompanying consolidated financial statements represent the accounts~~ of En2Go International, Inc. (“Parent”), incorporated in the State of Nevada on August 23, 2002 (formerly Medusa Style Corporation) and En2Go, Inc. (“Subsidiary”), incorporated in the State of Nevada on January 31, 2007 (collectively “the Company” or “we”). Contents

OnLyynks July 17, 2007, Parent completed an exchange agreement with Subsidiary wherein Parent issued 2,780,000 shares of its common stock in exchange for all the issued and outstanding common stock of SubsidiaryInc. ~~The~~ acquisition was accounted for as a recapitalization of Subsidiary in a manner similar to a reverse purchase as the former shareholders of Subsidiary controlled the combined Company after the acquisition. Following the acquisition and the transfer of an additional 1,075,000 shares from the shareholders of parent to the former shareholders of the subsidiary, the former shareholders of subsidiary controlled approximately 77% of the total outstanding stock of the combined entity. There was no adjustment to the carrying values of the assets or the liabilities of Parent or Subsidiary ~~as a result of the recapitalization.~~

~~The~~(formerly ~~operations~~En2go ~~of Parent are included only from the date of recapitalization. Accordingly~~International, ~~the previous operations and retained deficits of Parent prior to the date of recapitalization have been eliminated~~Inc. ~~The financial history prior to the recapitalization is that of the Subsidiary.~~)

~~General~~(a development stage company)

~~En2go~~Notes International, Inc. (“we”, “us”, “En2go” or the “Company”) is an entertainment software technology company that is developing media and entertainment related distribution applications for the online distribution of any content, including audio and video content. Our software application under development is called Lyynks, an application that delivers any content to aConsolidated ~~user’s computer~~Financial desktop television set, tablet or smart phone. Lyynks is being developed as a global Internet content broadcast platform that can facilitate for its customers the online distribution of music, television, movies, graphics, interactive advertising and social media.Statements

~~Basis~~As of ~~Presentation~~ and ~~Going~~for ~~Concern~~the Year Ended August 31, 2012

~~Our~~NOTE ~~consolidated~~1 ~~financial~~– ~~statements~~ORGANIZATION ~~have been~~AND ~~prepared~~BASIS ~~assuming~~OF that we will continue as a going concern. However, we have sustained losses and as of August 31, 2011, we have no revenues and have a net working capital deficiency and a negative cash flow from operations. These conditions, among others, give rise to substantial doubt about our ability to continue as a going concern. Management is continuing to seek additional equity capital. Until such time as we are operating profitably, we anticipate our working capital needs will be funded with proceeds from equity and debt financing. Management believes these steps will provide us with adequate funds to sustain our continued existence. There is, however, no assurance that the steps taken by management will meet all of our needs or that we will continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.PRESENTATION

~~Development~~The ~~Stage~~accompanying ~~Activities~~consolidated financial statements represent the accounts of Lyynks Inc. incorporated in the State of Nevada on August 23, 2002 (formerly En2go International, Inc.) and En2Go, Inc. (“Subsidiary”), incorporated in the State of Nevada on January 31, 2007 (collectively the Parent and the Subsidiary are referred to as the “Company”, “Lyynks” “we” or “our”).

~~Since~~On ~~inception~~July ~~the~~17, ~~Company~~2007, ~~has~~Parent ~~not~~completed ~~yet~~an ~~generated significant~~exchange ~~revenues~~agreement ~~and~~with ~~has~~Subsidiary ~~been~~wherein ~~defining~~Parent issued 2,780,000 shares of its ~~business~~common ~~operations~~stock in exchange for all the issued and ~~raising~~outstanding ~~capital.~~common ~~All~~stock of ~~our~~Subsidiary. The ~~operating~~acquisition ~~results~~was ~~and~~accounted ~~cash~~for ~~flows reported~~as a recapitalization of Subsidiary in a manner similar to a reverse purchase as the ~~accompanying~~former ~~consolidated~~shareholders ~~financial~~of ~~statements~~Subsidiary ~~from~~controlled ~~January~~the ~~31,~~combined ~~2007~~Company ~~through~~after ~~August~~the 31acquisition. Following the acquisition and the transfer of an additional 1,075,000 ~~2011~~shares ~~are~~from ~~considered~~the shareholders of parent to be ~~those~~the ~~related~~former shareholders of the subsidiary, the former shareholders of Subsidiary controlled approximately 77% of the total outstanding stock of the combined entity. There was no adjustment to ~~development~~the ~~stage~~carrying ~~activities~~values ~~and~~of ~~represent~~the assets or the ~~cumulative~~liabilities ~~from~~of ~~inception~~Parent ~~amounts~~or ~~from~~Subsidiary ~~our~~as a result of the recapitalization.

22The operations of Parent are included only from the date of recapitalization. Accordingly, the previous operations and retained deficits of Parent prior to the date of recapitalization have been eliminated. The financial history prior to the recapitalization is that of the Subsidiary.

~~development~~On ~~stage activities~~February ~~required~~22, to2012 bethe ~~reported~~Company ~~pursuant~~filed toa ~~Financial~~Certificate ~~Accounting~~of ~~Standards~~Dissolution ~~Board~~of ~~("FASB")~~Subsidiary ~~Accounting~~En2go ~~Standards~~Inc. ~~Codification ("ASC")~~with ~~915,~~the ~~“Development~~Nevada ~~Stage~~Secretary ~~Enterprises”~~of State.

~~NOTE~~On 2March 8, 2012, the Company filed in Nevada Articles of Merger providing for the merger of its wholly- ~~SUMMARY~~owned OFsubsidiary, ~~SIGNIFICANT~~Lyynks, ~~ACCOUNTING~~Inc., ~~POLICIES~~into the Company, as the surviving corporation, and in the merger changing the Company’s name to Lyynks Inc., In the merger, which was for the sole purpose of changing the Company’s name, there were no other changes to the Articles of Incorporation or any changes to the capital stock of the Company, or to its By-Laws or its officers and directors. Pursuant to FINRA approval, the name change was effective for trading purposes on May 14, 2012.

~~Use of estimates~~ General

The ~~preparation~~ ~~of financial statements in accordance with accounting principles generally accepted in the United States of America requires the~~ Company tois ~~make~~developing ~~estimates~~software ~~and~~products ~~judgments~~for ~~that affect~~ the ~~reported~~online ~~amounts~~distribution of ~~assets,~~audio ~~liabilities, revenues~~ and ~~expenses, and~~video ~~disclosure of contingent assets and liabilities~~content. OnThe ~~an on-going basis, the~~ Company ~~evaluates~~plans ~~its estimates and judgments, including those related~~ to ~~revenue~~provide ~~recognition,~~a ~~valuation~~service ofthat ~~long-lived~~users ~~assets,~~can ~~income~~use ~~taxes~~to ~~and~~deliver ~~litigation.~~their ~~The~~content ~~Company~~over ~~bases its estimates on historical and anticipated results and trends and on various other assumptions that~~ the ~~Company~~internet ~~believes~~with ~~are~~a ~~reasonable~~potential ~~under the~~global ~~circumstances, including assumptions as to future events~~reach. Additionally ~~The~~end ~~policies~~users ~~discussed~~would ~~below~~be ~~are~~able ~~considered by management~~ to beuse ~~critical to~~our ansocial ~~understanding~~network ofintegration ~~the~~to ~~Company’s~~share ~~financial~~content ~~statements.~~links ~~These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject~~ to anpromote ~~inherent~~content ~~degree~~or ofcontent ~~uncertainty~~providers. ~~Actual results may differ from those estimates.~~

~~Consolidation~~Basis of Presentation and Going Concern

~~The~~Our consolidated financial statements ~~include~~ ~~the~~have ~~accounts~~been prepared assuming that we will continue as a going concern. However, we have sustained losses and as of ~~Parent~~August 31, 2012, we have no revenues and ~~Parent’s~~have ~~wholly-owned~~a ~~Subsidiary~~net working capital deficiency and a negative cash flow from operations. These ~~All~~conditions, ~~intercompany~~among ~~balances~~others, give rise to substantial doubt about our ability to continue as a going concern. Management is continuing to seek additional equity capital. Until such time as we are operating profitably, we anticipate our working capital needs will be funded with proceeds from equity and ~~transactions~~debt ~~have~~financing. Management ~~been eliminated~~believes inthese ~~consolidation~~steps will provide us with adequate funds to sustain our continued existence. There is, however, no assurance that the steps taken by management will meet all of our needs or that we will continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Cash Concentration and Cash Equivalents~~ -19-

WeTable ~~consider all short-term securities purchased with a maturity~~ of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. Management does not believe the Company is exposed to significant credit risk. Management, as well, does not believe the Company is exposed to significant interest rate and foreign currency fluctuation risks during the period presented in these consolidated financial statements. As of August 31, 2011, there are no amounts that exceed the federally insured limits.Contents

~~Property~~Development ~~and~~Stage ~~Equipment~~ Activities

~~Property~~Since inception the Company has not yet generated significant revenues and ~~equipment~~has ~~are~~been ~~stated~~defining ~~as cost~~its ~~less~~business ~~accumulated~~operations ~~depreciation~~and raising capital. All ~~Depreciation~~of isour ~~provided~~operating onresults aand ~~straight~~cash ~~line~~flows ~~basis~~reported ~~over~~in the ~~estimated~~accompanying ~~useful~~consolidated ~~lives~~financial ofstatements ~~the assets~~ from ~~one~~January to31, ~~five~~2007 ~~years.~~through ~~Maintenance~~August ~~and~~31, ~~repairs~~2012 are ~~charged~~considered to ~~expense~~be asthose ~~incurred~~related to development stage activities and ~~major~~represent ~~improvements~~the ~~are~~cumulative ~~capitalized.~~from ~~Gains or~~inception ~~losses~~amounts onfrom ~~sales~~our ordevelopment ~~retirements~~stage ~~are~~activities ~~recognized~~required into ~~income~~be reported pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 915, “Development Stage Enterprises”.

~~Revenue~~NOTE ~~Recognition~~ 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Through~~Use ~~the period from inception through August 31, 2011, the Company had not yet generated any revenues. However, the Company plans to recognize its revenue according to the provisions~~ of ASC 605, “Revenue Recognition”, which takes into account the completion of the transaction, delivery of the product, a final fixed or determinable price, and that collectability is reasonably assured.Estimates

~~Net~~The ~~Earnings~~preparation ~~(Loss)~~of ~~per common~~financial ~~share~~statements in accordance with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates and judgments, including those related to revenue recognition, valuation of long-lived assets, income taxes and litigation. The Company bases its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. The policies discussed below are considered by management to be critical to an understanding of the Company’s financial statements. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from those estimates.

Basic earnings (loss) per share excludes dilution and is computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shares in the earnings (loss) of the Company. Certain unexercised stock options and stock warrants to purchase shares of the Company’s common stock and convertible debt into the shares of the Company as of August 31, 2011 and 2010, were excluded in the computation of diluted earnings (loss) perConsolidation

23The consolidated financial statements include the accounts of Parent and Parent’s wholly-owned Subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

~~share~~Cash ~~because~~Concentration ~~the effect would be antidilutive. For the years ended August 31, 2011~~ and ~~2010,~~Cash ~~there were 33,065,627 and 19,446,788 potential common shares outstanding.~~Equivalents

~~Evaluation~~We ofconsider ~~Long~~all short-~~Lived Assets~~term securities purchased with a maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. Management does not believe the Company is exposed to significant credit risk. Management, as well, does not believe the Company is exposed to significant interest rate and foreign currency fluctuation risks during the period presented in these consolidated financial statements. As of August 31, 2012, there are no amounts that exceed the federally insured limits.

~~The~~Property ~~Company reviews long-lived assets for impairment used in operations when events~~ and circumstances indicate that the assets might be impaired and the undiscounted cash flows expected to be generated by those assets are less than the carrying amount of those items. The Company’s cash flow estimates are based on limited operating history and have been adjusted to reflect management’s best estimate of future market and operating conditions. An impairment exists when the carrying amount of the long-lived assets is not recoverable and exceeds the fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If an impairment exists the resulting write-down would be the difference between the fair market value of the long-lived asset and the related book value. The Company’s estimates of fair value represent management’s best estimates based on industry trends.Equipment

~~Advertising~~Property ~~Costs~~and equipment are stated as cost less accumulated depreciation. Depreciation is provided on a straight line basis over the estimated useful lives of the assets from one to five years. Maintenance and repairs are charged to expense as incurred and major improvements are capitalized. Gains or losses on sales or retirements are recognized in income.

~~Advertising~~Revenue ~~costs are charged to operations in the period incurred. During the years ended August 31, 2011 and 2010, the Company incurred $-0-and $6,200 in advertising costs, respectively.~~Recognition

~~Income~~Through ~~Taxes~~the period from inception through August 31, 2012, the Company had not yet generated any revenues. However, the Company plans to recognize its revenue according to the provisions of ASC 605, “Revenue Recognition”, which takes into account the completion of the transaction, delivery of the product, a final fixed or determinable price, and that collectability is reasonably assured.

~~The~~Net ~~Company~~Earnings ~~accounts for income taxes under the asset and liability method, in accordance with ASC 740, “Income Taxes”~~ (~~“ASC740”~~Loss), ~~which~~per ~~requires the~~common recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.share

~~The~~Basic ~~Company~~earnings ~~records~~(loss) ~~net~~per ~~deferred~~share ~~tax assets~~excludes dilution and is computed by dividing earnings (loss) available to ~~the~~common ~~extent~~stockholders ~~that~~by the ~~Company~~weighted ~~believes~~average ~~that~~number ~~these~~of ~~assets~~common ~~will~~shares ~~more-likely-than-not~~outstanding befor ~~realized~~the period. In ~~making~~Diluted ~~such~~earnings ~~determination, the~~(loss) ~~Company~~per ~~considers~~share ~~all~~reflects ~~available~~the ~~positive~~potential ~~and~~dilution ~~negative~~that ~~evidence,~~could ~~including~~occur ~~future~~if ~~reversals~~securities ofor ~~existing~~other ~~taxable~~contracts ~~temporary~~to ~~differences, projected~~issue ~~future~~common ~~taxable~~stock ~~income,~~were ~~tax~~exercised ~~planning~~or ~~strategies~~converted ~~and~~into ~~recent~~common ~~financial~~stock ~~results. In~~or resulted in the ~~event~~issuance of common stock that then shares in the earnings (loss) of the Company. ~~were to~~Certain ~~determine~~unexercised ~~that~~stock itoptions ~~would~~and bestock ~~able~~warrants to ~~realize~~purchase ~~its~~shares ~~deferred~~of ~~income~~the ~~tax~~Company’s ~~assets~~common instock and convertible debt into the ~~future~~shares inof ~~excess~~the Company as of ~~its~~August 31, ~~net~~2012 ~~recorded~~and ~~amount~~2011, were excluded in the ~~Company~~computation ~~would~~of ~~make~~diluted anearnings ~~adjustment~~(loss) toper ~~the~~share ~~valuation~~because ~~allowance,~~the ~~which~~effect would ~~reduce~~be antidilutive. For the ~~provision~~years ~~for~~ended ~~income~~August 31, ~~taxes~~2012 and 2011, there were 54,256,627 and 33,065,627 potential common shares outstanding.

~~The principal item giving rise to deferred taxes is expenses deductible for tax purposes that are not deductible for book purposes and a net operating loss carryforward~~-20-

~~Stock-Based~~Table ~~Compensation~~ of Contents

~~The Company records as expense the fair value~~ Evaluation of ~~equity~~Long-~~based~~Lived compensation, including stock options and warrants, over the applicable vesting period. The Company also provides more extensive disclosures concerning stock options than required under previous standards.Assets

~~Software~~The ~~Development Costs~~Company reviews long-lived assets for impairment used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows expected to be generated by those assets are less than the carrying amount of those items. The Company’s cash flow estimates are based on limited operating history and have been adjusted to reflect management’s best estimate of future market and operating conditions. An impairment exists when the carrying amount of the long-lived assets is not recoverable and exceeds the fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If an impairment exists the resulting write-down would be the difference between the fair market value of the long-lived asset and the related book value. The Company’s estimates of fair value represent management’s best estimates based on industry trends.

WeAdvertising capitalize software development costs in accordance with generally accepted accounting principles, under which certain software development costs incurred subsequent to the establishment of technological feasibility, may be capitalized before the product is available for general release to customers, in accordance with ASC 350-985, “Software”. We determine technological feasibility to be established upon completion of (1) a detailed program design, (2) Completion of working model. Capitalized software development costs consists of costs for internally developed software to be sold publicly upon completion of development. Capitalized costs consist primarily of direct salaries and the cost of specific externalCosts

24Advertising costs are charged to operations in the period incurred. During the years ended August 31, 2012 and 2011, the Company incurred $-0- and $-0- in advertising costs, respectively.

~~consultants,~~Income where such costs qualify for capitalization under generally accepted accounting principles. Amortization shall not start until the product is available for general release to customers. On an annual basis, the Company will determine whether or not there has been impairment in value of the intangible assists and if necessary, records impairment charged to write down the assets to their estimated fair value. At August 31, 2010, new management of the Company evaluated the current software under development and determined the undiscounted cash flows expected to be generated by these assets are substantially less than the carrying amount of these items. Management had determined to develop new software and no longer used the previously developed software. The Company recorded an impairment charge of $1,104,917 for the year ended August 31, 2010, reducing the software costs to $-0-.Taxes

~~Convertible~~The ~~Debt~~Company accounts for income taxes under the asset and liability method, ~~Note~~in ~~Discounts~~ accordance with ASC 740, “Income Taxes” (“ASC740”), which requires the recognition of deferred tax assets and ~~Beneficial~~liabilities ~~Conversion~~for ~~Features~~the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The ~~convertible~~Company ~~debentures~~records ~~were~~net ~~issued in~~deferred ~~accordance~~tax ~~with~~assets ~~ASC~~to ~~470-20-25,~~the ~~“Debt~~extent ~~with~~that ~~Conversion~~the ~~and~~Company ~~Other~~believes ~~Options”~~that ~~(“ASC~~these ~~470~~assets will more-20likely-~~25”)~~than-not be realized. In Wemaking ~~calculated~~ such determination, the ~~value~~Company considers all available positive and negative evidence, including future reversals of ~~the~~existing ~~beneficial~~taxable ~~conversion~~temporary ~~feature~~differences, ~~embedded~~projected infuture ~~the~~taxable ~~Convertible~~income, ~~Notes~~tax planning strategies and recent financial results. In ~~The~~the ~~beneficial~~event ~~conversion~~that ~~feature~~the isCompany awere ~~discount against~~to determine that it would be able to realize its deferred income tax assets in the ~~debt~~future ~~and~~in excess of its net recorded amount, the ~~value~~Company would make an adjustment to the ~~warrants~~valuation ~~increases~~allowance, ~~additional~~which ~~paid-in~~would ~~capital~~reduce the provision for income taxes.

~~Reclassifications~~The principal item giving rise to deferred taxes is expenses deductible for tax purposes that are not deductible for book purposes and a net operating loss carryforward

~~The~~Stock-Based Company has reclassified certain information from its prior year financial statements to conform to current year’s presentations, including a change in the number of outstanding shares as of August 31, 2010 from 24,215,542 shares to 24,216,002 shares due to an accounting error in rounding.Compensation

~~Recently~~The ~~Issued~~Company ~~Accounting~~records ~~Pronouncements~~ as expense the fair value of equity-based compensation, including stock options and warrants, over the applicable vesting period. The Company also provides more extensive disclosures concerning stock options than required under previous standards.

~~FASB has~~Software ~~codified~~Development a single source of U.S. Generally Accepted Accounting Principles, the Accounting Standards Codification™. Unless needed to clarify a point to readers, we will refrain from citing specific section references when discussing application of accounting principles or addressing new or pending accounting rule changes. There are no recently issued accounting standards that are expected to have a material effect on our financial condition, results of operations or cash flows..Costs

~~NOTE~~We 3capitalize –software ~~SETTLEMENT~~development OFcosts ~~PRIOR LIABILITIES~~in accordance with generally accepted accounting principles, under which certain software development costs incurred subsequent to the establishment of technological feasibility, may be capitalized before the product is available for general release to customers, in accordance with ASC 350-985, “Software”. We determine technological feasibility to be established upon completion of (1) a detailed program design, (2) Completion of working model. Capitalized software development costs consists of costs for internally developed software to be sold publicly upon completion of development. Capitalized costs consist primarily of direct salaries and the cost of specific external consultants, where such costs qualify for capitalization under generally accepted accounting principles. Amortization shall not start until the product is available for general release to customers. On an annual basis, the Company will determine whether or not there has been impairment in value of the intangible assists and if necessary, records impairment charged to write down the assts to their estimated fair value. At August 31, 2010, new management of the Company evaluated the current software under development and determined the undiscounted cash flows expected to be generated by these assets are substantially less than the carrying amount of these items. Management had determined to develop new software and no longer used the previously developed software. The Company recorded an impairment charge of $1,104,917 for the year ended August 31, 2010, reducing the software costs to $-0-.

~~We have settled certain payables to reflect the acceptance by these creditors of lesser amounts. Accordingly, amounts accrued with respect to these account holders have been reduced to $~~-021- ~~from $508,457, and we have recognized other income in that amount in the consolidated statement of operations for the year ended August 31, 2011.~~

~~NOTE 4~~Table ~~–FAIR~~of ~~VALUE MEASUREMENTS~~Contents

~~The Company~~Convertible ~~utilizes~~Debt, ~~the~~Note ~~accounting~~Discounts ~~guidance for fair value measurements~~ and ~~disclosures~~Beneficial ~~for~~Conversion all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows:Features

~~Level 1~~The –convertible ~~Observable~~debentures ~~inputs~~were ~~such~~issued asin ~~quoted~~accordance ~~market~~with ~~prices~~ASC 470-20-25, “Debt with Conversion and Other Options” (“ASC 470-20-25”). We calculated the value of the beneficial conversion feature embedded in ~~active~~the ~~markets~~Convertible Notes. The beneficial conversion feature is a discount against the debt and the value to the warrants increases additional paid-in capital.

~~Level 2~~Recently –Issued ~~Inputs~~Accounting ~~other than quoted prices in active markets that are either directly or indirectly observable~~Pronouncements

~~Level 3~~FASB –has ~~Unobservable~~codified ~~inputs~~a ~~about~~single ~~which~~source ~~little~~of U.S. Generally Accepted Accounting Principles, the Accounting Standards Codification™. Unless needed to clarify a point to readers, we will refrain from citing specific section references when discussing application of accounting principles or addressing new or pending accounting rule changes. There are no ~~market~~recently ~~data~~issued ~~exists,~~accounting ~~therefore~~standards ~~requiring~~that anare ~~entity~~expected to ~~develop~~have ~~its~~a ~~own~~material ~~assumptions~~effect on our financial condition, results of operations or cash flows..

25NOTE 3 – SETTLEMENT OF PRIOR LIABILITIES

AsWe ~~of August~~have ~~31,~~settled ~~2011,~~certain ~~the~~payables ~~Company~~to ~~held~~reflect ~~certain~~the ~~financial~~acceptance ~~assets~~by ~~that~~these ~~are~~creditors ~~measured~~of atlesser ~~fair~~amounts. ~~value~~Accordingly, onamounts aaccrued ~~recurring~~with ~~basis. These consisted~~respect ofto ~~cash~~these ~~and~~account ~~cash~~holders ~~equivalents. The~~have ~~fair~~been ~~value~~reduced ofto ~~the~~$-0- ~~cash~~from $508,457, and ~~cash~~we ~~equivalents~~have isrecognized ~~determined~~other ~~based~~income onin ~~quoted market~~that ~~prices~~amount in ~~public~~the ~~markets~~consolidated ~~and~~statement isof ~~categorized~~operations asfor ~~Level~~the ~~1. The~~year ~~Company~~ended ~~does~~August ~~not~~31, ~~have~~2011, ~~any~~and ~~financial~~$538,277 ~~assets measured~~for atthe ~~fair~~period ~~value~~from oninception a(January ~~recurring~~31, ~~basis~~2007) asthrough ~~Level~~August 231, ~~or Level 3~~2012.

~~The following~~NOTE ~~table~~4 ~~sets~~–FAIR ~~forth~~VALUE ~~by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring basis as of August 31, 2011 and August 31, 2010.~~ MEASUREMENTS

	Fair Value Measurements Using
		Quoted Prices		Significant Other		Significant Other
		in Active Market		Observable Inputs		Unobservable Inputs
		(Level 1)		(Level 2)		(Level 3)
August 31, 2011
Cash and
cash equivalents	$	33,648	$	—	$	—
Total	$	33,648	$	—	$	—
August 31, 2010
Cash and
cash equivalents	$	4,942	$	—	$	—
Total	$	4,942	$	—	$	—

The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows:

~~The~~ Level ~~Company~~1 ~~had~~– noObservable ~~financial assets~~inputs ~~accounted~~such ~~for~~as onquoted amarket ~~non-recurring~~prices ~~basis~~in asactive ~~of August 31, 2011.~~markets

~~There were~~ Level no2 ~~changes~~– toInputs ~~the~~other ~~Company’s~~than ~~valuation~~quoted ~~techniques~~prices ~~used~~in toactive ~~measure~~markets ~~asset~~that ~~fair~~are ~~values~~either ondirectly ~~a recurring~~ or ~~nonrecurring~~indirectly basis during the year ended August 31, 2011 and the Company did not have any financial liabilities as of August 31, 2011. The Company has other financial instruments, such as advances and other receivables, accounts payable and other liabilities, notes payable and other assets, which have been excluded from the table above. Due to the short-term nature of these instruments, the carrying value of advances and other receivables, accounts payable and other liabilities, notes payable and other assets approximate their fair values.observable

~~NOTE 5~~ Level 3 – ~~RELATED~~Unobservable ~~PARTY~~inputs ~~TRANSACTIONS~~about which little or no market data exists, therefore requiring an entity to develop its own assumptions

~~During~~As ~~the~~of ~~year ended~~ August 31, ~~2011~~2012, ~~Richard~~ ~~Genovese,~~the Company held certain financial assets that are measured at fair value on a ~~Director~~recurring basis. These consisted of ~~the~~cash ~~Company~~and ~~(“Genovese”)~~cash ~~made~~equivalents. The ~~advances~~fair value of ~~$630,500~~the tocash ~~the~~and ~~Company~~cash ~~for~~equivalents ~~additional~~is ~~working capital.~~determined Asbased ofon ~~August~~quoted ~~31,~~market ~~2011~~prices in public markets and ~~August~~is ~~31,~~categorized ~~2010~~as ~~the~~Level ~~amount~~1. The ~~due~~Company ~~Genovese~~does ~~was~~not ~~$330,510~~have ~~and~~any ~~$562,010~~financial ~~respectively~~assets measured at fair value on a recurring basis as Level 2 or Level 3.

OnThe ~~May~~following 6,table ~~2011,~~sets ~~Genovese~~forth ~~converted~~by ~~$312~~level,~~000 of~~ ~~debt~~within ~~owed~~the tofair ~~him~~value ~~into 6~~hierarchy,~~240,000~~ ~~units~~the ~~(“Units”),~~Company’s atfinancial aassets ~~conversion~~accounted ~~price~~for ~~per~~at ~~Unit~~fair ofvalue ~~$.05,~~on ~~each Unit consisting of one share of common stock and~~ a ~~common~~recurring ~~stock~~basis ~~purchase~~as ~~warrant to purchase one share~~ of ~~common~~August ~~stock~~31, at2012 anand ~~exercise~~August ~~price~~31, ~~of $~~2011.~~10 per share. The fair value of the warrants issued was $93,600.~~

	Fair Value Measurements Using

	Quoted Prices		Significant Other		Significant Other
	in Active Market		Observable Inputs		Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)
August 31, 2012
Cash and cash equivalents	$	237,165	$	-	$	-
Total	$	237,165	$	-	$	-

August 31, 2011
Cash and cash equivalents	$	33,648	$	-	$	-
Total	$	33,648	$	-	$	-

On November 8, 2010, Genovese converted $550,000 of debt owed to him into 2,750,000 units (“Units”), at a conversion price per Unit of $.20, each Unit consisting of one share of common stock and a common stock purchase warrant to purchase one share of common stock at an exercise price of $.30 per share. The fair value of the warrants issued was $165,000.-22-

~~The~~Table ~~fair value~~ of ~~the warrants was estimated using the Black-Scholes pricing method.~~Contents

~~NOTE~~The 6Company ~~– CONVERTIBLE~~had ~~DEBT~~no financial assets accounted for on a non-recurring basis as of August 31, 2012.

There were no changes to the Company’s valuation techniques used to measure asset fair values on a recurring or nonrecurring basis during the year ended August 31, 2012 and the Company did not have any financial liabilities as of August31, 2012. The Company has other financial instruments, such as advances and other receivables, accounts payable and other liabilities, notes payable and other assets, which have been excluded from the table above. Due to the short-term nature of these instruments, the carrying value of advances and other receivables, accounts payable and other liabilities, notes payable and other assets approximate their fair values.

	2011		2010
The Company issued notes payable of $0 and $2,100,000 during the year ended August 31, 2009	$	—	$	350,000
Discount on note payable net of amortization		—		(5,833	)
Total	$	—	$	344,167

NOTE 5 - PROPERTY AND EQUIPMENT

~~Interest~~Property ~~expense for the nine months ended May 31, 2011~~ and ~~2010~~equipment ~~was~~consists ~~$6,845~~of ~~and~~the ~~$24,750 respectively.~~following:

NSC Investments

	August 31, 2012		August 31, 2011
Equipment	$	64,888	$	35,614
Accumulated depreciation		26,516		6,124
	$	38,372	$	29,490

InDepreciation ~~August~~expense 2008, we issued a promissory note to NSC Investments Ltd. (“NSC”) in the principal amount of $250,000. Under the terms of this promissory note (the “NSC 2008 Note”), interest is to be prepaid at the commencement of each quarter by us issuing 1,600 shares of our common stock. The unpaid principal balance of the promissory note was due and payable in full on the sale of any assets of the Company or November 1, 2008. Further consideration for the ~~loan~~year ~~consisted~~ended ofAugust 1531,~~000~~ ~~shares~~2012 ~~of our common stock at the funding, 5,000 shares of our common stock at the beginning of the next month,~~ and ~~10,000~~2011 ~~shares at the beginning of the next month. This promissory note~~ was ~~extended~~ until February 1, 2009. We agreed to pay 3,900 shares of our common stock as interest and additional issuance of 10,000 shares of our common stock for additional compensation. The promissory note was further extended to May 1, 2009 and we agreed to make payments on the principal of $5020,~~000~~392 ~~by February 15, 2009; repay a further $100,000 by May 1, 2009; issue 3,000 shares of our common stock as interest~~ and ~~additional issuance of 20,040 shares of our common stock for additional compensation. All the terms of the amended agreement were complied with. The remaining~~ $~~100~~6,~~000 plus accrued interest was convertible at NSC’s option at $2.00 per share on or before May 1~~124, ~~2010~~respectively. Pursuant to ASC 470-25-20, the modification of the Note agreement was not treated as an extinguishment but rather reduced the carrying amount of the debt through an adjustment to the note discounts, with a corresponding increase in additional paid-in capital.

InNOTE ~~November 2010,~~6 ~~the~~– ~~Company~~RELATED ~~entered~~PARTY into an agreement with NSC Investments Ltd. to issue 585,000 units (“Units”), at a price per Unit of $.20, each Unit consisting of one share of common stock and a common stock purchase warrant to purchase one share of common stock at an exercise price of $.30 per share, to settle the remaining balance of the $100,000 of principal debt and $17,500 of accrued interest. The fair value of the warrants issued was $90,938.TRANSACTIONS

27During the year ended August 31, 2012, Richard Genovese, a Director of the Company ("Genovese" ), converted $595,000 of debt owed to him into 7,933,333 common shares at a conversion price per share of $0.075.

~~2009 Convertible~~During ~~Debentures~~the year ended August 31, 2012, Genovese made advances of $926,000 to the Company. As of August 31, 2012 and August 31, 2011, the amount due Genovese was $661,510 and $330,510, respectively. The advances are non-interest bearing.

On ~~January 15~~February 28, ~~2009~~2012, weClayoquot ~~entered~~Wilderness ~~into~~Resort anLtd. ~~agreement with Genovese whereby Genovese and/or his affiliates~~ (~~collectively~~ “~~Genovese~~Clayoquot”) ~~advanced to the Company $250~~,~~000~~ ~~for~~ a ~~convertible~~company ~~debenture~~of orwhich ~~debentures (“the 2008~~ Genovese ~~Convertible~~is ~~Debenture”) for~~a ~~the aggregate~~ principal, ~~amount~~advanced of $~~250~~100,000. ~~The 2008 Genovese Convertible Debenture was non-interest bearing and matured on December 5, 2010. At the holder’s sole discretion, the holder could elect~~ to ~~convert~~ the ~~2008 Genovese Convertible Debenture, in whole or in part into common shares of the~~ Company ~~at a conversion price of $0~~.10 ~~per share.~~ As ~~additional~~of ~~compensation,~~August ~~Genovese was issued a share purchase warrant certificate for 2~~31,~~500,000~~ ~~warrants,~~2012 ~~with each warrant exercisable into one common share at $0.15 per share for a period of three years commencing from the date of the issuance of the warrant certificate. The Company~~ and ~~Genovese~~ ~~further~~August 31, agreed to establish five (5) mutually agreed upon milestones to be attained no later than September 2009 with each milestone generally occurring approximately every forty five (45) days. In conjunction with the attainment of each individual milestone2011, ~~Genovese agreed to advance to~~ the ~~Company~~amount andue ~~additional~~Clayoquot ~~$250,000.~~was ~~In connection with each~~ $~~250~~100,000 ~~advance,~~and ~~Genovese would be issued an additional~~ $~~250~~-0-,~~000~~ ~~Debenture~~respectively. The ~~2008~~advance ~~Genovese~~is ~~Convertible Debentures were~~ non-interest bearing ~~and mature two years from the date of issuance of each subsequent debenture (“2009 Convertible Debentures”)~~. At the holders’ sole discretion, the holder could elect to convert the 2009 Convertible Debentures, in whole or in part, at any time prior to maturity, into common shares of the Company at a conversion price of $0.10 per share.

AsNOTE ~~additional compensation,~~7 ~~Genovese~~– ~~was~~CONVERTIBLE issued a share purchase warrant certificate for 2,500,000 warrants with each warrant exercisable into one common share at $0.15 per share for a period of three years commencing from the date of the issuance of the warrant certificate for each Convertible Debenture issued. We further agreed that (1) Genovese would be granted the right of first refusal/ right of participation in connection with any additional financing of the Company for two (2) years; (2) Genovese would be entitled to two board seats; (3) we would obtain directors and officers insurance; and (4) the parties would work together commencing December 2008 to address other matters. We offered the convertible notes and warrants in reliance on Section 506 of Regulation D and/or Regulation S of the Securities Act, and comparable exemptions for sales to “accredited” investors under state securities laws. The 2008 Genovese Convertible Debenture was subsequently amended for an aggregate principal amount of $545,000. DEBT

~~Additional 2008~~NSC Convertible Debentures for $455,000, $250,000, and $50,000 and $195,000 were issued during the year ended August 31, 2009. In April 2009, the amount of 2009 Convertible Debentures available to be issued was increased by $255,000 for an aggregate of $1,750,000.Investments

~~As of~~In August 312008, ~~2009~~we issued a ~~total~~promissory note to NSC Investments Ltd. (“NSC”) in the principal amount of $1250,~~750,~~000. Under ~~principal~~the ~~amount~~terms of ~~2009~~this ~~Convertible~~promissory ~~Debentures~~note ~~had~~(the ~~been~~“NSC ~~issued.~~2008 Note”), interest is to be prepaid at the commencement of each quarter by us issuing 1,600 shares of our common stock. The ~~amount~~unpaid principal balance of the ~~Debentures outstanding~~promissory atnote ~~August~~was 31due and payable in full on the sale of any assets of the Company or November 1, ~~2009~~2008. ~~was~~Further ~~classified~~consideration asfor ~~“permanent~~the ~~equity”~~loan consisted asof ~~capital~~15,000 inshares ~~excess~~of our common stock at the funding, 5,000 shares of ~~par~~our ~~value~~common ~~and~~stock aat ~~corresponding amount~~the ~~was~~beginning ~~recorded~~of asthe anext ~~discount~~month, ~~against~~and 10,000 shares at the ~~note~~beginning ~~payable.~~of the next month. This ~~discount~~promissory note was ~~amortized~~extended ~~over~~until 24February ~~months~~1, on2009. aWe ~~straight-line~~agreed ~~basis~~ to pay 3,900 shares of our common stock as interest ~~expense~~and additional issuance of 10,000 shares of our common stock for additional compensation. OnThe ~~September~~promissory 25note was further extended to May 1, 2009 and we agreed to make payments on the principal of $50,000 ~~all~~by ~~issued~~February 15, 2009; ~~Convertible~~repay ~~Debentures~~a ~~were~~further ~~converted~~$100,000 ~~into~~by 17May 1,~~500~~ 2009; issue 3,000 shares of our common stock as interest and additional issuance of 20,040 shares of our common stock for additional compensation. All the terms of the amended agreement were complied with. The remaining $100,000 plus accrued interest was convertible at NSC’s option at $2.00 per share on or before May 1, 2010. Pursuant to ASC 470-25-20, the modification of the Note agreement was not treated as an extinguishment but rather reduced the carrying amount of the debt through an adjustment to the note discounts, with a corresponding increase in additional paid-in capital.

~~Janst~~In ~~Limited~~November 2010, the Company entered into an agreement with NSC Investments Ltd. to issue 585,000 units (“Units”), at a price per Unit of $.20, each Unit consisting of one share of common stock and a common stock purchase warrant to purchase one share of common stock at an exercise price of $.30 per share, to settle the remaining balance of the $100,000 of principal debt and $17,500 of accrued interest. The fair value of the warrants issued was $90,938.

In April 2009, we entered into a loan agreement with Janst Limited for $250,000. The terms of the loan were that the loan bears interest at 15% per annum, matured on May 1, 2010, and that the principal and accrued interest is convertible into common stock at the rate of $0.35 per share. -23-

InTable ~~November 2010, the Company entered into an agreement with Janst Limited to issue 1,515,625 units (“Units”), at a price per Unit~~ of $.20, each Unit consisting of one share of common stock and a common stock purchase warrant to purchase one share of common stock at an exercise price of $.30 per share, to settle the $250,000 of principal debt and $53,125 of accrued interest. The fair value of the warrants issued was $35,250.Contents

~~The fair~~2009 ~~value~~Convertible ~~of the warrants was estimated using the Black-Scholes pricing method.~~Debentures

28On January 15, 2009 we entered into an agreement with Genovese whereby Genovese and/or his affiliates (collectively “Genovese”) advanced to the Company $250,000 for a convertible debenture or debentures (“the 2008 Genovese Convertible Debenture”) for the aggregate principal amount of $250,000. The 2008 Genovese Convertible Debenture was non-interest bearing and matured on December 5, 2010. At the holder’s sole discretion, the holder could elect to convert the 2008 Genovese Convertible Debenture, in whole or in part into common shares of the Company at a conversion price of $0.10 per share. As additional compensation, Genovese was issued a share purchase warrant certificate for 2,500,000 warrants, with each warrant exercisable into one common share at $0.15 per share for a period of three years commencing from the date of the issuance of the warrant certificate. The Company and Genovese further agreed to establish five (5) mutually agreed upon milestones to be attained no later than September 2009 with each milestone generally occurring approximately every forty five (45) days. In conjunction with the attainment of each individual milestone, Genovese agreed to advance to the Company an additional $250,000. In connection with each $250,000 advance, Genovese would be issued an additional $250,000 Debenture. The 2008 Genovese Convertible Debentures were non interest bearing and mature two years from the date of issuance of each subsequent debenture (“2009 Convertible Debentures”). At the holders’ sole discretion, the holder could elect to convert the 2009 Convertible Debentures, in whole or in part, at any time prior to maturity, into common shares of the Company at a conversion price of $0.10 per share.

~~NOTE~~As 7additional -compensation, ~~COMMON~~Genovese ~~STOCK~~was issued a share purchase warrant certificate for 2,500,000 warrants with each warrant exercisable into one common share at $0.15 per share for a period of three years commencing from the date of the issuance of the warrant certificate for each Convertible Debenture issued. The 2008 Genovese Convertible Debenture was subsequently amended for an aggregate principal amount of $545,000. Additional 2008 Convertible Debentures for $455,000, $250,000, and $50,000 and $195,000 were issued during the year ended August 31, 2009. In April 2009, the amount of 2009 Convertible Debentures available to be issued was increased by $255,000 for an aggregate of $1,750,000.

~~The~~As ~~Company~~of ~~has~~August ~~authorized~~31, 902009 ~~million~~a ~~shares~~ total of ~~common~~$1,750,000 ~~stock~~principal ~~with~~amount aof ~~par~~2009 ~~value~~Convertible ofDebentures $had been issued.~~00001~~ The amount of the Debentures outstanding at August 31, ~~and~~2009 10was ~~million~~classified ~~shares~~as of“permanent ~~preferred~~equity” ~~stock~~as ~~with~~capital ain excess of par value ofand ~~$.00001. At~~a ~~August 31,~~corresponding ~~2011~~amount ~~and~~was ~~August~~recorded ~~31,~~as ~~2010,~~a discount against the ~~Company~~note ~~had~~payable. This ~~38,656,627~~discount ~~and~~was amortized over 24~~,216,002~~ ~~shares~~months ofon ~~common~~a ~~stock~~straight-line ~~issued~~basis ~~and~~as ~~outstanding~~interest expense. On September 25, ~~respectively~~2009, ~~and~~ noall ~~shares~~issued of2009 ~~preferred~~Convertible ~~stock~~Debentures ~~issued~~were ~~and~~converted ~~outstanding~~into 17,500,000 shares of common stock.

OnJanst ~~April 10, 2007, the Company completed a forward stock split by issuing two additional shares of common stock for every one share previously issued.~~ Limited

OnIn ~~July~~April 172009, ~~2007,~~we inentered ~~connection~~into ~~with~~a ~~its~~loan ~~Exchange Agreement~~agreement with ~~the~~Janst ~~Subsidiary,~~Limited ~~Parent~~for ~~issued 2~~$250,~~780,~~000. The ~~shares~~terms of ~~its~~the ~~previously~~loan ~~authorized~~were ~~but~~that ~~unissued common stock in exchange for all~~ the ~~issued~~loan ~~and~~bears ~~outstanding~~interest ~~common~~at ~~stock~~15% ofper ~~Subsidiary. The 2~~annum,~~780,000~~ ~~shares~~matured ~~have~~on ~~been~~May1, ~~reflected~~2010, asand ~~though~~that ~~they were issued at~~ the ~~inception~~principal ofand ~~the~~accrued ~~Subsidiary,~~interest ~~with~~is aconvertible ~~reverse~~into ~~merger~~common ~~adjustment~~stock ~~that represents the shareholders of the public shell~~ at the rate ~~time~~ of ~~the~~$0.35 ~~recapitalization~~per share.

~~During~~In ~~July,~~November ~~2007~~2010, inthe ~~connection~~Company ~~with~~entered ~~its~~into ~~Exchange Agreement~~an agreement with ~~Subsidiary~~Janst Limited to issue 1,515,625 ~~Parent~~units ~~issued~~(“Units”), ~~100~~at a price per Unit of $.20,~~000~~ ~~shares~~each Unit consisting of one share of common stock and a common stock purchase warrant to ~~private~~purchase ~~placement~~one ~~subscribers~~share of common stock at an exercise price of $10.0030 per share, to settle the $250,000 of principal debt and $53,125 of accrued interest. The fair value of the warrants issued was $35,250. The fair value of the warrants was estimated using the Black-Scholes pricing method.

OnInterest ~~October~~expense ~~31,~~for ~~2007~~ the ~~Board~~years ofended ~~Directors approved~~August ~~the issuance of a private placement memorandum for 135~~31,~~000~~ ~~shares~~2012 ofand ~~common~~2011 ~~stock~~was at $~~10.00~~-0- ~~per~~and ~~share. On January 22, 2008, we completed a private placement of 135,000 shares of our common stock at a purchase price of~~ $~~10.00 per share to persons who were not “U.S. Persons” within the meaning of Regulation S (“Regulation S”) promulgated under the Securities Act of 1933~~6, ~~as amended (the “Securities Act”). Also~~845, ~~stock offering costs of $91,401 have been recorded against capital in excess of par value~~respectively.

~~During~~NOTE ~~November~~8 2007, the Board of Directors authorized the granting of options to purchase 200,000 shares of common stock at $10.00 per share. The fair value of each option granted is estimated on the date granted using the Black-~~Scholes~~ ~~option~~COMMON pricing model with the following weighted-average assumptions; risk-free interest rates of 4.4%, expected dividend yields of zero, expected life of 10 years, and expected volatility of 147.95%. The options vested immediately and were valued in total at $2,366,186. Options granted under the Plan are subject to the Plan being approved by the stockholders of the Company within one year from the date the Plan was adopted.STOCK

OnEffective ~~January~~December 227, ~~2008,~~2011 the Company ~~completed a~~filed ~~private~~an ~~placement~~amendment ofto ~~135,000~~its ~~shares~~Articles of ~~its~~Incorporation ~~common~~(1) ~~stock~~to atincrease aour ~~purchase~~authorized ~~price~~Common ofStock ~~$10.00~~from ~~per~~90,000,000 ~~share~~shares to ~~persons~~1,000,000,000 ~~who~~shares ~~were~~and ~~not~~(2) ~~“U.S. Persons”~~to ~~within~~authorize ~~the~~a ~~meaning~~new class of ~~Regulation~~10,000,000 Sshares ~~(“Regulation~~of ~~S”)~~Preferred ~~promulgated~~Stock ~~under~~with ~~the~~authority ~~Securities~~for ~~Act~~our Board of ~~1933,~~Directors ~~as amended~~to ~~(the~~issue ~~“Securities~~one ~~Act”). The~~or ~~Company~~more ~~received~~series ~~gross~~of ~~proceeds~~the ~~from~~preferred ~~the~~stock ~~placement~~with ofsuch $1designations,~~350~~ rights,~~000~~ preferences, limitations and/or ~~net proceeds~~restrictions as it should determine by vote of ~~approximately~~a ~~$1,258,600~~majority ~~after~~of ~~deducting~~such ~~$30,000~~directors. inAs ~~placement~~of ~~fees~~August ~~paid~~31, to2012, ~~registered~~no ~~investment~~shares ~~dealers~~of inpreferred ~~Canada and~~stock ~~other~~have ~~offering~~been ~~costs~~issued.

InThe ~~August~~Company ~~2008,~~has weauthorized ~~issued the NSC 2008 Note in the principal amount of $250~~1,000~~. In November 2010~~, ~~the Company entered into an agreement with NSC Investments Ltd. to issue 585~~000,000 ~~units~~shares ~~(“Units”), at a conversion price per Unit~~ of ~~$.20, each Unit consisting of one share of~~ common stock ~~and~~ with a ~~common~~par ~~stock~~value ~~purchase warrant to purchase one share~~ of ~~common stock at an exercise price of~~ $.3000001. At ~~per~~August ~~share~~31, to2012 ~~settle~~and ~~the remaining~~August ~~balance~~31, of2011, the ~~$100,000~~Company ofhad ~~principal~~54,256,627 ~~debt~~ and ~~$17~~38,~~500~~656,627 shares of ~~accrued~~common ~~interest~~stock onissued ~~the~~and ~~NSC~~outstanding, ~~2008 Note~~respectively.

During August 2008, the Company issued 45,000 warrants valued at approximately $338,000 to purchase stock for services rendered. The warrants vest over various terms. During the year ended August 31, 2009, the Company recognized compensation expense of $216,479. The fair value of each warrant granted is estimated on the date granted using the Black-Scholes option pricing model with the following weighted average assumptions: risk free interest rates of 3.74% to 3.97%, expected dividend yields of zero, expected life of 10 years and expected volatility of 136.94% to 140.60%.24-

29Table of Contents

~~During~~On ~~the~~April ~~fiscal year ended August 31~~10, ~~2008~~2007, the Company ~~authorized~~completed ~~the~~a ~~issuance~~forward ~~of 100,000 shares of common~~ stock tosplit ~~Mr.~~by ~~Steve~~issuing ~~Wozniak.~~two ~~The~~additional shares ~~were valued at $1,850,000 based on the fair market value~~ of ~~the~~common stock onfor ~~the~~every ~~date~~one ~~the~~share ~~shares~~previously ~~were~~ issued.

InOn ~~September~~July ~~2008~~17, we2007, ~~entered~~in ~~into~~connection ~~a subscription agreement~~ with ~~Richard~~its ~~Genovese~~Exchange ~~and/or~~Agreement ~~his~~with ~~affiliates~~the ~~(collectively~~Subsidiary, ~~“Genovese”) whereby~~Parent ~~Genovese~~issued ~~purchased 100~~2,780,000 shares orof ~~our~~its previously authorized but unissued common stock in exchange for all the issued and ~~100~~outstanding common stock of Subsidiary. The 2,780,000 ~~warrants~~shares have been reflected as though they were issued at the inception of the Subsidiary, with ana ~~exercise~~reverse ~~price~~merger adjustment that represents the shareholders of ~~$1.50~~the ~~for~~public ~~$150,000~~shell at the time of the recapitalization.

InDuring ~~October~~July, ~~2008~~2007, wein ~~entered~~connection ~~into an agreement~~ with ~~Euro~~its ~~Trend~~Exchange ~~Trader,~~Agreement ~~Inc.~~with ~~(“ETT”) to provide investor relations and public relations. We agreed to pay ETT $5~~Subsidiary,~~000 start~~ upParent ~~fees~~issued ~~and $3~~100,000 ~~per month thereafter. Additionally, we paid ETT 20,000~~ shares of ~~our~~ common stock ~~for~~to ~~coverage~~private ofplacement ~~the Company~~subscribers byat ~~a registered market maker and an additional~~ $10~~,000~~.00 ~~for~~per ~~investor relations services~~share.

InOn ~~November~~October ~~2008~~31, we2007 ~~borrowed~~the $5Board of Directors approved the issuance of a private placement memorandum for 135,000 ~~from~~shares ~~a consultant~~of tocommon ~~the~~stock ~~Company~~at ~~which~~$10.00 ~~was~~per ~~payable~~share. byOn ~~December~~January 622, 2008., ~~The~~we ~~lender~~completed ~~was~~a toprivate ~~receive~~placement ~~200~~of 135,000 shares of our common stock at a purchase price of $10.00 per ~~month as~~share ~~interest~~to ~~and~~persons anwho ~~additional~~were ~~consideration~~not “U.S. Persons” within the meaning of ~~25,000~~Regulation ~~warrants~~S ~~with~~(“Regulation anS”) ~~exercise~~promulgated ~~price~~under ofthe ~~$0.25.~~Securities InAct ~~February~~of ~~2009~~1933, weas ~~repaid~~amended (the ~~principal~~ ~~and~~“Securities ~~interest~~Act”). inAlso, ~~full~~stock ~~and~~offering ~~did~~costs ~~not~~of ~~issue~~$91,401 ~~any~~have ~~shares~~been orrecorded ~~warrants~~against capital in excess of par value.

InDuring November ~~2008~~2007, wethe ~~issued~~Board 5of Directors authorized the granting of options to purchase 200,000 shares of ~~our~~ common stock toat ~~Howard~~$10.00 ~~Family~~per ~~Trust~~share. asThe afair ~~bonus~~value inof ~~consideration~~each ofoption granted is estimated on the ~~Company’s~~date ~~failure~~granted tousing ~~pay~~the ~~rent~~Black-Scholes onoption apricing ~~timely~~model ~~basis. The~~with ~~shares~~the ~~were~~following ~~valued~~weighted-average atassumptions; ~~$14~~risk-free interest rates of 4.4%,~~000~~ ~~based~~expected ondividend ~~the~~yields ~~fair~~of ~~market~~zero, ~~value~~expected life of ~~the~~10 ~~stock~~years, onand ~~the~~expected ~~date~~volatility ~~the~~of ~~shares~~147.95%. The options vested immediately and were ~~issued~~valued in total at $2,366,186.

InOn ~~May~~January ~~2009~~22, we2008, ~~entered~~the ~~into~~Company completed a ~~subscription agreement~~private ~~with~~placement ~~Robert~~of ~~Kolson;~~135,000 ~~whereby~~shares Mrof its common stock at a purchase price of $10.00 ~~Kolson~~per ~~purchased~~share ~~75,000~~to ~~shares~~persons who were not “U.S. Persons” within the meaning of ~~our~~Regulation ~~common~~S ~~stock and~~(“Regulation 37S”) promulgated under the Securities Act of 1933,~~500~~ ~~warrants~~as ~~with~~amended an(the ~~exercise~~“Securities ~~price~~Act”). The Company received gross proceeds from the placement of $~~3.00~~1,350,000 ~~for~~and net proceeds of approximately $~~150~~1,258,600 after deducting $30,000. in placement fees paid to registered investment dealers in Canada and other offering costs.

~~During~~In ~~the year ended~~ August 312008, ~~2009,~~we ~~the Company~~ issued anthe ~~aggregate~~NSC of2008 ~~$1,750,000~~Note in ~~2009~~the ~~Convertible~~principal ~~Debentures.~~amount Atof ~~the~~$250,000. In ~~holder's~~November ~~sole discretion~~2010, the ~~holder~~Company ~~was~~entered ~~entitled to~~into ~~convert~~an ~~the~~agreement ~~Debentures,~~with inNSC ~~whole~~Investments orLtd. into ~~part~~issue ~~into~~585,000 ~~common~~units ~~shares~~(“Units”), ~~of the Company~~ at a conversion price ~~of $0.10~~ per ~~share.~~Unit Asof ~~additional compensation~~$.20, ineach ~~conjunction~~Unit ~~with~~consisting ~~the issuance~~ of ~~the~~one ~~2009~~share ~~Convertible~~of ~~Debentures,~~common ~~the~~stock ~~Company~~and ~~issued~~a ~~17,500,000~~common ~~share~~stock purchase ~~warrant~~ ~~certificates with each~~ warrant ~~exercisable~~to ~~into~~purchase one ~~common~~ share atof ~~$0.15~~common ~~per~~stock ~~share~~at ~~for~~an aexercise ~~period~~price of ~~three~~$.30 ~~years~~per ~~commencing from~~share, ~~the~~to ~~date~~settle of the ~~issuance~~remaining ofbalance ~~the warrant certificate. On September 25, 2009 all~~ of the $1100,~~750,~~000 of ~~2009~~principal ~~Convertible~~debt ~~Debentures were converted into 17,500,000 common shares~~ and $17,500~~,000~~ ~~share~~of ~~purchase~~accrued ~~warrants~~interest ~~exercisable~~on atthe ~~$0.15~~NSC ~~per~~2008 ~~share remained outstanding~~Note.

OnDuring ~~September 15~~August ~~2009~~2008, the Company ~~completed~~issued a45,000 ~~reverse~~warrants valued at approximately $338,000 to purchase stock ~~split~~for onservices arendered. The ~~one~~warrants tovest ~~ten~~over ~~(1:10) basis,~~various ~~such~~terms. During ~~that~~the ~~each~~year ~~shareholder~~ended ~~now~~August ~~holds~~31, ~~one~~2009, ~~new~~the ~~share~~Company ~~for~~recognized ~~every~~compensation ~~ten~~expense ~~shares~~of ~~previously held~~$216,479. The ~~Company’s~~fair ~~share~~value ~~transactions~~of ~~disclosed~~each inwarrant granted is estimated on the ~~financial~~date ~~statements have~~granted ~~been~~using ~~restated~~the ~~retroactively~~Black-Scholes tooption ~~reflect~~pricing model with the ~~reverse~~following ~~stock~~weighted ~~split~~average ~~for~~assumptions: ~~all~~risk ~~periods~~free ~~presented~~interest rates of 3.74% to 3.97%, expected dividend yields of zero, expected life of 10 years and expected volatility of 136.94% to 140.60%.

OnDuring ~~October~~the 30fiscal year ended August 31, ~~2009~~2008, wethe ~~entered~~Company ~~into~~authorized athe ~~subscription agreement~~issuance ~~with~~of ~~Janspec~~100,000 ~~Holdings~~shares ~~Limited~~of ~~("Janspec");~~common ~~whereby~~stock ~~Janspec~~to ~~purchased~~Mr. ~~428,572~~Steve ~~common~~Wozniak. The shares ~~and~~were ~~428~~valued at $1,~~572~~850,000 ~~warrants with~~based anon ~~exercise~~the ~~price~~fair market value of ~~$0.60~~the ~~for~~stock ~~$150,000~~on the date the shares were issued.

OnIn ~~November~~September 72008, ~~2009~~ we entered into a subscription agreement with ~~Peninsula~~Richard ~~Merchant~~Genovese ~~Syndications~~and/or ~~Corp.~~his affiliates (~~"Peninsula"~~collectively “Genovese”), ~~where~~pursuant ~~Peninsula~~to which Genovese purchased ~~285~~100,~~715~~000 shares of our common stock and ~~285~~100,~~715~~000 warrants with an exercise price of $01.6050 for $~~100~~150,000.

OnIn ~~November~~October 92008, ~~2009,~~ we ~~issued~~entered ~~32,000~~into ~~common shares~~an toagreement ~~Weintraub~~with ~~Genshlea~~Euro ~~Chediak~~Trend inTrader, ~~lieu~~Inc. of(“ETT”) ~~outstanding~~to ~~legal~~provide ~~services~~investor ~~provided~~relations toand ~~the~~public ~~Company~~relations. We ~~The~~agreed ~~shares~~to ~~were~~pay ~~valued~~ETT at$5,000 start up fees and $113,~~200 based~~000 onper ~~the~~month ~~fair~~thereafter. ~~market~~Additionally, ~~value~~we paid ETT 20,000 shares of ~~the~~our common stock onfor coverage of the ~~date~~Company ~~that~~by ~~the~~a registered market maker and an additional 10,000 shares ~~were~~for ~~issued~~investor relations services.

On November 13, 2009 we entered into a subscription agreement with Robert Kolson; whereby Mr. Kolson purchased 285,715 shares of our common stock and 285,715 warrants with an exercise price of $0.60 for $100,000.-25-

30Table of Contents

OnIn ~~January~~November 202008, ~~2010~~ we ~~issued~~borrowed ~~170~~$5,000 ~~common shares~~from a consultant to ~~Howard~~the ~~Family~~Company ~~Trust~~which inwas ~~lieu~~payable ofby ~~outstanding~~December ~~rent~~6, ~~property~~2008. The ~~taxes~~lender ~~and~~was ~~insurance.~~to ~~The~~receive 200 shares ~~were~~of ~~valued~~our atcommon ~~$85~~stock per month as interest and an additional consideration of 25,000 ~~reflective of~~warrants ~~the~~with ~~fair~~an ~~market~~exercise ~~value~~price of ~~the~~$0.25. In ~~stock~~February on2009 ~~the~~we ~~date~~repaid the principal and interest in full and did not issue any shares ~~were~~or ~~issued~~warrants.

OnIn November 8,2008 ~~2010~~we issued 5,000 weshares ~~entered~~of ~~into~~our acommon ~~subscription agreement~~stock ~~with~~to ~~Janst~~Howard ~~Limited;~~Family ~~whereby~~Trust ~~Janst~~as ~~purchased~~a ~~1,250,000~~bonus ~~shares~~in consideration of ~~our~~the ~~common~~Company’s ~~stock and~~failure ~~1,250,000~~to ~~warrants~~pay ~~with~~rent anon ~~exercise~~a ~~price~~timely ~~of $~~basis.30 ~~for~~The shares were valued at $~~250~~14,000. based on the fair market value of the stock on the date the shares were issued.

OnIn ~~November~~May 82009, ~~2010,~~ we entered into a subscription agreement with ~~NSC~~Robert ~~Investments~~Kolson, ~~Ltd.;~~pursuant ~~whereby~~to ~~NSC~~which Mr. Kolson purchased ~~250~~75,000 shares of our common stock and ~~250~~37,~~000~~500 warrants with an exercise price of $3.3000 for $50150,000.

OnDuring ~~November~~the 8year ended August 31, ~~2010~~2009, wethe ~~entered~~Company issued an aggregate of $1,750,000 in 2009 Convertible Debentures. At the holder's sole discretion, the holder was entitled to convert the Debentures, in whole or in part into common shares of the Company at a ~~subscription agreement~~conversion ~~with~~price ~~Richard~~of ~~Genovese,~~$0.10 ~~whereby~~per Mrshare. ~~Genovese~~As ~~purchased~~additional ~~250~~compensation,~~000~~ ~~shares~~in conjunction with the issuance of ~~our~~the ~~common stock~~2009 ~~and~~Convertible ~~250~~Debentures, the Company issued 17,500,000 ~~warrants~~share purchase warrant certificates with aneach ~~exercise~~warrant ~~price~~exercisable ofinto one common share at $0.3015 per share for a period of three years commencing from the date of the issuance of the warrant certificate. On September 25, 2009 all of the $501,750,000 of 2009 Convertible Debentures were converted into 17,500,000 common shares and 17,500,000 share purchase warrants exercisable at $0.15 per share remained outstanding.

On ~~December~~September ~~13,~~15 ~~2010~~2009, wethe ~~entered~~Company ~~into~~completed a ~~subscription agreement~~reverse ~~with~~stock ~~Musgrave~~split ~~Investments~~on ~~Ltd.;~~a ~~whereby~~one ~~Musgrave~~to ~~purchased~~ten ~~500~~(1:10) basis,~~000~~ ~~shares~~such ofthat ~~our~~each shareholder ~~common~~following ~~stock~~the ~~and~~reverse ~~500,000~~split ~~warrants~~held ~~with an~~one ~~exercise~~new ~~price~~share offor $every ten shares previously held.30 The Company’s share transactions disclosed in the financial statements were restated retroactively to reflect the reverse stock split for ~~$100,000~~all periods presented.

On ~~May~~October 630, ~~2011,~~2009 we entered into a subscription agreement with ~~Richard~~Janspec ~~Genovese.;~~Holdings ~~whereby~~Limited ~~Mr.~~("Janspec"), ~~Genovese~~pursuant ~~purchased~~to ~~600,000~~which ~~shares~~Janspec ofpurchased ~~our~~428,572 common ~~stock~~shares and ~~600~~428,~~000~~572 warrants with an exercise price of $0.1060 for $30150,000.

On ~~July~~November 267, ~~2011,~~2009 we entered into a subscription agreement with aPeninsula ~~private~~Merchant ~~investor~~Syndications Corp. ~~the~~("Peninsula"), ~~investor~~pursuant to which Peninsula purchased ~~500~~285,~~000~~715 shares of our common stock and ~~500~~285,~~000~~715 warrants with an exercise price of $0.1060 for $25100,000.

~~The~~On ~~fair~~November ~~value~~9, of2009, ~~the~~we ~~warrants~~ issued in32,000 ~~connection with~~common ~~the~~shares ~~sale~~to Weintraub Genshlea Chediak in lieu of ~~common~~outstanding ~~stock~~legal ~~during~~services provided to the ~~year~~Company. ~~ended~~The ~~August~~shares ~~31,~~were ~~2011~~valued ~~was~~at $~~151~~11,~~496.~~200 ~~The~~based on the fair market value of the ~~warrants~~stock ~~was~~on ~~estimated using~~the date that the ~~Black-Scholes~~shares ~~pricing~~were ~~method~~issued.

~~NOTE~~On 8November –13, ~~OPTIONS~~2009 ~~AND~~we ~~WARRANTS~~entered into a subscription agreement with Robert Kolson, pursuant to which Mr. Kolson purchased 285,715 shares of our common stock and 285,715 warrants with an exercise price of $0.60 for $100,000.

~~Stock~~On ~~Options~~January 20, 2010 we issued 170,000 common shares to Howard Family Trust in lieu of outstanding rent, property taxes and insurance. The shares were valued at $85,000 reflective of the fair market value of the stock on the date the shares were issued.

~~During~~On November 8, ~~2007~~2010, ~~the~~we ~~Board~~entered ofinto ~~Directors of~~a ~~the~~subscription ~~Company~~agreement ~~adopted~~with ~~and~~Janst ~~the~~Limited, ~~stockholders~~pursuant ~~at that time approved the 2007 Stock Plan (“the Plan”). The Plan provides both for the direct award or sale of shares and for the granting of options~~ to ~~purchase~~which ~~shares. Options~~Janst ~~granted under~~purchased ~~the plan may include qualified and non-qualified stock options. The aggregate number of shares that may be issued under the plan shall not exceed 750~~1,250,000 shares of our common stock, and ~~are issuable to directors~~1, ~~officers~~250,000 ~~and~~warrants ~~employees~~with ofan the Company. Awards under the plan will be granted as determined by Committees of the Board of Directors or by the Board of Directors. The options will expire after 10 years or 5 years if the option holder owns at least 10% of the common stock of the Company. The exercise price of ~~a non-qualified option must be at least 85% of the market price on the date of issue~~$. ~~The~~30 ~~exercise price~~for ~~of a qualified option must be at least equal to the market price or 110% of the market price on the date of issue if the option holder owns at least 10% of the common stock of the Company~~$250,000.

InOn November ~~2007~~8, ~~200~~2010,~~000~~ ~~stock~~we ~~options~~entered ~~were granted~~into ~~with~~a ansubscription ~~exercise~~agreement ~~price~~with ~~equal~~NSC toInvestments ~~fair~~Ltd., ~~value~~pursuant atto ~~the~~which ~~date~~NSC ofpurchased ~~grant. The~~250,000 ~~term~~shares of ~~the~~our ~~options~~common ~~granted~~stock ~~under~~and ~~the~~250,000 ~~Plan could~~warrants ~~not~~with ~~exceed~~an 10exercise ~~years~~price ~~and~~of ~~the~~$.30 ~~stock~~for ~~options granted were vested immediately~~$50,000.

31On November 8, 2010, we entered into a subscription agreement with Richard Genovese., pursuant to which Mr. Genovese purchased 250,000 shares of our common stock and 250,000 warrants with an exercise price of $.30 for $50,000.

On ~~August~~December 113, ~~2008~~2010, we ~~agreed~~entered into a subscription agreement with Musgrave Investments Ltd., pursuant to ~~issue~~which 30Musgrave purchased 500,000 shares of our common stock ~~options~~and to500,000 ~~certain~~warrants ~~board~~with ~~members~~an ~~for~~exercise ~~their~~price ~~services~~of to$.30 ~~the~~for ~~board~~$100,000.

On September 1, 2008 we granted 15,000 stock options to a certain officer and board member for his services performed as Chair of the Audit Committee and Chair of the Compensation Committee. The estimated value of the compensatory common stock purchase options granted to non-~~employees in exchange for services and financing expenses was determined using the Black~~26-Scholes pricing model and the following assumptions: expected term of 10 years, a risk free interest rate of 3.97% to 4.40%, a dividend yield of 0% and volatility of 136.94% to 147.95%. During the years ended August 31, 2011 and 2010, the amount of the expense charged to operations for compensatory options granted in exchange for services was $-0- and $-0-, respectively.

~~The~~Table ~~following table summarizes the changes in options outstanding and the related prices for the shares~~ of ~~the Company’s common stock issued to employees and non-employees of the Company. These options were granted in lieu of cash compensation for services performed.~~Contents

	Shares			Weighted Average Exercise Price
Outstanding, September 1, 2008		230,000		$	9.70
Granted		15,000			7.10
Expired/Cancelled		—			—
Exercised		—			—
Outstanding, year ended August 31, 2009		245,000			9.50
Granted		—			—
Expired/Cancelled		(200,000	)		—
Exercised		—			—
Outstanding, year ended August 31, 2010		45,000			7.70
Granted		—			—
Expired/Cancelled		(20,000	)		—
Exercised		—			—
Outstanding, year ended August 31, 2011		25,000		$	7.86
Exercisable at August 31, 2011		25,000		$	7.86

On May 6, 2011, we entered into a subscription agreement with Richard Genovese, pursuant to which Mr. Genovese purchased 600,000 shares of our common stock and 600,000 warrants with an exercise price of $.10 for $30,000.

32On July 26, 2011, we entered into a subscription agreement with a private investor. The investor purchased 500,000 shares of our common stock and 500,000 warrants with an exercise price of $.10 for $25,000.

Options Outstanding				Options Exercisable
Year		Exercise Price	Number of Shares Outstanding	Weighted Average Contractual Life (Years)	Number Exercisable		Weighted Average Exercise Price
2008	$	9.00	10,000	7.93	10,000	$	9.00
2009		7.10	15,000	8.01	15,000		7.10
Total			25,000		25,000

The fair value of the warrants issued in connection with the sale of common stock during the year ended August 31, 2011 was $151,496. The fair value of the warrants was estimated using the Black Scholes pricing method.

~~Stock~~On ~~Warrants~~November 22, 2011, we entered into a subscription agreement with a private investor. The investor purchased 2,666,667 shares of our common stock for an aggregate investment in the Company of $200,000.

InOn ~~September~~December ~~2008~~5, we2011, the Company entered into a subscription agreement with ~~Richard~~a ~~Genovese~~private ~~and/or~~investor. ~~his~~The ~~affiliates~~investor ~~(collectively “Genovese”) whereby Genovese~~ purchased ~~100~~ 400,000 shares of our common stock and ~~100~~400,000 warrants with an exercise price of $20.0025 per share for an aggregate investment in the Company of $~~150~~100,000.

InOn ~~November~~May ~~2008~~1, 2012, we ~~borrowed~~entered ~~$5,000 from~~into a ~~consultant~~subscription toagreement ~~the~~with ~~Company~~a ~~which~~private ~~was payable by December 6, 2008~~investor. The ~~lender~~investor ~~was~~purchased to100,000 ~~receive 200~~ shares of our common stock ~~per~~ ~~month~~for ~~as interest and~~ an ~~additional~~aggregate ~~consideration~~investment ofin ~~25,000~~the ~~warrants~~Company ~~with an exercise price~~ of $020,000.~~25. In February 2009 we repaid the principal and interest in full and no shares or warrants were issued.~~

On ~~January~~ 15May 2, ~~2009~~2012, we entered into ansubscription ~~agreement~~agreements with ~~Genovese~~two ~~whereby~~private ~~Genovese and/or his affiliates (collectively “Genovese”) will advance to the Company $250,000 for a convertible debenture (“Debenture”) for the aggregate principal amount of $250,000~~investors. The ~~Debenture~~investors ~~shall~~purchased ~~be non-interest bearing and will mature on December 5~~1, ~~2010. At the holder’s sole discretion~~500, ~~the~~000 ~~holder may elect to convert the Debenture, in whole or in part into common~~ shares of ~~the~~our Company at a conversion price of $0.10 per share. As additional compensation, Genovese shall be issued a share purchase warrant certificate for 2,500,000 warrants with each warrant exercisable into one common ~~share~~stock ~~at $0.15 per share~~ for aan ~~period~~aggregate ofinvestment ~~three~~in ~~years commencing from~~ the ~~date of the issuance of the warrant certificate. The~~ Company and Genovese further agreed to establish five (5) mutually agreed upon milestones to be attained no later than September 2009 with each milestone generally occurring approximately every forty five (45) days. In conjunction with the attainment of ~~each individual milestone, Genovese agrees to advance to the Company an additional~~ $~~250~~300,000. In connection with each $250,000 advance, Genovese shall be issued an additional $250,000 Convertible Debenture. The Debenture shall be non interest bearing and will mature two years from the date of issuance of each subsequent debenture (“Subsequent Debentures”).

~~At the~~On ~~Holders’~~August ~~sole discretion~~8, ~~the Holder may elect to convert the Subsequent Debentures~~2012, inwe ~~whole~~entered ~~or in part, at any time prior to maturity,~~ into ~~common~~a ~~shares~~subscription ofagreement ~~the~~with ~~Company at~~ a ~~conversion~~private ~~price of $0~~investor.10 ~~per~~The ~~share.~~investor Aspurchased ~~additional compensation~~3, ~~Genovese shall be issued a share purchase warrant certificate for 2~~000,~~500,~~000 ~~warrants~~shares ~~with~~of ~~each~~our ~~warrant exercisable into one~~ common ~~share at~~stock ~~$0.15 per share~~ for aan ~~period~~aggregate ofinvestment three years commencing from the date of the issuance of the warrant certificate for each Subsequent Debenture issued. We would further agreed that (1) Genovese would be granted the right of first refusal/ right of participation in ~~connection with any additional financing of~~ the Company for two (2) years, (2) Genovese would be entitled to two board seats, (3) we would obtain directors and officers insurance, and (4) the parties would work together commencing December 2008 to address other matters. We offered the convertible notes and warrants in reliance on Section 506 of Regulation D and/or Regulation S of the Securities Act, and comparable exemptions for sales to “accredited” investors under state securities laws. The Debenture was subsequently amended for an aggregate principal amount of $~~545~~300,000.

33The fair value of the warrants issued in connection with the sale of common stock during the year ended August 31, 2012 was $64,200. The fair value of the warrants was estimated using the Black Scholes pricing method.

~~Additional~~NOTE ~~Debentures~~9 ~~for~~– ~~$455,000, $250,000,~~OPTIONS ~~and~~AND $50,000 and $195,000 were issued during the year ended August 31, 2009. In April 2009, the amount of convertible debentures available to be issued was increased by $255,000 for an aggregate of $1,750,000. As of August 31, 2009 a total of $1,750,000 has been issued as Debentures. On September 25, 2009 all of the $1,750,000 of debentures were converted into 17,500,000 common shares and 17,500,000 share purchase warrants exercisable at $0.15 per share remain unexercised.WARRANTS

InStock ~~May 2009, we entered into a subscription agreement with Robert Kolson; whereby Mr. Kolson purchased 75,000 shares of our common stock and 37,500 warrants with an exercise price of $3.00 for $150,000.~~Options

OnDuring ~~October 30~~November, ~~2009~~2007 wethe ~~entered~~Board ~~into~~of aDirectors ~~subscription agreement~~of ~~with~~the ~~Janspec~~Company ~~Holdings~~adopted ~~Limited~~and the stockholders at that time approved the 2007 Stock Plan (~~"Janspec"~~“the Plan”);. The ~~whereby~~Plan ~~Janspec~~provides ~~purchased~~both ~~428~~for the direct award or sale of shares and for the granting of options to purchase shares. Options granted under the plan may include qualified and non-qualified stock options. The aggregate number of shares that may be issued under the plan shall not exceed 750,~~572~~000 shares of common ~~shares~~stock, and ~~428~~are issuable to directors,~~572~~ ~~warrants with~~officers, anand employees of the Company. Awards under the plan will be granted as determined by Committees of the Board of Directors or by the Board of Directors. The options will expire after 10 years or 5 years if the option holder owns at least 10% of the common stock of the Company. The exercise price of $0a non-qualified option must be at least 85% of the market price on the date of issue.60 The ~~for~~exercise ~~$150,000~~price of a qualified option must be at least equal to the market price or 110% of the market price on the date of issue if the option holder owns at least 10% of the common stock of the Company.

OnIn November 72007, ~~2009~~200,000 westock ~~entered~~options ~~into~~were agranted ~~subscription agreement~~ with ~~Peninsula~~an ~~Merchant~~exercise ~~Syndications~~price ~~Corp.~~equal ~~("Peninsula")~~to ~~where~~fair ~~Peninsula~~value ~~purchased~~at ~~285,715~~the ~~shares~~date of ~~our~~grant. The ~~common stock~~term ~~and~~of ~~285,715~~the ~~warrants~~options ~~with~~granted anunder ~~exercise~~the ~~price~~Plan ofcould ~~$0.60~~not ~~for~~exceed ~~$100,000~~10 years and the stock options granted were vested immediately.

On ~~November~~August 131, ~~2009~~2008, we ~~entered~~agreed ~~into~~to aissue ~~subscription agreement with Robert Kolson; whereby Mr. Kolson purchased 285~~30,~~715~~000 ~~shares~~stock ofoptions ~~our~~to ~~common~~certain ~~stock~~board ~~and~~members ~~285,715~~for ~~warrants~~their ~~with~~services anto ~~exercise price~~the ~~of $0~~board.~~60 for $100,000.~~

~~During~~On ~~the~~September ~~year~~1, ~~ended~~2008 ~~August~~we ~~31,~~granted ~~2011~~15, ~~the~~000 ~~Company~~stock ~~issued~~options ~~14,440,625~~to ~~warrants~~a incertain ~~connection~~officer ~~with~~and ~~the~~board ~~sales~~member for his services performed as Chair of ~~common~~the ~~stock~~Audit Committee and ~~conversion~~Chair of ~~debt~~the ~~into~~Compensation ~~common stock~~Committee. The ~~fair~~ estimated value of the ~~warrants~~compensatory common stock purchase options granted to non-employees in ~~connection~~exchange ~~with~~for services and financing expenses was determined using the ~~allocation~~Black-Scholes pricing model and the following assumptions: expected term of ~~sale~~10 years, a risk free interest rate of 3.97% to 4.40%, a dividend yield of 0% and ~~conversion~~volatility ~~was~~of ~~$536~~136.94% to 147.95%. On August 31,~~283~~ 2012, we cancelled 25,000 stock options that were issued to a certain board member.

	Warrants				Weighted Average Exercise Price
Outstanding, September 1, 2008		100,000				$2.00
Granted		17,500,000				0.15
Expired/Cancelled		-				-
Exercised		-				-
Granted		37,500				3.00
Outstanding, year ended August 31, 2009		17,637,500				0.17
Expired/Cancelled		-				-
Exercised		-				-
Granted		1,000,002				0.60
Outstanding, year ended August 31, 2010		18,637,502				$0.19
Granted		14,440,625				0.20
Expired/Cancelled			(37,500)	-
Exercised			-	-
Outstanding, year ended August 31, 2011		33,040,627				0.19
Exercisable, year ended August 31, 2011		33,040,627				$0.19

-27-

34Table of Contents

		Warrants Outstanding			Warrants Exercisable
Year		Exercise Price	Number of Warrants Outstanding	Weighted Average Contractual Life (Years)	Number Exercisable	Weighted Average Exercise Price
2008	$	2.00	100,000	2.02	100,000	2.00
2009		0.15	*10,000,000	0.42	10,000,000	0.15
2009		0.15	*2,500,000	0.47	2,500,000	0.15
2009		0.15	*500,000	0.50	500,000	0.15
2009		0.15	*1,700,000	0.65	1,700,000	0.15
2009		0.15	*150,000	0.67	150,000	0.15
2009		0.15	*50,000	0.68	50,000	0.15
2009		0.15	*50,000	0.71	50,000	0.15
2009		0.15	*500,000	0.98	500,000	0.15
2009		0.15	*2,050,000	0.98	2,050,000	0.15
2010		0.60	1,000,002	0.16	1,000,000	0.60
2011		0.30	6,600,625	4.18	6,600,625	0.30
2011		0.30	500,000	4.26	500,000	0.30
2011		0.10	6,840,000	4.67	6,840,000	0.10
2011		0.10	500,000	4.91	500,000	0.10
Total			33,040,627		33,040,627

During the years ended August 31, 2012 and 2011, the amount of the expense charged to operations for compensatory options granted in exchange for services was $-0- and $-0-, respectively.

AsThe offollowing ~~August~~table ~~31,~~summarizes ~~2011,~~the ~~37,500~~changes in options outstanding and the related prices for the shares of the Company'’s common stock issued to employees and ~~outstanding~~non-employees ~~warrants~~of ~~have~~the ~~been~~Company. ~~cancelled~~These options were granted in lieu of cash compensation for services performed.

* Pursuant to the terms of the debentures issued under the Genovese Agreement, the warrants contain an anti-dilution provision that states it is specifically agreed that in the event that the Company shall reduce the number of outstanding shares of Common Stock by combining such shares into a smaller number of shares, then, in such case, the then applicable Exercise Price per Warrant Share purchasable pursuant to the Warrant Certificate in effect at the time of such action will not be changed.

	Shares		Weighted Average Exercise Price
Outstanding, September 1, 2008		230,000	$	9.70
Granted		15,000		7.10
Expired/Cancelled		-		-
Exercised		-		-
Outstanding, year ended August 31, 2009		245,000		9.50
Granted		-		-
Expired/Cancelled		(200,000)		-
Exercised		-		-
Outstanding, year ended August 31, 2010		45,000		7.70
Granted		-		-
Expired/Cancelled		(20,000)		-
Exercised		-		-
Outstanding, year ended August 31, 2011		25,000	$	7.86

Granted		-		-

Expired/Cancelled		(25,000)		7.86

Exercised		-		-

Outstanding, period ended August 31, 2012		-0-	$	-0-

Exercisable at August 31, 2012		-0-	$	-0-

~~The~~Stock following table sets forth common stock equivalents (potential common stock) for the years ended August 31, 2011 and 2010 that are not included in the loss per share calculation above because their effect would be anti-dilutive for the periods indicated:Warrants

	For the Years Ended August 31,
	2011		2010
Plan Stock Options		25,000		45,000
Warrants		33,040,627		18,637,502
Convertible notes		—		764,286

In September 2008, we entered into a subscription agreement with Richard Genovese and/or his affiliates (collectively “Genovese”) whereby Genovese purchased 100,000 shares of our common stock and 100,000 warrants with an exercise price of $2.00 for $150,000.

35-28-

~~NOTE~~Table 9of ~~- INCOME TAXES~~Contents

~~The~~In ~~Company~~November ~~adopted the provisions of ASC 740~~2008, ~~“Income~~ ~~Taxes”~~we ~~(“ASC~~borrowed ~~740”) on January 1~~$5,000 ~~2007. As~~from a ~~result~~consultant ofto the ~~implementation of ASC 740, the~~ Company ~~recognized~~which nowas ~~adjustment~~payable inby ~~the~~December ~~net~~6, ~~liability for unrecognized income tax benefits~~2008. The ~~Company~~lender ~~believes there~~was ~~are~~to noreceive ~~potential~~200 ~~uncertain~~shares ~~tax~~of ~~positions~~our ~~and~~common ~~all~~stock ~~tax~~per ~~returns~~month ~~are correct~~ as ~~filed. Should~~interest ~~the~~and ~~Company~~an ~~recognize a~~additional ~~liability~~consideration ~~for~~of ~~uncertain~~25,000 ~~tax~~warrants ~~positions;~~with ~~the~~an ~~Company~~exercise ~~will~~price ~~separately~~of ~~recognize the liability for uncertain tax positions on its balance sheet~~$0.25. ~~Included~~In inFebruary ~~any~~2009 ~~liability~~we ~~for~~repaid ~~uncertain tax positions,~~ the ~~Company~~principal ~~will~~and ~~also record a liability for~~ interest ~~and~~ ~~penalties. The~~in ~~Company’s~~full ~~policy is to recognize interest~~ and ~~penalties~~no ~~related~~shares toor ~~uncertain~~warrants ~~tax~~were ~~positions as a component of the current provision for income taxes~~issued.

~~ASC~~On ~~740~~January ~~requires~~15, ~~the~~2009 ~~Company~~we toentered ~~provide a~~into ~~net~~an ~~deferred~~agreement ~~tax~~with ~~asset~~Genovese whereby Genovese and/~~liability~~or ~~equal~~his affiliates (collectively “Genovese”) advanced to the ~~expected~~Company ~~future~~$250,000 ~~tax~~for ~~benefit/expense~~a convertible debenture (“Debenture”) for the aggregate principal amount of ~~temporary~~$250,000. The ~~reporting~~Debenture ~~differences~~was ~~between book~~be non-interest bearing and ~~tax~~matured ~~accounting~~on ~~methods~~December ~~and~~5, ~~any~~2010. At ~~available~~the ~~operating~~holder’s ~~loss~~sole discretion, the holder had the right to elect to convert the Debenture, in whole or ~~tax~~in ~~credit~~part ~~carryforwards. The~~into ~~Company~~common ~~has~~shares ~~available~~of the Company at ~~August~~ 31a conversion price of $0.10 per share. As additional compensation, ~~2011~~Genovese ~~and~~was ~~2010~~issued a share purchase warrant certificate for 2,500,000 anwarrants ~~operating~~with ~~loss~~each ~~carryforward~~warrant ofexercisable ~~approximately~~into one common share at $120.515 ~~million~~per share for a period of three years commencing from the date of the issuance of the warrant certificate. The Company and Genovese further agreed to establish five (5) mutually agreed upon milestones to be attained no later than September 2009 with each milestone generally occurring approximately every forty five (45) days. In conjunction with the attainment of each individual milestone, Genovese agreed to advance to the Company an additional $12250,000.0 ~~million~~In connection with each $250,000 ~~respectively~~advance, ~~which may~~Genovese bewas ~~applied~~issued ~~against~~an ~~future~~additional ~~taxable~~$250,000 ~~income~~Convertible ~~and~~Debenture. ~~which~~The ~~expires~~Debentures inwere ~~various~~non-interest bearing and matured two years ~~through~~from ~~2028~~the date of issuance of each subsequent debenture (“Subsequent Debentures”).

~~The~~At ~~amount~~the ofHolders’ ~~and~~sole ~~ultimate~~discretion, ~~realization~~the ofHolder had the ~~benefits~~ ~~from~~right ~~the~~to ~~operating~~elect ~~loss~~to ~~carryforwards~~convert ~~for~~the ~~income~~Subsequent ~~tax~~Debentures, ~~purposes~~in iswhole ~~dependent,~~or in part, ~~upon~~at ~~the~~any ~~tax~~time ~~laws~~prior into ~~effect~~maturity, ~~the future~~into ~~earnings~~common shares of the Company at a conversion price of $0.10 per share. As additional compensation, ~~and~~Genovese ~~other~~was ~~future~~issued ~~events~~a share purchase warrant certificate for 2,500,000 ~~the~~warrants ~~effects~~with ofeach ~~which~~warrant ~~cannot~~exercisable beinto ~~determined~~one common share at $0. ~~Because~~15 per share for a period of ~~the~~three ~~uncertainty surrounding~~years commencing from the ~~realization~~date of the ~~loss~~issuance ~~carryforwards,~~of the ~~Company~~warrant ~~has~~certificate ~~established~~for aeach ~~valuation~~Subsequent ~~allowance~~Debenture ~~equal~~issued. toWe further agreed that (1) Genovese would be granted the ~~tax~~right ~~effect~~ of ~~the~~first ~~loss~~refusal/ ~~carryforwards~~right ~~and,~~of ~~therefore,~~participation noin ~~deferred~~connection ~~tax~~with ~~asset~~any ~~has~~additional ~~been~~financing ~~recognized~~of the Company for ~~the~~two ~~loss~~(2) ~~carryforwards. The~~years, ~~net~~(2) ~~deferred tax~~Genovese ~~asset~~would isbe ~~approximately~~entitled $4to two board seats,~~250,000~~ as(3) ofwe ~~August~~would ~~31,~~obtain ~~2011~~directors and officers insurance, and $(4~~,093,000~~) asthe ofparties ~~August~~would ~~31,~~work ~~2010,~~together ~~with~~commencing ~~offsetting~~December ~~valuation~~2008 ~~allowances of~~to ~~the~~address ~~same~~other matters. The Debenture was subsequently amended for an aggregate principal amount of $545,000.

~~Substantial~~Additional ~~changes~~Debentures infor ~~the~~$455,000, ~~company’s ownership~~$250,000, ~~have~~and ~~occurred~~$50,000 and ~~therefore~~$195,000 ~~there~~were isissued anduring ~~annual~~the ~~limitation~~year ofended August 31, 2009. In April 2009, the amount of ~~Parent’s~~convertible ~~pre-acquisition~~debentures ~~net~~available ~~operating loss~~to ~~carryforward~~be ~~which~~issued ~~can~~was beincreased ~~utilized~~by $255,000 for an aggregate of $1,750,000. ~~Accordingly~~ As of August 31, ~~only~~2009 a total of $1,750,000 had been issued as Debentures. On September 25, 2009 all of the ~~post-acquisition~~$1,750,000 ~~net~~of ~~operating~~debentures ~~loss~~were ~~carryforward~~converted ~~has~~into 17,500,000 common shares and 17,500,000 share purchase warrants exercisable at $0.15 per share remain unexercised, respective exercise periods thereof having been ~~included~~ extended for ~~Parent~~an additional year from the original expiration dates.

~~The~~In ~~reconciliation~~May of2009, ~~the~~we ~~provision~~entered ~~(benefit) for~~into ~~income~~a ~~taxes~~subscription ~~computed~~agreement atwith ~~the~~Robert ~~U.S.~~Kolson, ~~federal~~pursuant ~~statutory~~to ~~rate~~which toMr. ~~the~~Kolson ~~Company’s~~purchased ~~effective~~75,000 ~~tax~~shares ~~rate~~of ~~for~~our ~~the~~common ~~years~~stock ~~ended~~and ~~August 31~~37,500 ~~2011~~warrants ~~and~~with ~~2010~~an isexercise asprice ~~follows:~~of $3.00 for $150,000.

		2011			2010
Federal benefit at Statutory rate	$	181,000		$	1,050,000
State income tax, net of federal benefit		11,000			69,000
Unused net operating losses		(192,000	)		(1,119,000	)
Provision (Benefit) for income taxes		$____-		$	—

On October 30, 2009 we entered into a subscription agreement with Janspec Holdings Limited ("Janspec"), pursuant to which Janspec purchased 428,572 common shares and 428,572 warrants with an exercise price of $0.60 for $150,000.

~~The~~On ~~Company~~November ~~has~~7, ~~not~~2009 ~~made~~we ~~provision~~entered ~~for~~into ~~income taxes~~a insubscription ~~the~~agreement ~~years~~with ~~ended~~Peninsula ~~August~~Merchant 31Syndications Corp. ("Peninsula"), ~~2011~~pursuant ~~and~~to ~~2010,~~which ~~respectively~~Peninsula purchased 285,715 ~~since~~shares ~~the~~of ~~Company~~our ~~has~~common ~~the~~stock ~~benefit~~and of285,715 ~~net~~warrants ~~operating~~with ~~losses~~an ~~carried forward~~exercise inprice ~~these~~of ~~periods~~$0.60 for $100,000.

~~NOTE~~On ~~10 –~~November ~~COMMITMENTS~~13, ~~AND~~2009 ~~CONTINGENCIES~~we entered into a subscription agreement with Robert Kolson, pursuant to which Mr. Kolson purchased 285,715 shares of our common stock and 285,715 warrants with an exercise price of $0.60 for $100,000.

~~Consulting Agreement~~-29-

~~Effective~~Table ~~September 1, 2010, the Company entered into a consulting agreement with, L.A. Dreamline II, LLC, a marketing consultant (a related party), for a monthly consulting fee~~ of ~~$15,000. The consulting agreement is for a term of 25 months. For the year ended August 31, 2011, the Company paid the related party $180,000.~~Contents

~~Effective~~During ~~May~~the 1,year ~~2010~~ended weAugust ~~have~~31, ~~entered~~2012, ~~into~~the aCompany ~~month-to-month~~issued ~~lease~~400, ~~providing~~000 ~~for~~warrants ain ~~monthly~~connection ~~rental~~with the sales of ~~$3,500~~common ~~for~~stock ~~our~~and ~~executive~~conversion ~~office.~~of ~~Rent~~debt ~~expense,~~into ~~including~~common ~~executory~~stock. The ~~costs,~~fair ~~for~~value of the ~~years~~warrants ~~ended August~~in ~~31,~~connection ~~2011~~with ~~and~~the ~~2010~~allocation ~~was~~of ~~$48,412~~sale and conversion was $~~158~~64,~~658, respectively~~200.

	Warrants		Weighted Average Exercise Price
Outstanding, September 1, 2008		100,000	$	2.00
Granted		17,500,000		0.15
Expired/Cancelled		-		-
Exercised		-		-
Granted		37,500		3.00
Outstanding, year ended August 31, 2009		17,637,500		0.17
Expired/Cancelled		-		-
Exercised		-		-
Granted		1,000,002		0.60
Outstanding, year ended August 31, 2010		18,637,502		0.19
Granted		14,440,625		0.20
Expired/Cancelled		(37,500)		3.00

Outstanding, September 1, 2011		33,040,627	$	0.19

Granted		400,000	$	0.25

Expired/Cancelled		(1,000,002)	$	0.60

Exercised

Outstanding, period ended August 31, 2012		32,440,625	$	0.18

Exercisable, period ended August 31, 2012		32,440,625	$	0.18

NOTE 11 – LEGAL PROCEEDINGS

	Warrants Outstanding						Warrants Exercisable
Year	Exercise Price		Number of Warrants Issued		Weighted Average Contractual Life (Years)		Number Exercisable		Weighted Average Exercise Price
2008	$	2.00		100,000		0.65		100,000		2.00
2009		0.15		*10,000,000		0.42		10,000,000		0.15
2009		0.15		*2,500,000		0.48		2,500,000		0.15
2009		0.15		*500,000		0.50		500,000		0.15
2009		0.15		*1,700,000		0.64		1,700,000		0.15
2009		0.15		*150,000		0.66		150,000		0.15
2009		0.15		*50,000		0.68		50,000		0.15
2009		0.15		*50,000		0.70		50,000		0.15
2009		0.15		*500,000		0.97		500,000		0.15
2009		0.15		*2,050,000		0.97		2,050,000		0.15
2011		0.30		6,600,625		3.25		6,600,625		0.30
2011		0.30		500,000		3.35		500,000		0.30
2011		0.10		6,840,000		3.75		6,840,000		0.10
2011		0.10		500,000		3.86		500,000		0.10
2012		0.25		400,000		4.21		400,000		0.25
Total				32,440,625				32,440,625

~~We are party to the following litigation matters.~~-30-

~~Stride~~Table ~~& Associates. We are a defendant in a suit filed September 2, 2009 by Stride & Associates, Inc. in the Superior Court~~ of California, Los Angeles Superior Court-North Central District, for the amount of $19,500, plus interest, for services allegedly rendered by the plaintiff to the Company in connection with personnel placement. The plaintiff has filed a judgment in the amount of $21,620 against us in this litigation, and the Company has accrued the full amount. . We intend to settle this matter.Contents

~~NOTE~~As 12of –August ~~SUBSEQUENT~~31, ~~EVENTS~~2012, 1,000,002 of the Company's warrants issued and outstanding as of August 31, 2011 have expired.

On* ~~November~~The 2217,500,000 ~~2011~~warrants (“2009 Warrants”) issued in conjunction with the 2009 Convertible Debentures contain an anti-dilution provision that states it is specifically agreed that in the event that the Company ~~issued~~shall reduce the number of outstanding shares at of Common Stock by combining such shares into a ~~purchase~~smaller ~~price~~number of shares, then, in such case, the then applicable Exercise Price per ~~share~~Warrant Share purchasable pursuant to the Warrant Certificate in effect at the time of $0such action will not be changed.~~075~~ asOn ~~follows:~~January 30, 2012, the Company extended respective exercise dates of the 2009 Warrants for one additional year from their original expiry dates.

The following table sets forth common stock equivalents (1potential common stock) ~~2,666,667~~ ~~shares~~for ~~were~~the ~~issued~~years toended anAugust ~~investor~~31, ~~for~~2012 anand ~~aggregate~~2011 ~~investment~~that are not included in the ~~Company~~loss ~~of $200,000;~~per share calculation above because their effect would be anti-dilutive for the periods indicated:

(2) 7,933,333 shares were issued to Clayoquot Wilderness Resort, company owned by Richard Genovese in conversion of $595,000 principal amount of debt held. Subsequent to year end, Genovese advanced the Company $265,000.

	For the Years Ended August 31,
	2012		2011
Plan Stock Options		-0-		25,000
Warrants		32,440,625		33,040,627
Convertible notes		-		-

OnNOTE ~~December~~10 5,- ~~2011,~~INCOME ~~the Company issued 400,000 shares to an investor at a per share purchase price of $0.25 for an investment of $100,000.~~TAXES

~~Effective~~The ~~December~~Company 7followed the provisions of ASC 740, ~~2011~~“Income Taxes” (“ASC 740”). As a result of the implementation of ASC 740, the Company ~~filed an~~recognized ~~amendment~~no toadjustment ~~its~~in ~~Articles~~the ofnet ~~Incorporation~~liability ~~(1)~~for tounrecognized ~~increase~~income ~~our~~tax ~~authorized~~benefits. The ~~Common~~Company ~~Stock~~believes ~~from~~there ~~90,000,000~~are ~~shares~~no topotential ~~1,000,000,000 shares~~uncertain ~~and~~tax ~~(2)~~positions toand ~~authorize~~all atax ~~new~~returns ~~class~~are ofcorrect ~~10,000,000~~as ~~shares~~filed. Should ofthe ~~Preferred~~Company ~~Stock~~recognize ~~with~~a ~~authority~~liability for ~~our~~uncertain ~~Board~~tax ofpositions; ~~Directors~~the toCompany ~~issue one~~will orseparately ~~more~~recognize ~~series~~the ofliability ~~the~~for ~~preferred~~uncertain ~~stock~~tax ~~with~~positions ~~such~~on ~~designations,~~its ~~rights,~~balance ~~preferences,~~sheet. Included ~~limitations~~in ~~and/or~~any ~~restrictions~~liability asfor ituncertain ~~should determine~~tax bypositions, ~~vote~~the ofCompany will also record a ~~majority~~liability offor ~~such~~interest ~~directors~~and penalties. The AsCompany’s ofpolicy ~~December~~is 9,to ~~2011,~~recognize nointerest ~~shares~~and penalties related to uncertain tax positions as a component of ~~preferred~~the ~~stock~~current ~~have~~provision ~~been~~for ~~issued~~income taxes.

37 Substantial changes in the Company’s ownership have occurred, and therefore there is an annual limitation of the amount of Parent’s pre-acquisition net operating loss carryforward which can be utilized. Accordingly, only the post-acquisition net operating loss carryforward has been included for Parent.

~~Item~~The 9reconciliation of the provision (benefit) for income taxes computed at the U.S. ~~Changes~~federal Instatutory ~~and~~rate ~~Disagreements~~to ~~With~~the ~~Accountants~~Company’s oneffective ~~Accounting~~tax rate for the years ended August 31, 2012 and ~~Financial~~2011 ~~Disclosure.~~is as follows:

None.

	2012			2011
Federal benefit at Statutory rate	$	574,000		$	181,000
State income tax, net of federal benefit		34,000			11,000
Unused net operating losses		(608,000	)		(192,000	)

Provision (Benefit) for income taxes	$____-			$	-

~~Item~~The ~~9A.~~Company ~~Controls~~has not made provision for income taxes in the year ended August 31, 2012 and ~~Procedures~~2011, respectively, since the Company has the benefit of net operating losses carried forward in these periods.

As supervised by our board of directors and our Chief Executive Officer and Chief Financial Officer, management has established a system of disclosure controls and procedures and has evaluated the effectiveness of that system. The system and its evaluation are reported on in the below Management’s Annual Report on Internal Control over Financial Reporting. Our chief executive and financial officer has concluded that our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (“Exchange Act”) Rule 13a-~~15(e)) as of August~~ 31~~, 2011, are effective.~~-

~~Management’s~~Table ~~Annual~~of ~~Report on Internal Control over Financial Reporting~~Contents

~~Management~~NOTE is11 responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Management assessed the effectiveness of internal control over financial reporting as of August 31, 2011. We carried out this assessment using the criteria of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control–~~Integrated Framework.~~ ~~Management~~COMMITMENTS ~~concluded~~AND ~~in this assessment that as of August 31, 2011, our internal control over financial reporting was effective.~~CONTINGENCIES

~~This~~Consulting annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm, pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.Agreement

~~There~~Effective ~~have~~September ~~been~~1, no2010, ~~significant~~the ~~changes~~Company inentered ~~our~~into ~~internal~~a ~~control over~~consulting ~~financial~~agreement ~~reporting~~with, ~~(as~~L.A. ~~defined~~Dreamline inII, ~~Rules~~LLC, ~~13a-15(f)~~a ~~and~~marketing ~~15d-15~~consultant (fa related party), ~~under~~for ~~the~~a ~~Exchange~~monthly ~~Act)~~consulting ~~during~~fee ~~the~~of ~~fourth~~$15,000. The ~~quarter~~consulting agreement is for a term of ~~our 2011~~25 ~~fiscal~~months. For the year ~~that~~ended ~~have~~August ~~materially affected~~31, or2012 ~~are~~and ~~reasonably~~2011, ~~likely~~the toCompany ~~materially~~paid ~~affect,~~the ~~our~~related ~~internal~~party ~~control~~$180,000 ~~over~~and ~~financial reporting~~$180,000, respectively.

~~Item 9B. Other Information.~~Lease

~~The~~Effective ~~following~~May ~~corporate~~1, ~~events~~2010 ~~are~~we ~~reported~~have ~~under~~entered ~~this~~into ~~Item by~~a ~~the~~month-to-month ~~Company~~lease, inproviding ~~lieu~~for a monthly rental of ~~reporting~~$3,500 ~~such~~for ~~events~~our inexecutive aoffice. Rent ~~separate~~expense, ~~Current~~including ~~Report~~executory oncosts, ~~Form~~for ~~8-K~~the ~~filing~~years ~~[Item~~ended ~~references~~August ~~are~~31, to2012 ~~Form~~and ~~8-K Items]:~~2011 was $78,820 and $48,412, respectively.

~~Item~~NOTE ~~3.02.~~12 ~~Unregistered~~– ~~Sales~~LEGAL ~~of Equity Securities.~~PROCEEDINGS

~~The~~We ~~following~~are ~~table~~party ~~sets~~to ~~forth~~ the ~~sales~~following ~~of unregistered~~litigation ~~securities since the Company’s last report filed under this item~~matter.

Date	Title and Amount (1)	Purchaser	Principal Underwriter	Total Offering Price/Underwriting Discounts
December 5, 2011	400,000 shares of common stock, together with warrants expiring November 29, 2014 to purchase 400,000 shares of common stock at an exercise price of $.25 per share.	Private investor.	NA	$.25 per share/NA

Stride & Associates. We are a defendant in a suit filed September 2, 2009 by Stride & Associates, Inc. in the Superior Court of California, Los Angeles Superior Court-North Central District, for the amount of $19,500, plus interest, for services allegedly rendered by the plaintiff to the Company in connection with personnel placement. The plaintiff has filed a judgment in the amount of $21,620 against us in this litigation, and the Company has accrued the full amount. We intend to settle this matter.

~~(1) The~~NOTE ~~issuances~~13 to– ~~private~~SUBSEQUENT investors are viewed by the Company as exempt from registration under the Securities Act of 1933, as amended (“Securities Act”), alternatively, as transactions either not involving any public offering, or as exempt under the provisions of either Regulation D or Regulation S promulgated by the SEC under the Securities Act.EVENTS

~~Item~~On ~~5.03.~~September ~~Amendments~~7, 2012 the Company issued 6,610,000 shares to ~~Articles~~Richard Genovese in conversion of ~~Incorporation~~$661,000 orprincipal ~~By-Laws; Change~~amount inof ~~Fiscal~~debt ~~Year~~held.

~~Amendment~~On ofOctober ~~our~~16, ~~Articles~~2012 ofthe ~~Incorporation~~Company issued 5,714,286 shares to ~~Increase~~JANST ~~our Authorized~~Limited ~~Common~~at ~~Stock~~a share purchase price of $0.07 for an investment of $400,000.

Our board of directors unanimously approved an amendment to our Articles of Incorporation to increase the authorized number of shares of common stock from 90,000,000 shares, par value $.00001 per share, to 1,000,000,000 shares, par value $.00001 per share, and to authorize a new class of 10,000,000 shares of preferred stock, par value $.00001 per share, on October 18, 2011. On the same date we received the written consent from two shareholders of our company holding a majority (67.23%) of the outstanding shares of our common stock. We filed the amendment with the Secretary of State of Nevada on December 7, 2011, after mailing a Definitive Information Statement to our stockholders, and the amendment was effective December 7, 2011.-32-

38Table of Contents

~~PART~~Item ~~III~~9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

~~Item 10. Directors, Executive Officers, and Corporate Governance.~~None

~~DIRECTORS~~Item ~~AND~~9A. Controls ~~EXECUTIVE~~and ~~OFFICERS~~ Procedures

As supervised by our board of directors and our Chief Executive Officer and Chief Financial Officer, management has established a system of disclosure controls and procedures and has evaluated the ~~date~~effectiveness of ~~this~~that ~~report,~~system. ~~our~~The system and its evaluation are reported on in the below Management’s Annual Report on Internal Control over Financial Reporting. Our chief executive ~~officers~~and financial officer has concluded that our disclosure controls and ~~directors~~ ~~are~~procedures (as ~~follows:~~defined in the Securities Exchange Act of 1934 (“Exchange Act”) Rule 13a-15(e)) as of August 31, 2012, are effective.

			Held
Name	Age	Title	Position Since
Robert Rosner	47	President and Chief Executive Officer, Chief Financial Officer and Director	President and Chief Executive Officer – March 2010 Director – May 2010
Bruce Schmidt	59	Secretary, Treasurer, Director	Director - September 2006 Secretary & Treasurer-April 2009
Richard Genovese	58	Director	June 2009
Frank Anderson	53	Director	June 2009

Management’s Annual Report on Internal Control over Financial Reporting

~~Robert~~Management ~~Rosner~~is responsible for establishing and maintaining adequate internal control over financial reporting, ~~President~~as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Management assessed the effectiveness of internal control over financial reporting as of August 31, ~~Chief~~2012. ~~Executive Officer~~We carried out this assessment using the criteria of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control–Integrated Framework. Management concluded in this assessment that as of August 31, ~~Chief~~2012, ~~Financial~~our ~~Officer~~internal ~~and~~control ~~Director~~over financial reporting was effective.

~~Robert~~This ~~Rosner,~~annual ~~46,~~report ~~has~~does ~~served~~not asinclude ~~the~~an ~~Chairman~~attestation ~~and~~report ~~Chief Executive Officer~~ of ~~Watair~~our ~~Inc.~~registered ~~(OTC~~public ~~“WTAR”)~~accounting ~~since~~firm ~~August~~regarding ~~2005,~~internal ~~and~~control ~~was~~over ~~reappointed~~financial ~~as President in January 2008~~reporting. ~~Formerly~~ heManagement’s report was ~~President~~not ~~from~~subject ~~August 2005~~ to ~~April~~attestation ~~2007.~~by ~~Mr. Rosner~~our ~~also~~registered ~~currently~~public ~~serves~~accounting ~~as Corporate Secretary of Watair Inc.~~firm, ~~having~~pursuant ~~been appointed~~ to ~~this~~rules ~~position~~of ~~in March 2007. During his tenure with Watair, he was also~~ the ~~Vice~~Securities ~~President of Regulatory Affairs~~ and ~~Compliance~~Exchange ~~and~~Commission ~~Corporate~~that ~~Secretary~~permit ~~from~~us ~~August~~to ~~2003~~provide ~~until~~only ~~August~~management’s ~~2005.~~report ~~Watair is based out of Beverly Hills, CA and engages~~ in ~~the~~this ~~manufacture,~~annual ~~marketing, and distribution of commercial and home/office atmospheric water generation machines~~report.

~~Mr. Rosner~~There ~~has~~have ~~held~~been ~~Directorships~~no ~~with~~significant ~~Watair~~changes ~~from~~in ~~August 2003~~our tointernal ~~the~~control ~~current~~over ~~date~~financial reporting (as defined in Rules 13a-15(f) and he15d-15(f) ~~has~~under ~~also~~the ~~served~~Exchange asAct) ~~President~~during ~~and~~the ~~director~~fourth quarter of ~~Fortuna~~our ~~Silver~~2012 ~~Mines~~fiscal ~~Inc.,~~year athat ~~company~~have ~~listed~~materially onaffected, ~~the TSX~~or ~~(“FVI”)~~are ~~and~~reasonably ~~OTC~~likely BBto ~~(“FVITF”)~~materially affect, ~~from~~our ~~June~~internal ~~1996~~control toover ~~January~~financial ~~2005~~reporting.

~~Bruce~~Item ~~Schmidt,~~9B. Other ~~Secretary, Treasurer &~~Information ~~Director~~

Bruce Schmidt brings over three decades of strategic planning and management consulting experience to the Company. With a background in physics and education from the University of British Columbia, he is acting or has acted as a consultant and has served on the Board of Directors for a variety of Canadian biotech/hightech and venture capital companies including: Carrus Capital Corp as CEO and Director, Greenangel Energy as CFO and Director, Prescient Neuropharma Inc. as President, CEO and Director; Alda Pharmaceuticals Corp. as Director; Biophage Pharma Inc. as Corporate Secretary and Director; Strategic Merchant Bancorp, Ltd as a Director; VP Media Group Ltd. as Director and Aitchison Capital, Inc. as a Director. Mr. Schmidt has also been involved with a number of non-profit Canadian organizations including: the Canadian Networks of Centers of Excellence, the Canadian Healthcare Licensing Association, the British Columbia Biotechnology Alliance (BC Biotech), B.C. Nanotechnology Alliance, and British Columbia’s Integrated Technology Initiative.None

~~Richard Genovese, Director~~ -33-

~~Mr. Genovese~~Table ~~has been the president and sole director~~ of Connect Capital Ltd. since the incorporation of Connect Capital in 2004. Connect Capital Ltd., a private corporation in Vancouver, British Columbia, Canada, specializes in financial and management advisory services to both public and private companies. Since 2005, Mr. Genovese has been the president of Clayoquot Wilderness Resort, Ltd., a world renowned luxurious eco-resort located in the Clayoquot Biosphere Reserve on British Columbia’s Vancouver Island.Contents

~~Frank~~PART ~~Anderson, Director~~ III

~~Frank~~Item ~~Anderson has been the managing director of Connect Capital Ltd~~10. ~~since 2006. From 2000 to 2006~~ Directors, ~~Mr. Anderson~~Executive ~~was a director~~Officers, ~~secretary~~ and ~~treasurer~~Corporate ~~of Sporg Corporation~~Governance which is an internet registration services business. From 1982 to 1999, Mr. Anderson was an investment advisor with Canaccord Capital Corp., Canada’s largest investment firm. Mr. Anderson has successfully completed the Canadian Securities Course.

39DIRECTORS AND EXECUTIVE OFFICERS

~~Involvement~~As inof ~~Certain~~the ~~Legal~~date ~~Proceedings~~of this report, our executive officers and directors are as follows:

None of the following events occurred during the past five years that is material to an evaluation of the ability or integrity of any director, person nominated to become a director, executive officer, promoter or control person:

Name	Age	Title	Held Position Since
Robert Rosner	48	President and Chief Executive Officer, Chief Financial Officer and Director	President and Chief Executive Officer – March 2010 Director – May 2010
Bruce Schmidt	58	Secretary, Treasurer, Director	Director - September 2006 Secretary & Treasurer-April 2009
Richard Genovese	59	Director	June 2009
Frank Anderson	54	Director	June 2009

~~(i) Any~~Robert ~~bankruptcy~~Rosner, ~~petition~~President, ~~filed~~Chief byExecutive orOfficer, ~~against~~Chief ~~any~~Financial ~~business of~~Officer ~~which~~and ~~such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;~~Director

Robert Rosner, 46, was appointed as our acting President, Chief Executive Officer and Chief Financial Officer effective March 27, 2010, and was elected to our Board of Directors on May 24, 2010. Mr. Rosner has served as the Chairman and Chief Executive Officer of Watair Inc. (iiOTC “WTAR”) ~~Any~~ ~~conviction~~since August 2005, and was reappointed as President in aJanuary ~~criminal~~2008. ~~proceeding~~Formerly orhe ~~being subject~~was President from August 2005 to aApril ~~pending~~2007. ~~criminal~~Mr. Rosner ~~proceeding~~also ~~(excluding~~currently ~~traffic~~serves ~~violations~~as Corporate Secretary of Watair Inc., having been appointed to this position in March 2007. During his tenure with Watair, he was also the Vice President of Regulatory Affairs and ~~other~~Compliance ~~minor~~and ~~offenses);~~Corporate Secretary from August 2003 until August 2005. Watair engages in the manufacture, marketing, and distribution of commercial and home/office atmospheric water generation machines.

~~(iii)~~Mr. ~~Being~~Rosner ~~subject~~has toheld ~~any~~Directorships ~~order,~~with ~~judgment,~~Watair orfrom ~~decree, not~~August ~~subsequently~~2003 ~~reversed,~~to ~~suspended~~the orcurrent ~~vacated,~~date ofand ~~any~~he ~~court~~has ofalso ~~competent~~served ~~jurisdiction,~~as ~~permanently~~President orand ~~temporarily~~director ~~enjoining~~of Fortuna Silver Mines Inc., ~~barring,~~ ~~suspending~~a orcompany ~~otherwise~~listed ~~limiting~~on ~~his~~the ~~involvement~~TSX in(“FVI”) ~~any~~and ~~type~~OTC ofBB ~~business~~(“FVITF”), ~~securities~~from orJune ~~banking~~1996 ~~activities;~~to orJanuary 2005.

~~(iv) Being~~Bruce ~~found by a court of competent jurisdiction (in a civil action)~~Schmidt, ~~the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law~~Secretary, ~~and~~Treasurer & ~~the judgment has not been reversed, suspended, or vacated.~~Director

Bruce Schmidt brings over twenty-seven years of strategic planning and management consulting experience to the Company. With a background in physics and education from the University of British Columbia, he has acted as a consultant and has served on the Board of Directors for a variety of Canadian biotech/hightech and venture capital companies from 1992 through 2005 including: Prescient Neuropharma Inc. (TSX- “PNO”) as President, Chief Executive Officer and Director; Alda Pharmaceuticals Corp. (TSX-“APH”) as Director; Biophage Pharma Inc. (TSX-“BUG”) as Corporate ~~Governance~~Secretary and Director; Strategic Merchant Bancorp, Ltd (TSX-“SMB”) as a Director; VP Media Group Ltd. (TSX- “DVD.H”) as Director and Aitchison Capital, Inc. (TSX-“TTI”) as a Director. Mr. Schmidt has also been involved with a number of non-profit Canadian organizations including: the Canadian Networks of Centers of Excellence, the Canadian Healthcare Licensing Association, the British Columbia Biotechnology Alliance (BC Biotech), B.C. Nanotechnology Alliance, British Columbia’s Integrated Technology Initiative and the New Economy and Adoption of Technologies Group of the British Columbia Securities Commission. Since May of 1996, Mr. Schmidt has been working as a Life-Sciences Management consultant under his own consulting company, RJS Management in Vancouver, BC. RJS Management provides executive counsel to hightech/biotech companies in the areas of business strategy, marketing and strategic partnering.

~~Directors~~Richard are elected at the annual stockholder meeting or appointed by our Board of Directors and serve for one year or until their successors are elected and qualified. When a new director is appointed to fill a vacancy created by an increase in the number of directorsGenovese, that director holds office until the next election of one or more directors by stockholders. Officers are appointed by our Board of Directors and their terms of office are at the discretion of our Board of Directors.Director

~~Committees~~Mr. Genovese has been the president and sole director of ~~our~~Connect ~~Board~~Capital Ltd. since the incorporation of ~~Directors~~Connect Capital in 2004. Connect Capital Ltd., a private corporation in Vancouver, British Columbia, Canada, specializes in financial and management advisory services to both public and private companies. Since 2005, Mr. Genovese has been the president of Clayoquot Wilderness Resort, Ltd., a world renowned luxurious eco-resort located in the Clayoquot Biosphere Reserve on British Columbia’s Vancouver Island.

~~Audit~~Frank ~~Committee. Our Board of Directors plans to establish an Audit Committee~~Anderson, the members of which shall be considered as independent under the standards for independence for audit committee members established by the NYSE. The Audit Committee will operate under a written charter.Director

~~Other~~Frank ~~Committees.~~Anderson ~~The~~has ~~Board~~been ~~does~~the ~~not~~managing ~~have~~director ~~standing compensation~~of orConnect ~~nominating~~Capital ~~committees~~Ltd. ~~The~~since ~~Board~~2006. From ~~does~~2000 ~~not~~to ~~believe~~2006, aMr. Anderson ~~compensation~~was ora ~~nominating~~director, ~~committee~~secretary isand ~~necessary~~treasurer ~~based~~of ~~on the~~Sporg ~~size~~Corporation ofwhich ~~the~~is ~~Company,~~an ~~the~~internet ~~current~~registration ~~levels~~services ofbusiness. From ~~compensation~~1982 to ~~corporate~~1999, ~~officers~~Mr. Anderson ~~and~~was ~~the~~an ~~beneficial~~investment ~~ownership~~advisor bywith ~~Richard~~Canaccord ~~Genovese of~~Capital inCorp., ~~excess of 50% of the Company~~Canada’s ~~outstanding~~largest ~~common~~investment ~~stock~~firm. Mr. ~~The~~Anderson ~~Board~~has ~~will~~successfully ~~consider~~completed ~~establishing compensation and nominating committees at~~ the ~~appropriate~~Canadian ~~time~~Securities Course.

~~Stockholder Communications~~ -34-

~~The~~Table ~~Board has not established a formal process for stockholders to send communications, including director nominations, to the Board; however, the names~~ of all directors are available to stockholders in this report. Any stockholder may send a communication to any member of the Board of Directors, in care of the Company, at 644-1812 West Burbank Blvd., Burbank, CA 91506 (Attention: Secretary). Director nominations submitted by a stockholder will be considered by the full Board. Due to the infrequency of stockholder communications to the Board, the Board does not believe that a more formal process is necessary. However, the Board will consider, from time to time, whether adoption of a more formal process for such stockholder communications has become necessary or appropriate.Contents

~~Other~~Involvement ~~Information~~in ~~about~~Certain ~~our~~Legal ~~Board of Directors~~ Proceedings

~~During~~None ~~our~~of ~~fiscal~~the ~~year~~following ~~ended~~events ~~August 31,~~occurred ~~2011,~~during ~~our~~the ~~Board~~ past five years that is material to an evaluation of ~~Directors~~the ~~did~~ability ~~not~~or ~~meet~~integrity of any director, ~~but~~person ~~acted~~nominated byto ~~written~~become ~~consent 9~~a ~~times.~~director, executive officer, promoter or control person:

We(i) Any dobankruptcy ~~not~~petition ~~have~~filed aby ~~formal~~or ~~policy~~against onany ~~attendance~~business atof ~~meetings~~which ~~of our~~such ~~shareholders;~~person ~~however,~~was wea ~~encourage~~general ~~all~~partner ~~Board~~or ~~members~~executive toofficer ~~attend~~either ~~shareholder~~at ~~meetings~~the ~~that~~time ~~are~~of ~~held~~the inbankruptcy ~~conjunction~~or ~~with~~within atwo ~~meeting of~~years ~~our~~prior ~~Board~~to ofthat ~~Directors.~~time;

~~Section 16~~(aii) Any ~~Beneficial~~conviction ~~Ownership~~in ~~Reporting Compliance~~a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

~~Section 16~~(aiii) Being ofsubject ~~the~~to ~~Securities~~any ~~Exchange Act of 1934~~order, as ~~amended~~judgment, ~~requires~~or ~~the~~decree, ~~Company’s~~not ~~directors~~subsequently ~~and executive officers~~reversed, ~~and~~suspended ~~persons~~or ~~who~~vacated, ~~own more than 10%~~ of aany ~~registered~~court ~~class~~ of ~~the~~competent ~~Company’s~~jurisdiction, ~~equity~~permanently ~~securities~~or totemporarily ~~file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of equity securities of the Company. Officers~~enjoining, ~~directors~~barring, ~~and~~suspending ~~greater~~or ~~than~~otherwise ~~10%~~limiting ~~stockholders~~his ~~are~~involvement ~~required to~~in ~~furnish~~any ~~the~~type ~~Company with copies~~ of ~~all Section 16(a) forms they file. Based on the copies of the reports and other written assurances provided to it~~business, ~~the~~securities ~~Company~~or ~~believes~~banking ~~that~~activities; ~~the following reports for our 2010 fiscal year were not filed timely: The following reports were filed late:~~or

40(iv) Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

~~Mr. Genovese~~Corporate reported in a February 24, 2010 Form 4 filing (1) the acquisition of 200 shares of common stock purchased on October 25, 2009, and (2) the sale on February 16, 2010 of units comprising 1,000,000 shares of common stock and warrants to purchase 1,000,000 shares of common stock. In a July 28, 2010 Form 4 filing, Mr. Genovese reported purchases of 25,108 and 60,000 shares of common stock on July 19 and July 21, 2010, respectively, and in an August 31, 2010 Form 4 filing reported the purchase on August 4, 2010 of 5,000 shares of common stock.Governance

~~Code~~Directors are elected at the annual stockholder meeting or appointed by our Board of ~~Ethics~~Directors and serve for one year or until their successors are elected and qualified. When a new director is appointed to fill a vacancy created by an increase in the number of directors, that director holds office until the next election of one or more directors by stockholders. Officers are appointed by our Board of Directors and their terms of office are at the discretion of our Board of Directors.

OnCommittees ~~March 3,~~of ~~2009~~our ~~the Company’s~~ Board of Directors adopted an amended and restated Code of Ethics for the Company. A copy of the Company’s amended Code of Ethics was filed as an Exhibit to Form 8-K filed on March 4, 2009 and will be found posted on the Company’s website at www.en2go.com. Upon written request to the Secretary of the Company a copy will be provided to any stockholder.

~~Item~~Audit 11Committee. ~~Executive~~Our ~~Compensation~~Board of Directors plans to establish an Audit Committee, the members of which shall be considered as independent under the standards for independence for audit committee members established by the NYSE. The Audit Committee will operate under a written charter.

~~SUMMARY~~Other ~~COMPENSATION~~Committees. ~~TABLE~~The Board does not have standing compensation or nominating committees. The Board does not believe a compensation or nominating committee is necessary based on the size of the Company, the current levels of compensation to corporate officers and the beneficial ownership by Richard Genovese of in excess of 50% of the Company’s outstanding common stock. The Board will consider establishing compensation and nominating committees at the appropriate time.

~~The~~Stockholder table below summarizes all compensation awarded to, earned by, or paid to our executive officers as at August 31, 2010 for all services rendered in all capacities to us during the last three completed fiscal years.Communications

Name and Principal Position	Fiscal Year	Salary	Bonus	Stock Awards	Option Awards	Non-Equity Incentive Plan Compensation	Non- Qualified Deferred Compensation Earnings	All Other Compensation	Total
Robert Rosner (3)	2011							$ 25,000	$ 25,000
	2010								-0-
Paul E. Fishkin, President CFO and Director (1)	2010 2009	$ 8,000 153,750	— —	— —		— —	— —	— —	$ 8,000 153,750
Bruce Schmidt, Secretary Treasurer and Director. Former President, CEO and CFO (2)	2009	$ —	—	—	$ 115,739	—	—	—	$ 115,739
Tolga F. Katas, Chief Technology Officer	2010 2009	$ 191,000 298,500	$ 50,000 —	— —	— $ 1,183,093	— —	— —	— —	$ 241,000 1,481,593
Ted Cohen, Chief Strategic Officer and Director (3)	-0- 2009	$ -0- 105,000	— —	— —		— —	— —	— —	$ 105,000

The Board has not established a formal process for stockholders to send communications, including director nominations, to the Board; however, the names of all directors are available to stockholders in this report. Any stockholder may send a communication to any member of the Board of Directors, in care of the Company, at 644-1812 West Burbank Blvd., Burbank, CA 91506 (Attention: Secretary). Director nominations submitted by a stockholder will be considered by the full Board. Due to the infrequency of stockholder communications to the Board, the Board does not believe that a more formal process is necessary. However, the Board will consider, from time to time, whether adoption of a more formal process for such stockholder communications has become necessary or appropriate.

~~(1) Mr. Fishkin became~~Other anInformation ~~executive~~about ~~officer~~our ofBoard ~~the Company in July 2007 at the time~~ of ~~the En2Go Nevada acquisition, and resigned as an officer of the Company on March 26, 2010.~~Directors

~~(2) Mr. Schmidt~~During ~~resigned from~~our ~~all~~fiscal ~~officer~~year ~~positions~~ended ~~with~~August 31, ~~the~~2012, ~~Company~~our inBoard ~~July 2007 at the time~~ of ~~the~~Directors ~~En2Go Nevada acquisition but remained as a Director. Mr. Schmidt~~ did not ~~receive~~meet, ~~any~~but ~~compensation~~acted ~~for~~by ~~his~~written ~~services~~consent atnine ~~that time~~times. He was appointed secretary and treasurer of the Company in April 2009. Mr. Schmidt was granted stock options in 2008 and 2009 as compensation for his services performed as Chair of the Audit Committee and Chair of the Compensation Committee.

~~(3) Mr. Rosner~~We ~~was~~do ~~appointed Chief~~not ~~Executive~~have ~~Officer~~a ~~and~~formal ~~Chief~~policy ~~Financial~~on ~~Officer~~attendance onat ~~March 27~~meetings of our shareholders; however, ~~2010~~we encourage all Board members to attend shareholder meetings that are held in conjunction with a meeting of our Board of Directors.

41-35-

~~Stock~~Table ~~Options~~of Contents

~~2007~~Section 16(a) ~~Stock~~Beneficial ~~Plan~~Ownership Reporting Compliance

~~During~~Section 16(a) ~~November,~~of ~~2007~~ the ~~Board~~Securities ofExchange ~~Directors~~Act of 1934, as amended, requires the Company ~~adopted~~’s directors and ~~the~~executive ~~stockholders~~officers, atand ~~that~~persons ~~time~~who ~~approved~~own ~~the~~more ~~2007~~than ~~Stock~~10% ~~Plan~~of (“a registered class of the ~~Plan”).~~Company’s ~~The~~equity ~~Plan~~securities ~~provides~~to ~~both~~file ~~for~~with the ~~direct~~ ~~award~~Securities orand ~~sale~~Exchange ofCommission ~~shares~~initial ~~and~~reports ~~for~~of ~~the~~ownership ~~granting~~and reports of ~~options~~changes toin ~~purchase~~ownership ~~shares.~~of ~~Options~~equity ~~granted~~securities ~~under~~of the ~~plan~~Company. ~~may~~Officers, ~~include~~directors, ~~qualified~~ and ~~non-qualified~~greater ~~stock~~than ~~options.~~10% ~~The~~stockholders ~~aggregate~~are ~~number~~required ofto ~~shares~~furnish ~~that~~the ~~may~~Company bewith ~~issued~~copies ~~under~~of ~~the~~all ~~plan~~Section 16(a) ~~shall~~forms ~~not~~they ~~exceed~~file. ~~750,000~~Based ~~shares of~~on ~~common~~the ~~stock,~~copies ~~and~~of ~~are~~the ~~issuable~~reports toand ~~directors,~~other ~~officers,~~written ~~and~~assurances ~~employees~~provided ofto it, the Company. ~~Awards~~believes ~~under~~that the ~~plan~~following ~~will~~reports befor ~~granted~~our ~~as determined~~2012 byfiscal ~~Committees~~year ofwere ~~the~~not ~~Board~~filed oftimely ~~Directors or~~ by ~~the~~Richard ~~Board of Directors.~~Genovese:

~~The~~Mr. ~~options~~Genovese ~~will~~filed ~~expire~~on ~~after~~October 10, ~~years~~2011 ora 5report ~~years~~on ifForm ~~the~~4 ~~option holder~~reporting ~~owns~~a attransaction on ~~least~~October ~~10%~~4, of2011; ~~the~~a ~~common~~transaction ~~stock~~on ofOctober ~~the~~24, ~~Company.~~2011 ~~The~~was ~~exercise~~reported ~~price~~in ofa Form 4 filed on January 20, 2012; transactions on February 7, 2012 were reported in a ~~non-qualified~~Form ~~option~~4 ~~must~~filed beFebruary at13, ~~least~~2012; ~~85% of~~transactions taking place in the ~~market~~period ~~price~~March 28 through April 4, 2012 were reported on a Form 4 filed April 11, 2012; transactions taking place in the ~~date~~period ofApril ~~issue.~~11 ~~The~~through ~~exercise~~June ~~price~~1, of2012 were reported on a ~~qualified~~Form ~~option~~4 ~~must~~filed beJune at27, ~~least~~2012; ~~equal~~transactions totaking place in the ~~market~~period ~~price~~June ~~or 110%~~6 ofthrough ~~the~~June ~~market~~22, ~~price~~2012 were reported on ~~the~~a ~~date~~Form of4 ~~issue~~filed ifJuly 23, 2012; and transactions taking place in the ~~option~~period ~~holder~~July ~~owns~~13 atthrough ~~least~~September ~~10%~~7, of2012 ~~the~~were ~~common~~reported ~~stock~~on ofa ~~the~~Form ~~Company~~4 filed September 14, 2012.

~~Stock~~Code ~~Option~~of ~~Grants~~ Ethics

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