| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|--------------------------------------------------------------------------------------|

|  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------|

| Delaware                                                      |   | 20-1945139                           |
|---------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation ororganization) |   | (I.R.S. Employer Identification No.) |
|                                                          |   |                                 |
| Room 4304, 43/F China Resources Building                      |   | HKSAR                                |
| 26 Harbour Road, Wan Chai                                     |   | (Zip Code)                           |
| Hong Kong  HKSAR                                         |   |                                 |
| (Address of principal executive offices)                      |   |                                 |

| 011-852-2511-0238                                          |
|------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

----

| Large accelerated filer |  ̈                                                      | Accelerated filer         |  ̈ |
|-------------------------|-------------------------------------------------------------|---------------------------|--------|
| Non-accelerated filer   |  ̈ (Do not check if a smaller reporting company)   | Smaller reporting company | x      |

----

----

| USE OF NAMES                                                                                            |   | v      |
|---------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                    |   |   |
| CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS                                               |   | v      |
|                                                                                                    |   |   |
| Part I                                                                                                  |   | 1      |
| Item 1. Business                                                                                        |   | 1      |
| Item 1A. Risk Factors                                                                                   |   | 5      |
| Item 2. Properties                                                                                      |   | 5      |
| Item 3. Legal Proceedings                                                                               |   | 6      |
| Item 4. [Removed and Reserved]                                                                          |   | 6      |
|                                                                                                    |   |   |
| Part II                                                                                                 |   | 6      |
| Item 5. Market For Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |   | 6      |
| Item 6. Selected Financial Data                                                                         |   | 13     |
| Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations     |   | 13     |
| Item 8. Financial Statements and Supplementary Data                                                     |   | 33     |
| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure            |   | 34     |
| Item 9A. Controls and Procedures                                                                        |   | 34     |
| Item 9B. Other Information                                                                              |   | 36     |
|                                                                                                    |   |   |
| Part III                                                                                                |   | 37     |
| Item 10. Directors, Executive Officers, and Corporate Governance                                        |   | 37     |
| Item 11. Executive Compensation                                                                         |   | 40     |
| Item 12. Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters |   | 45     |
| Item 13. Certain Relationships And Related Transactions, and Director independence                      |   | 47     |
| Item 14. Principal Accountant Fees And Services                                                         |   | 51     |
|                                                                                                    |   |   |
| Part IV                                                                                                 |   | 51     |
| Item 15. Exhibits, Financial Statements                                                                 |   | 51     |
|                                                                                                    |   |   |
| SIGNATURES                                                                                              |   | 58     |
| Exhibit Index                                                                                           |   | 59     |

----

| · | dependence on key personnel; |
|--------|------------------------------|

| · | competitive factors; |
|--------|----------------------|

| · | degree of success of research and development programs; |
|--------|---------------------------------------------------------|

| · | the operation of our business; and |
|--------|------------------------------------|

| · | general economic conditions in the United States and China. |
|--------|-------------------------------------------------------------|

----

----

----

|   | 1. | The Company’s President and Chief Executive Officer, who was also general manager of the subsidiaries, resigned his positions with Sinobiomed Inc. but retained management control of the subsidiaries by virtue of his nominee’s status as Chief Representative of the subsidiaries, a legal status in China that is difficult to change without cooperation of the incumbent. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | The debt of the subsidiaries in China exceeded the value of the assets and the prospects for generating sufficient cash flow to repay the debt were doubtful. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Assets of the subsidiaries were subject to seizure order as noted above. |
|--------|----|--------------------------------------------------------------------------|

----

|   | 1. | the conversion price contained the convertible debenture issued by the Company to Accelera Evolution Limited in the amount of $100,000 on July 30, 2008, including any accrued and unpaid interest thereon, is amended from $0.30 per share to $0.003 per share; and |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | the conversion price contained in the convertible debenture issued by the Company to Accelera Ventures Ltd. in the amount of $250,000 on November 11, 2008, including any accrued and unpaid interest thereon, which was transferred from Accelera Ventures Ltd. to Accelera Evolution Limited and then such transfer was subsequently cancelled, is amended from $0.30 per share to $0.005 per share. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| Quarter Ended |   | High ($) |   |   | Low ($) |   |
|--------------------|--------|---------------|--------|--------|--------------|--------|
| December 31, 2010  |   | $             | 0.07   |   |         | $      | 0.02 |   |
| September 30, 2010 |   | $             | 0.28   |   |         | $      | 0.03 |   |
| June 30, 2010      |   | $             | 0.16   |   |         | $      | 0.05 |   |
| March 31, 2010     |   | $             | 0.06   |   |         | $      | 0.02 |   |
| December 31, 2009  |   | $             | 0.06   |   |         | $      | 0.04 |   |
| September 30, 2009 |   | $             | 0.08   |   |         | $      | 0.03 |   |
| June 30, 2001      |   | $             | 0.15   |   |         | $      | 0.05 |   |
| March 31, 2009     |   | $             | 0.12   |   |         | $      | 0.02 |   |
| December 31, 2008  |   | $             | 0.24   |   |         | $      | 0.01 |   |
| September 30, 2008 |   | $             | 0.77   |   |         | $      | 0.19 |   |
| June 30, 2008      |   | $             | 0.69   |   |         | $      | 0.27 |   |
| March 31, 2008     |   | $             | 1.09   |   |         | $      | 0.59 |   |
| December 31, 2007  |   | $             | 2.86   |   |         | $      | 0.87 |   |
| September 30, 2007 |   | $             | 3.76   |   |         | $      | 2.07 |   |
| June 30, 2007      |   | $             | 2.25   |   |         | $      | 1.30 |   |
| March 31, 2007     |   | $             | 1.35   |   |         | $      | 1.11 |   |

----

| Plan category                                         |   | Number of securities tobe issued upon exerciseof outstanding options,warrants and rights |       |   | Weighted-averageexercise price ofoutstanding options,warrants and rights |   |   | Number of securities remainingavailable for future issuanceunder equity compensationplans (excluding securitiesreflected in column (a)) |   |
|------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|------------|--------|---------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                       |   | (a)                                                                                                                                        |       |   | (b)                                                                                               |   |   | (c)                                                                                                                                                                                                      |   |
| Equity compensation plans approved by security holders (1) |   |                                                                                                                                       | 10,950,000 |   |                                                                                              | $      | 0.046  |                                                                                                                                                                                                     |   |   | 14,050,000 |   |
| Equity compensation plans not approved by security holders |   |                                                                                                                                       |       |   |                                                                                              |   |   |                                                                                                                                                                                                     |   |   |   |   |
| Total                                                      |   |                                                                                                                                       | 10,950,000 |   |                                                                                              | $      | 0.046  |                                                                                                                                                                                                     |   |   | 14,050,000 |   |

| (1) | The Company’s Board of Directors adopted a stock option plan on November 3, 2006 and was subsequently ratified by the shareholders at the Annual Meeting of Shareholders held on March 1, 2007.  See below for details of this plan. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i) | the persons to be granted Stock Options and Incentives; |
|-----|---------------------------------------------------------|

| (ii) | the fair market value of our shares; |
|------|--------------------------------------|

| (iii) | the exercise price per share of options to be granted; |
|-------|--------------------------------------------------------|

| (iv) | the number of shares to be represented by each option or incentive award; |
|------|---------------------------------------------------------------------------|

| (v) | the time or times at which options and incentive awards shall be granted; |
|-----|---------------------------------------------------------------------------|

| (vi) | the interpretation of the Stock Option Plan; |
|------|----------------------------------------------|

| (vii) | whether to prescribe, amend and rescind rules and regulations relating to the Stock Option Plan; |
|-------|--------------------------------------------------------------------------------------------------|

| (viii) | the term and provisions or each option and incentive award granted (which need not be identical) and, with the consent of the grantee thereof, modify or amend such option or incentive award; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ix) | whether to accelerate or defer (with the consent of the grantee) of the exercise date of any option or incentive award; |
|------|-------------------------------------------------------------------------------------------------------------------------|

| (x) | the person to execute on our behalf any instrument required to effectuate the grant of an option or incentive award previously granted by the Board; |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------|

| (xi) | whether to accept or reject the election made by a grantee pursuant to Section 7.5 of the Stock Option Plan; and |
|------|------------------------------------------------------------------------------------------------------------------|

----

| (xii) | all other determinations deemed necessary or advisable for the administration of the Stock Option Plan. |
|-------|---------------------------------------------------------------------------------------------------------|

----

----

|   | 1. | the conversion price contained the convertible debenture issued by the Company to Accelera Evolution Limited in the amount of $100,000 on July 30, 2008, including any accrued and unpaid interest thereon, is amended from $0.30 per share to $0.003 per share; and |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | the conversion price contained in the convertible debenture issued by the Company to Accelera Ventures Ltd. in the amount of $250,000 on November 11, 2008, including any accrued and unpaid interest thereon, which was transferred from Accelera Ventures Ltd. to Accelera Evolution Limited and then such transfer was subsequently cancelled, is amended from $0.30 per share to $0.005 per share. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

|   | 1. | the conversion price contained the convertible debenture issued by the Company to Accelera Evolution Limited in the amount of $100,000 on July 30, 2008, including any accrued and unpaid interest thereon, was amended from $0.30 per share to $0.003 per share; and |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | the conversion price contained in the convertible debenture issued by the Company to Accelera Ventures Ltd. in the amount of $250,000 on November 11, 2008, including any accrued and unpaid interest thereon, which was transferred from Accelera Ventures Ltd. to Accelera Evolution Limited and then such transfer was subsequently cancelled, was amended from $0.30 per share to $0.005 per share. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

|                                              |   | Page   |
|---------------------------------------------------|--------|--------|
|                                              |   |   |
| Report of Independent Public Accountants          |   | 1      |
|                                              |   |   |
| Consolidated Balance Sheet                        |   | 2      |
|                                              |   |   |
| Consolidated Statements of Operations             |   | 3      |
|                                              |   |   |
| Consolidated Statements of Cash Flows             |   | 4      |
|                                              |   |   |
| Consolidated Statement of Stockholders' (Deficit) |   | 5      |
|                                              |   |   |
| Notes to Consolidated Financial Statements        |   | 6      |

----

----

| Note 1 - Basis of Presentation - going concern                                           |   | December 31 |        |   | December 31 |   |
|------------------------------------------------------------------------------------------|--------|------------------|-------------|--------|------------------|--------|
|                                                                                     |   | 2008             |        |   | 2007             |   |
|                                                                                     |   |             |        |   |             |   |
| ASSETS                                                                                   |   |             |        |   |             |   |
|                                                                                     |   |             |        |   |             |   |
| CURRENT ASSETS                                                                           |   |             |        |   |             |   |
| Cash - unrestricted                                                                      |   | $                | 170,456     |   |             | $      | 64,866 |   |
| Cash - restricted (Note 3)                                                               |   |             | 198         |   |             |   | 184 |   |
| Accounts receivable, net (Note 4)                                                        |   |             | 161,018     |   |             |   | 48,071 |   |
| Inventory (Note 6)                                                                       |   |             | 1,124,789   |   |             |   | 893,402 |   |
| Prepaid expenses and deposits                                                            |   |             | 68,491      |   |             |   | 428,841 |   |
| Total current assets                                                                     |   |             | 1,524,952   |   |             |   | 1,435,364 |   |
|                                                                                     |   |             |        |   |             |   |   |   |
| Fixed assets (Note 7)                                                                    |   |             | 6,452,135   |   |             |   | 6,658,831 |   |
|                                                                                     |   |             |        |   |             |   |   |   |
| Total assets                                                                             |   | $                | 7,977,087   |   |             | $      | 8,094,195 |   |
|                                                                                     |   |             |        |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                                  |   |             |        |   |             |   |   |   |
|                                                                                     |   |             |        |   |             |   |   |   |
| CURRENT LIABILITIES                                                                      |   |             |        |   |             |   |   |   |
| Short-term loans (Notes 8 and 9)                                                         |   | $                | 6,221,176   |   |             | $      | 7,105,118 |   |
| Accounts payable                                                                         |   |             | 935,829     |   |             |   | 824,706 |   |
| Interest payable                                                                         |   |             | 2,622,680   |   |             |   | 1,918,408 |   |
| Unearned revenue                                                                         |   |             | 303,805     |   |             |   | 170,471 |   |
| Shareholder loans (Note 10)                                                              |   |             | 4,160,678   |   |             |   | 2,176,526 |   |
| Other current liabilities                                                                |   |             | 2,000,621   |   |             |   | 1,986,284 |   |
| Total current liabilities                                                                |   |             | 16,244,789  |   |             |   | 14,181,513 |   |
|                                                                                     |   |             |        |   |             |   |   |   |
| Convertible debentures (Note 11)                                                         |   |             | 350,000     |   |             |   | - |   |
| Total liabilities                                                                        |   |             | 16,594,789  |   |             |   | 14,181,513 |   |
|                                                                                     |   |             |        |   |             |   |   |   |
| COMMITMENTS AND CONTINGENCIES (Notes 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 13, 16, 17 and 19) |   |             |        |   |             |   |   |   |
|                                                                                     |   |             |        |   |             |   |   |   |
| STOCKHOLDERS' (DEFICIT)                                                                  |   |             |        |   |             |   |   |   |
| Common stock (Note 14)                                                                   |   |             |        |   |             |   |   |   |
| Authorized 250,000,000 shares at par value of $ 0.0001 each                              |   |             |        |   |             |   |   |   |
| Issued and outstanding 131,422,086 shares (2007 - 131,312,086)                           |   |             | 13,143      |   |             |   | 13,132 |   |
| Additional paid-in capital                                                               |   |             | 29,430,084  |   |             |   | 26,127,797 |   |
| Subscriptions received                                                                   |   |             | 250,000     |   |             |   | - |   |
| Accumulated (deficit)                                                                    |   |             | (36,535,586 | )      |             |   | (30,761,870 | ) |
| Accumulated other comprehensive income (loss)                                            |   |             | (1,775,343  | )      |             |   | (1,466,377 | ) |
| Total stockholders' (deficit)                                                            |   |             | (8,617,702  | )      |             |   | (6,087,318 | ) |
|                                                                                     |   |             |        |   |             |   |   |   |
| Total liabilities and stockholders' (deficit)                                            |   | $                | 7,977,087   |   |             | $      | 8,094,195 |   |

----

|                                                       |   | Years Ended December 31 |        |
|------------------------------------------------------------|--------|----------------------------------------|-------------|
|                                                       |   | 2008                                   |        |   | 2007 |   |
|                                                       |   |                                   |        |   |   |   |
| REVENUE                                                    |   |                                   |        |   |   |   |
| Sales                                                      |   | $                                      | 1,197,983   |   |   | $ | 1,026,572 |   |
| Cost of goods sold                                         |   |                                   | 752,573     |   |   |   | 697,466 |   |
| Gross profit                                               |   |                                   | 445,410     |   |   |   | 329,106 |   |
| Other revenue (Note 15)                                    |   |                                   | 789,913     |   |   |   | 229,122 |   |
|                                                       |   |                                   | 1,235,323   |   |   |   | 558,228 |   |
| EXPENSES                                                   |   |                                   |        |   |   |   |   |   |
| Advertising and promotion                                  |   |                                   | 578         |   |   |   | 5,153 |   |
| Depreciation                                               |   |                                   | 215,935     |   |   |   | 145,025 |   |
| General and administration                                 |   |                                   | 1,572,311   |   |   |   | 2,588,957 |   |
| Repairs and maintenance                                    |   |                                   | 43,193      |   |   |   | 45,192 |   |
| Research and development                                   |   |                                   | 441,123     |   |   |   | 1,114,043 |   |
| Salaries and benefits                                      |   |                                   | 669,470     |   |   |   | 694,516 |   |
| Stock-based compensation (Note 16)                         |   |                                   | 3,055,796   |   |   |   | 2,682,016 |   |
| Travel                                                     |   |                                   | 88,917      |   |   |   | 354,505 |   |
| Total expenses                                             |   |                                   | 6,087,323   |   |   |   | 7,629,407 |   |
|                                                       |   |                                   |        |   |   |   |   |   |
| Net (loss) for the period from operations                  |   |                                   | (4,852,000  | ) |   |   | (7,071,179 | ) |
|                                                       |   |                                   |        |   |   |   |   |   |
| OTHER INCOME AND EXPENSES                                  |   |                                   |        |   |   |   |   |   |
| Interest and bank charges (Notes 8, 9 and 10)              |   |                                   | (554,545    | ) |   |   | (1,026,482 | ) |
| Gain on forgiveness of interest on debt                    |   |                                   | -           |   |   |   | 2,320,115 |   |
| Finders fees (Note 11)                                     |   |                                   | (35,000     | ) |   |   | - |   |
| (Loss) on failed acquisition of subsidiary                 |   |                                   | -           |   |   |   | (600,216 | ) |
| (Losses) on loans and guarantees to other parties (Note 5) |   |                                   | (332,171    | ) |   |   | (299,697 | ) |
|                                                       |   |                                   |        |   |   |   |   |   |
| Net income (loss) for the period before minority interests |   |                                   | (5,773,716  | ) |   |   | (6,677,459 | ) |
|                                                       |   |                                   |        |   |   |   |   |   |
| Minority interest in loss for the period                   |   |                                   | -           |   |   |   | 8,039 |   |
|                                                       |   |                                   |        |   |   |   |   |   |
| Net income (loss) for the period                           |   | $                                      | (5,773,716  | ) |   | $ | (6,669,420 | ) |
|                                                       |   |                                   |        |   |   |   |   |   |
| Other comprehensive income (loss)                          |   |                                   |        |   |   |   |   |   |
| Foreign currency translation                               |   | $                                      | (308,966    | ) |   | $ | (651,210 | ) |
|                                                       |   |                                   |        |   |   |   |   |   |
| Comprehensive income (loss)                                |   | $                                      | (6,082,682  | ) |   | $ | (7,320,630 | ) |
|                                                       |   |                                   |        |   |   |   |   |   |
| Net (loss) per common share - basic and fully diluted      |   | $                                      | (0.04       | ) |   | $ | (0.05 | ) |
|                                                       |   |                                   |        |   |   |   |   |   |
| Weighted average number of common stock outstanding        |   |                                   | 131,415,154 |   |   |   | 134,892,246 |   |

----

|                                                                        |   | Years Ended December 31 |       |
|-----------------------------------------------------------------------------|--------|----------------------------------------|------------|
|                                                                        |   | 2008                                   |       |   | 2007 |   |
| Cash from (used in) operating activities:                                   |   |                                   |       |   |   |   |
| Net (loss)                                                                  |   | $                                      | (5,773,716 | ) |   | $ | (6,669,420 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                                   |       |   |   |   |   |   |
| Depreciation                                                                |   |                                   | 784,930    |   |   |   | 790,170 |   |
| (Gain) loss on disposition of fixed assets                                  |   |                                   | (1,218     | ) |   |   | 9,992 |   |
| Imputed interest expense on shareholders' loans                             |   |                                   | 188,752    |   |   |   | 113,771 |   |
| Minority interest in net income (loss)                                      |   |                                   | -          |   |   |   | (8,039 | ) |
| Shares issued for services                                                  |   |                                   | 57,750     |   |   |   | 85,400 |   |
| Stock-based compensation                                                    |   |                                   | 3,055,796  |   |   |   | 2,682,016 |   |
| Gain on foregiveness of interest on debt                                    |   |                                   | -          |   |   |   | (2,320,115 | ) |
| Net change in operating assets and liabilities:                             |   |                                   |       |   |   |   |   |   |
| Accounts receivable                                                         |   |                                   | (112,947   | ) |   |   | 213,817 |   |
| Inventory                                                                   |   |                                   | (231,387   | ) |   |   | (449,764 | ) |
| Prepaid expenses and deposits                                               |   |                                   | 360,350    |   |   |   | (398,178 | ) |
| Accounts payable                                                            |   |                                   | 111,123    |   |   |   | 560,284 |   |
| Interest payable                                                            |   |                                   | 704,272    |   |   |   | 619,638 |   |
| Unearned revenue                                                            |   |                                   | 133,334    |   |   |   | 95,328 |   |
| Other current liabilities                                                   |   |                                   | 14,337     |   |   |   | (54,338 | ) |
|                                                                        |   |                                   |       |   |   |   |   |   |
| Net cash  (used in) from operating activities                     |   |                                   | (708,624   | ) |   |   | (4,729,438 | ) |
|                                                                        |   |                                   |       |   |   |   |   |   |
| Cash (used in) investing activities:                                        |   |                                   |       |   |   |   |   |   |
| Purchases of fixed assets                                                   |   |                                   | (108,834   | ) |   |   | (145,553 | ) |
| Proceeds of disposition of fixed assets                                     |   |                                   | 3,628      |   |   |   | 5,418 |   |
|                                                                        |   |                                   |       |   |   |   |   |   |
| Net cash (used in) investing activities                                     |   |                                   | (105,206   | ) |   |   | (140,135 | ) |
|                                                                        |   |                                   |       |   |   |   |   |   |
| Cash from (used in) financing activities:                                   |   |                                   |       |   |   |   |   |   |
| Loans made to unrelated parties                                             |   |                                   | -          |   |   |   | - |   |
| Repayments of loans by unrelated parties                                    |   |                                   | -          |   |   |   | 146,165 |   |
| Share subscriptions received                                                |   |                                   | 250,000    |   |   |   | 17,062,508 |   |
| Finders fees paid in cash                                                   |   |                                   | -          |   |   |   | (896,875 | ) |
| Exercise of warrants                                                        |   |                                   | -          |   |   |   | 31,250 |   |
| Proceeds of convertible debentures received                                 |   |                                   | 350,000    |   |   |   | - |   |
| Short-term loans received                                                   |   |                                   | -          |   |   |   | 985,680 |   |
| Repayments of short-term loans                                              |   |                                   | (1,361,821 | ) |   |   | (14,328,449 | ) |
| Loans received from shareholders                                            |   |                                   | 1,851,005  |   |   |   | 1,163,435 |   |
| Repayments of loans from shareholders                                       |   |                                   | (21,123    | ) |   |   | (1,145,051 | ) |
|                                                                        |   |                                   |       |   |   |   |   |   |
| Net cash from (used in) financing activities                                |   |                                   | 1,068,061  |   |   |   | 3,018,663 |   |
|                                                                        |   |                                   |       |   |   |   |   |   |
| Effect of other comprehensive income (loss) on cash                         |   |                                   | (148,627   | ) |   |   | (230,320 | ) |
|                                                                        |   |                                   |       |   |   |   |   |   |
| Increase (decrease) in cash                                                 |   |                                   | 105,604    |   |   |   | (2,081,230 | ) |
|                                                                        |   |                                   |       |   |   |   |   |   |
| Cash, including restricted cash of $184, beginning of period                |   |                                   | 65,050     |   |   |   | 2,146,280 |   |
|                                                                        |   |                                   |       |   |   |   |   |   |
| Cash, including restricted cash of $198, end of period                      |   | $                                      | 170,654    |   |   | $ | 65,050 |   |
|                                                                        |   |                                   |       |   |   |   |   |   |
| Supplementary cash flow disclosure:                                         |   |                                   |       |   |   |   |   |   |
| Interest paid                                                               |   | $                                      | 134,739    |   |   | $ | 154,556 |   |

----

|                                                      |   | CommonStock |        |   | Amount |   |   | Additional paid-in capital |   |   | Subscriptionsreceived |   |   | CumulativeOtherComprehensiveIncome (loss) |    |   | Accumulated(Deficit) |   |       | Stockholders'(Deficit) |   |
|----------------------------------------------------------------|--------|-------------|-------------|--------|--------|--------|--------|--------------------------------------|--------|--------|-----------------------|--------|--------|------------------------------------------------|---------|--------|----------------------|--------|------------|------------------------|--------|
|                                                           |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |    |   |                 |   |       |                   |   |
| Balance December 31, 2006                                      |   |        | 70,000,000  |   |   | $      | 7,000  |                                 |   | $      | 7,660,082             |   |   | $                                              | -       |   |                 | $      | (815,167   | )                      |   | $ | (24,092,450 | ) |   | $ | (17,240,535 | ) |
|                                                           |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |    |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Cancellation of shares                                         |   |        | (76,000,000 | )      |   |   | (7,600 | )                                    |   |   | 7,600                 |   |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Capital changes to give effect to reverse take-over            |   |        | 121,000,000 |   |   |   | 12,100 |                                 |   |   | (74,073               | )      |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | (61,973 | ) |
| Issue of shares for services                                   |   |        | 100,000     |   |   |   | 10     |                                 |   |   | 85,390                |   |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | 85,400 |   |
| Stock-based compensation                                       |   |        | -           |   |   |   | -      |                                 |   |   | 2,682,016             |   |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | 2,682,016 |   |
| Shares issued pursuant to private placements                   |   |        | 15,994,806  |   |   |   | 1,600  |                                 |   |   | 17,060,908            |   |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | 17,062,508 |   |
| Finders fees paid or payable in cash                           |   |        | -           |   |   |   | -      |                                 |   |   | (1,439,125            | )      |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | (1,439,125 | ) |
| Shares issued as finders fees                                  |   |        | 192,280     |   |   |   | 19     |                                 |   |   | (19                   | )      |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Shares issued pursuant to exercise of warrants                 |   |        | 25,000      |   |   |   | 3      |                                 |   |   | 31,247                |   |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | 31,250 |   |
| Imputed interest on shareholders' loans                        |   |        | -           |   |   |   | -      |                                 |   |   | 113,771               |   |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | 113,771 |   |
| Net (loss) for the period                                      |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | -       |   |                 |   | (651,210   | )                      |   |   | (6,669,420 | ) |   |   | (7,320,630 | ) |
|                                                           |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |    |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Balance December 31, 2007                                      |   |        | 131,312,086 |   |   | $      | 13,132 |                                 |   | $      | 26,127,797            |   |   | $                                              | -       |   |                 | $      | (1,466,377 | )                      |   | $ | (30,761,870 | ) |   | $ | (6,087,318 | ) |
|                                                           |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |    |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Issue of shares for services                                   |   |        | 110,000     |   |   |   | 11     |                                 |   |   | 57,739                |   |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | 57,750 |   |
| Stock-based compensation                                       |   |        | -           |   |   |   | -      |                                 |   |   | 3,055,796             |   |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | 3,055,796 |   |
| Subscriptions received for units pursuant to private placement |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | 250,000 |   |                 |   | -          |                   |   |   | - |   |   |   | 250,000 |   |
| Imputed interest on shareholders' loans                        |   |        | -           |   |   |   | -      |                                 |   |   | 188,752               |   |   |                                           | -       |   |                 |   | -          |                   |   |   | - |   |   |   | 188,752 |   |
| Net income (loss) for the period                               |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | -       |   |                 |   | (308,966   | )                      |   |   | (5,773,716 | ) |   |   | (6,082,682 | ) |
|                                                           |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |    |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Balance December 31, 2008                                      |   |        | 131,422,086 |   |   | $      | 13,143 |                                 |   | $      | 29,430,084            |   |   | $                                              | 250,000 |   |                 | $      | (1,775,343 | )                      |   | $ | (36,535,586 | ) |   | $ | (8,617,702 | ) |

----

----

----

----

----

----

| Buildings                      | 5 - 30 years |
|--------------------------------|--------------|
| Climate control equipment      | 8 years      |
| Computer software              | 4 - 5 years  |
| Land license                   | 29 years     |
| Manufacturing equipment        | 5 - 8 years  |
| Office furniture and equipment | 4 - 5 years  |
| Other equipment and fixtures   | 4 - 5 years  |
| Road                           | 20 years     |
| Vehicles                       | 5 - 10 years |

----

----

----

|             |   | December 31,2008 |      |   | December 31,2007 |   |
|------------------|--------|-----------------------|-----------|--------|-----------------------|--------|
|             |   |                  |      |   |                  |   |
| Raw materials    |   | $                     | 144,022   |   |                  | $      | 74,007 |   |
| Goods in process |   |                  | 803,704   |   |                  |   | 550,198 |   |
| Finished goods   |   |                  | 177,063   |   |                  |   | 269,197 |   |
|             |   |                  |      |   |                  |   |   |   |
|             |   | $                     | 1,124,789 |   |                  | $      | 893,402 |   |

----

|                           |   | December 31,2008 |       |   | December 31,2007 |   |
|--------------------------------|--------|-----------------------|------------|--------|-----------------------|--------|
|                           |   |                  |       |   |                  |   |
| Buildings                      |   | $                     | 6,710,682  |   |                  | $      | 6,220,810 |   |
| Climate control equipment      |   |                  | 1,355,620  |   |                  |   | 1,265,923 |   |
| Computer software              |   |                  | 2,052      |   |                  |   | 1,917 |   |
| Land license                   |   |                  | 2,462,880  |   |                  |   | 2,299,920 |   |
| Manufacturing equipment        |   |                  | 2,319,680  |   |                  |   | 2,119,775 |   |
| Office furniture and equipment |   |                  | 174,873    |   |                  |   | 156,532 |   |
| Other equipment                |   |                  | 31,473     |   |                  |   | 29,048 |   |
| Road                           |   |                  | 36,902     |   |                  |   | 34,460 |   |
| Vehicles                       |   |                  | 751,242    |   |                  |   | 701,535 |   |
|                           |   |                  |       |   |                  |   |   |   |
|                           |   |                  | 13,845,404 |   |                  |   | 12,829,920 |   |
| Less: Accumulated depreciation |   |                  | 7,393,269  |   |                  |   | 6,171,089 |   |
|                           |   |                  |       |   |                  |   |   |   |
|                           |   | $                     | 6,452,135  |   |                  | $      | 6,658,831 |   |

----

| Name of Lender       |   | PrincipalamountDecember31, 2008 |      |   | PrincipalamountDecember31, 2007 |   |      | Due date |   |              | Interest rateNot due/overdue |   |   | Security(1)  |   |
|--------------------------------|--------|--------------------------------------|-----------|--------|--------------------------------------|--------|-----------|---------------|--------|-------------------|----------------------------------------|--------|--------|--------------|--------|
|                           |   |                                 |      |   |                                 |   |      |          |   |              |                                   |   |   |         |   |
| China Construction Bank        |   | $                                    | 1,935,120 |   |                                 | $      | 1,957,670 |          |   | October 16, 2004  |                                   |   |   | 5.31% / 7.56 | %      |   | Building mortgage | (2)  |
| Shenzhen Development Bank      |   |                                 | 820,960   |   |                                 |   | 766,640   |          |   | June 6, 2005      |                                   |   |   | 6.372%/9.56  | %      |   | Guarantee |   |
| Industrial Bank                |   |                                 | 2,658,796 |   |                                 |   | 3,395,128 |          |   | December 19, 2005 |                                   |   |   | 6.138%/9.21  | %      |   | Guarantee | (3)  |
| Zheda Haina S&T Holding    |   |                                 | 615,720   |   |                                 |   | 574,980   |          |   |              | -                                      |   |   |         | -      |   |   |   |   | (4) |
| Luoyang Zonghong               |   |                                 | 190,580   |   |                                 |   | 410,700   |          |   |              | -                                      |   |   |         | -      |   |   |   | - |   |
|                           |   | $                                    | 6,221,176 |   |                                 | $      | 7,105,118 |          |   |              |                                   |   |   |         |   |   |   |   |   |   |
| Weighted average interest rate |   |                                 | 7.55      | %      |                                 |   | 7.27      | %             |   |              |                                   |   |   |         |   |   |   |   |   |   |

|   | (1) | Guarantees have been arranged with various companies under cross-guarantee arrangements where each guarantees a loan for the other, or a loan forward basis where Wanxing Bio-Pharmaceuticals borrows and then loans a specified amount to the guarantor in return for the guarantee. The Company has guaranteed debt of two other companies under such arrangements, up to an amount of $3,665,000 (25,000,000 yuan) plus interest. The Company’s debt to the Industrial Bank arose upon the Company being called on its two guarantees. The Company recorded a corresponding loan receivable from the other companies and has made a provision for uncollectability in the full amount of the receivable (Note 5). |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Buildings with carrying value of $3,825,897 have been mortgaged as security. |
|--------|-----|------------------------------------------------------------------------------|

|   | (3) | A payment on the Industrial Bank loan in the nine months ended September 30, 2008 was provided by the minority shareholder of Wanxing Bio-Pharmaceuticals pursuant to a guarantee provided by the minority shareholder. The corresponding debt to the minority shareholder is included in Shareholder Loans (Note 10). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | The debt to Zheda Haina arose upon the payment by Zheda Haina of part of the Company’s loan from Shenzhen Development Bank pursuant to a guarantee provided to the bank by Zheda Haina in 2004. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|                                                                                |   | 2008   |       |   | 2007   |   |
|-------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Loss for the year ended December 31                                                 |   | $      | (5,773,716 | )      |   | $      | (6,669,420 | ) |
| Average statutory tax rate in China                                                 |   |   | 33         | %      |   |   | 33 | % |
|                                                                                |   |   |       |   |   |   |   |   |
| Expected income tax provision                                                       |   | $      | (1,905,327 | )      |   | $      | (2,200,909 | ) |
| Tax effect of non-deductible stock-based compensation and imputed interest expenses |   |   | 1,070,701  |   |   |   | 919,893 |   |
| Tax basis of deferred expenses in excess of book cost                               |   |   | —    |   |   |   | — |   |
| Tax effect of unrecognized losses                                                   |   |   | 834,626    |   |   |   | 1,281,016 |   |
|                                                                                |   |   |       |   |   |   |   |   |
| Income tax expense                                                                  |   | $      | —    |   |   | $      | — |   |

|                                                             |   | 2008   |       |   | 2007   |   |
|------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Operating losses carried forward                                 |   |   | 4,598,364  |   |   |   | 3,981,646 |   |
| Excess of tax basis over book cost of deferred expenses in China |   | $      | 4,965,173  |   |   | $      | 4,747,265 |   |
| Valuation allowance                                              |   |   | (9,563,537 | )      |   |   | (8,728,911 | ) |
|                                                             |   |   |       |   |   |   |   |   |
| Net deferred income tax assets                                   |   | $      | -          |   |   | $      | - |   |

----

| 2009   |   | $      | 1,832,000  |   |
|--------|--------|--------|------------|--------|
| 2010   |   |   | 3,707,000  |   |
| 2011   |   |   | 5,145,000  |   |
| 2012   |   |   | 1,381,000  |   |
| 2013   |   |   | 1,869,000  |   |
|   |   | $      | 13,934,000 |   |

----

----

| Exercise Price |   |   | Number of Warrants |   | Expiry Date |
|---------------------|--------|--------|------------------------------|--------|------------------|
| $                   | 1.25   |   |                         |   | 1,012,334        |   | May 14, 2009 |
| $                   | 1.75   |   |                         |   | 4,061,500        |   | May 14 to May 30, 2009 |
| $                   | 2.00   |   |                         |   | 2,624,400        |   | September 11, 2009 |
| $                   | 2.00   |   |                         |   | 274,169          |   | December 5, 2009 |
|                |   |   |                         |   |             |   |   |
|                |   |   |                         |   | 7,972,403        |   |   |

----

|                                   |   | Number ofoptions |      |   | WeightedAverageExercisePrice |   |   | WeightedAverageGrant-dateFair Value |   |   | AggregateIntrinsicValue |   |
|----------------------------------------|--------|-----------------------|-----------|--------|------------------------------|--------|--------|------------------------------------------|--------|--------|-------------------------|--------|
| Options Outstanding, January 1, 2007   |   |                  | -         |   |                         |   |   |                                     |   |   |                    |   |   |
|                                   |   |                  |      |   |                         |   |   |                                     |   |   |                    |   |   |   |   |   |
| Options granted in 2007                |   |                  | 8,000,000 |   |                         |   | 0.50   |                                     |   |   | 0.825                   |   |   | $ | nil |   |
| Options Outstanding, December 31, 2007 |   |                  | 8,000,000 |   |                         |   | 0.50   |                                     |   |   | 0.825                   |   |   | $ | nil |   |
|                                   |   |                  |      |   |                         |   |   |                                     |   |   |                    |   |   |   |   |   |
| Options granted in 2008                |   |                  | 500,000   |   |                         |   | 0.50   |                                     |   |   | 0.16                    |   |   | $ | nil |   |
| Options Outstanding, December 31, 2008 |   |                  | 8,500,000 |   |                         |   | 0.50   |                                     |   |   | 0.786                   |   |   | $ | nil |   |

----

| Vested atDecember 31, |   | Range ofExercisePrices |   |   | Numberof Shares |   |      | WeightedAverageExercisePrice |   |   | CompensationExpense to beRecognized |   |   | AggregateIntrinsic Value |      |
|----------------------------|--------|-----------------------------|--------|--------|-----------------|--------|-----------|------------------------------|--------|--------|-----------------------------------------------|--------|--------|-------------------------------|-----------|
| 2008 and earlier           |   |                        | 0.50   |   |            |   | 7,120,833 |                         |   |   | 0.50                                          |   |   |                          |      |   | $ | nil |   |
| 2009                       |   |                        | 0.50   |   |            |   | 900,000   |                         |   |   | 0.50                                          |   |   | $                             | 804,412   |   |   |   |  nil |   |
| 2010                       |   |                        | 0.50   |   |            |   | 375,000   |                         |   |   | 0.50                                          |   |   |                          | 278,141   |   |   |   | nil |   |
| 2011                       |   |                        | 0.50   |   |            |   | 140,167   |                         |   |   | 0.50                                          |   |   |                          | 107,560   |   |   |   | nil |   |
|                       |   |                        |   |   |            |   | 8,500,000 |                         |   |   |                                          |   |   | $                             | 1,190,113 |   |   | $ | nil |   |

|                                              |   | Numberoutstanding |      |   | Total fair value |   |      | Weighted average grant-date fair value |   |
|---------------------------------------------------|--------|-------------------|-----------|--------|----------------------------|--------|-----------|------------------------------------------------------------|--------|
| Non-vested options outstanding, January 1, 2008   |   |              | 4,650,000 |   |                       | $      | 4,037,450 |                                                       |   | $ | 0.868 |   |
| Non-vested options outstanding, December 31, 2008 |   |              | 1,379,167 |   |                       | $      | 1,190,113 |                                                       |   | $ | 0.723 |   |
| Options vested in year ended December 31, 2008    |   |              | 3,625,000 |   |                       | $      | 3,055,796 |                                                       |   | $ | 0.843 |   |

|   Expiration Date    |   | Range ofExercise Prices |   |   | Number |   |   | Weighted average |   |
|--------------------------------|--------|-----------------------------------|--------|--------|--------|--------|--------|-----------------------|--------|
|  Year Ending December 31, |   | High                              |   |   | Low    |   |   | of Shares        |   |   | exercise price |   |
| 2012                           |   |                              | 0.50   |   |   |   | 0.50   |                  |   |   | 8,000,000 |   |   | $ | 0.50 |   |
| 2013                           |   |                              | 0.50   |   |   |   | 0.50   |                  |   |   | 500,000 |   |   | $ | 0.50 |   |

----

|                          |   | Marchand May,2007 |    |   | November,2007 |   |    | August,2008repricing |   |         | October,2008 |   |
|-------------------------------|--------|------------------------|---------|--------|---------------|--------|---------|----------------------|--------|--------------|--------------|--------|
| Volatility:                   |   |                   | 41.0    | %      |          |   | 94      | %                    |   |         | 104          | %      |   |   | 128 | % |
| Risk-free interest rate:      |   |                   | 4.92    | %      |          |   | 3.42    | %                    |   |         | 2.06         | %      |   |   | 2.06 | % |
| Dividend yield:               |   |                   | — |   |          |   | — |                 |   |         | —      |   |   |   | — |   |
| Expected lives  (years): |   |                   | 5       |   |          |   | 5       |                 |   | 3.75 to 4.25 |         |   |   | 5 |   |

----

| Year ended December 31, 2008 |   | Revenues |      |   | Net loss (income) |   |      | Total assets |   |
|--------------------------------------------------|--------|----------|-----------|--------|-----------------------------|--------|-----------|-------------------|--------|
| Pharmaceuticals                                  |   | $        | 1,238,392 |   |                        | $      | 2,058,097 |              |   | $ | 7,371,805 |   |
| Cosmetics                                        |   |     | 749,504   |   |                        |   | (176,962  | )                 |   |   | 529,826 |   |
| Parent company administration                    |   |     | -         |   |                        |   | 3,892,581 |              |   |   | 75,456 |   |
|                                             |   |     |      |   |                        |   |      |              |   |   |   |   |
| Total consolidated                               |   | $        | 1,987,896 |   |                        | $      | 5,773,716 |              |   | $ | 7,977,087 |   |

| Year ended December 31, 2007 |   | Revenues |      |   | Net loss |   |      | Total assets |   |
|--------------------------------------------------|--------|----------|-----------|--------|---------------|--------|-----------|-------------------|--------|
| Pharmaceuticals                                  |   | $        | 1,038,232 |   |          | $      | 1,852,976 |              |   | $ | 7,921,199 |   |
| Cosmetics                                        |   |     | 217,462   |   |          |   | 14,144    |              |   |   | 158,438 |   |
| Parent company administration                    |   |     | -         |   |          |   | 4,802,300 |              |   |   | 14,558 |   |
|                                             |   |     |      |   |          |   |      |              |   |   |   |   |
| Total consolidated                               |   | $        | 1,255,694 |   |          | $      | 6,669,420 |              |   | $ | 8,094,195 |   |

| Year ended December 31, 2008  |   | Depreciationexpense |    |   | Interest expense |   |    | Capitalexpenditures |   |
|-------------------------------|--------|---------------------|---------|--------|------------------|--------|---------|---------------------|--------|
| Pharmaceuticals               |   | $                   | 213,231 |   |             | $      | 506,658 |                |   | $ | 21,274 |   |
| Cosmetics                     |   |                | 2,704   |   |             |   | -       |                |   |   | 87,560 |   |
| Parent company administration |   |                | -       |   |             |   | 47,887  |                |   |   | - |   |
|                          |   |                |    |   |             |   |    |                |   |   |   |   |
| Total consolidated            |   | $                   | 215,935 |   |             | $      | 554,545 |                |   | $ | 108,834 |   |

| Year ended December 31, 2007 |   | Depreciationexpense |    |   | Interest expense |   |      | Capitalexpenditures |   |
|--------------------------------------------------|--------|---------------------|---------|--------|-----------------------|--------|-----------|---------------------|--------|
| Pharmaceuticals                                  |   | $                   | 142,587 |   |                  | $      | 1,018,251 |                |   | $ | 140,736 |   |
| Cosmetics                                        |   |                | 2,438   |   |                  |   | -         |                |   |   | 4,817 |   |
| Parent company administration                    |   |                | -       |   |                  |   | 8,231     |                |   |   | - |   |
|                                             |   |                |    |   |                  |   |      |                |   |   |   |   |
| Total consolidated                               |   | $                   | 145,026 |   |                  | $      | 1,026,482 |                |   | $ | 145,553 |   |

----

|   | 1. | The Company’s Chairman and Chief Executive Officer, who was also general manager of the subsidiaries, resigned his positions with Sinobiomed Inc. but retained management control of the subsidiaries by virtue of his nominee’s status as Chief Representative of the subsidiaries, a legal status in China that is difficult to change without cooperation of the incumbent. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | The debt of the subsidiaries in China exceeded the value of the assets and the prospects for generating sufficient cash flow to repay the debt were doubtful. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Assets of the subsidiaries were subject to seizure order as noted above. |
|--------|----|--------------------------------------------------------------------------|

----

| ASSETS                                             |   |   |        |
|----------------------------------------------------|--------|--------|-------------|
| CURRENT ASSETS                                     |   |   |        |
| Cash - unrestricted                                |   | $      | 75,455      |   |
| Current assets of operations held for disposal     |   |   | 1,449,497   |   |
| Total current assets                               |   |   | 1,524,952   |   |
|                                               |   |   |        |   |
| Non-current assets of operations held for disposal |   |   | 6,452,135   |   |
|                                               |   |   |        |   |
| Total assets                                       |   | $      | 7,977,087   |   |
|                                               |   |   |        |   |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)            |   |   |        |   |
| CURRENT LIABILITIES                                |   |   |        |   |
| Accounts payable                                   |   |   | 292,148     |   |
| Interest payable                                   |   |   | 6,148       |   |
| Liabilities of operations held for disposal        |   |   | 14,306,475  |   |
| Shareholder loans                                  |   |   | 966,370     |   |
| Other current liabilities                          |   |   | 673,648     |   |
| Total current liabilities                          |   |   | 16,244,789  |   |
|                                               |   |   |        |   |
| Convertible debentures                             |   |   | 350,000     |   |
| Total liabilities                                  |   |   | 16,594,789  |   |
|                                               |   |   |        |   |
| STOCKHOLDERS' (DEFICIT)                            |   |   |        |   |
| Common stock                                       |   |   | 13,143      |   |
| Additional paid-in capital                         |   |   | 29,430,084  |   |
| Subscriptions received                             |   |   | 250,000     |   |
| Accumulated (deficit)                              |   |   | (36,535,586 | ) |
| Accumulated other comprehensive income (loss)      |   |   | (1,775,343  | ) |
| Total stockholders' (deficit)                      |   |   | (8,617,702  | ) |
|                                               |   |   |        |   |
| Total liabilities and stockholders' (deficit)      |   | $      | 7,977,087   |   |

----

| EXPENSES                                  |   |   |       |
|-------------------------------------------|--------|--------|------------|
| Consulting                                |   | $      | 271,089    |   |
| General and administration                |   |   | 35,589     |   |
| Interest                                  |   |   | 47,887     |   |
| Professional fees                         |   |   | 302,207    |   |
| Stock-based compensation                  |   |   | 3,055,796  |   |
| Total expenses                            |   |   | 3,710,568  |   |
|                                      |   |   |       |   |
| Net (loss) for the period from operations |   |   | (3,710,568 | ) |
|                                      |   |   |       |   |
| OTHER INCOME AND EXPENSES                 |   |   |       |   |
| Finders fees                              |   |   | (35,000    | ) |
| (Loss) from discontinued operations       |   |   | (2,028,148 | ) |
|                                      |   |   |       |   |
| Net income (loss) for the period          |   | $      | (5,773,716 | ) |
|                                      |   |   |       |   |
| Other comprehensive income (loss)         |   |   |       |   |
| Foreign currency translation              |   | $      | (308,966   | ) |
|                                      |   |   |       |   |
| Comprehensive income (loss)               |   | $      | (6,082,682 | ) |

----

|   | 1. | the conversion price contained in the convertible debenture issued by the Company to Accelera Evolution Limited in the amount of $100,000 on July 30, 2008, including any accrued and unpaid interest thereon, is amended from $0.30 per share to $0.003 per share; and |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | the conversion price contained in the convertible debenture issued by the Company to Accelera Ventures Ltd. in the amount of $250,000 on November 11, 2008, including any accrued and unpaid interest thereon, which was transferred from Accelera Ventures Ltd. to Accelera Evolution Limited, is amended from $0.30 per share to $0.005 per share. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                              |   | Page   |
|---------------------------------------------------|--------|--------|
|                                              |   |   |
| Consolidated Balance Sheets                       |   | 1      |
|                                              |   |   |
| Consolidated Statements of Operations             |   | 2      |
|                                              |   |   |
| Consolidated Statements of Cash Flows             |   | 3      |
|                                              |   |   |
| Consolidated Statement of Stockholders' (Deficit) |   | 4      |

----

| Note 1 - Basis of Presentation - going concern                  |   | March 31 |        |   | December 31 |   |
|---------------------------------------------------------------------------------------------------------|--------|---------------|-------------|--------|------------------|--------|
|                                                                                                    |   | 2009          |        |   | 2008             |   |
|                                                                                                    |   |          |        |   |             |   |
| ASSETS                                                                                                  |   |          |        |   |             |   |
|                                                                                                    |   |          |        |   |             |   |
| CURRENT ASSETS                                                                                          |   |          |        |   |             |   |
| Cash                                                                                                    |   | $             | 127,985     |   |             | $      | 75,455 |   |
| Current assets of discontinued operations                                                               |   |          | -           |   |             |   | 1,449,497 |   |
| Prepaid expenses and deposits                                                                           |   |          | 29,700      |   |             |   | - |   |
| Total current assets                                                                                    |   |          | 157,685     |   |             |   | 1,524,952 |   |
|                                                                                                    |   |          |        |   |             |   |   |   |
| Proceeds receivable for disposition of subsidiaries (Note 3)                                            |   |          | 200,000     |   |             |   | - |   |
| Non-current assets of discontinued operations                                                           |   |          | -           |   |             |   | 6,452,135 |   |
|                                                                                                    |   |          |        |   |             |   |   |   |
| Total assets                                                                                            |   | $             | 357,685     |   |             | $      | 7,977,087 |   |
|                                                                                                    |   |          |        |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                                                 |   |          |        |   |             |   |   |   |
|                                                                                                    |   |          |        |   |             |   |   |   |
| CURRENT LIABILITIES                                                                                     |   |          |        |   |             |   |   |   |
| Accounts payable, including related party payables of $216,331 (December 31, 2008- $200,223)            |   | $             | 229,039     |   |             | $      | 292,148 |   |
| Interest payable                                                                                        |   |          | 13,052      |   |             |   | 6,148 |   |
| Shareholder loans (Note 5)                                                                              |   |          | 966,370     |   |             |   | 966,370 |   |
| Liabilities of discontinued operations                                                                  |   |          | -           |   |             |   | 14,306,475 |   |
| Other current liabilities, including related party liabilities of $78,750 (December 31, 2008- $577,250) |   |          | 216,146     |   |             |   | 673,648 |   |
| Total current liabilities                                                                               |   |          | 1,424,607   |   |             |   | 16,244,789 |   |
|                                                                                                    |   |          |        |   |             |   |   |   |
| Convertible debentures (Note 6)                                                                         |   |          | 350,000     |   |             |   | 350,000 |   |
| Total liabilities                                                                                       |   |          | 1,774,607   |   |             |   | 16,594,789 |   |
|                                                                                                    |   |          |        |   |             |   |   |   |
| COMMITMENTS AND CONTINGENCIES (Notes 1, 2, 4, 5, 6, 7, 8, 9, 10 and 11)                                 |   |          |        |   |             |   |   |   |
|                                                                                                    |   |          |        |   |             |   |   |   |
| STOCKHOLDERS' (DEFICIT)                                                                                 |   |          |        |   |             |   |   |   |
| Common stock (Note 8)                                                                                   |   |          |        |   |             |   |   |   |
| Authorized 250,000,000 shares at par value of $ 0.0001 each                                             |   |          |        |   |             |   |   |   |
| Issued and outstanding 134,554,925 shares (Dec. 31, 2008 - 131,422,086)                                 |   |          | 13,456      |   |             |   | 13,143 |   |
| Additional paid-in capital                                                                              |   |          | 30,001,001  |   |             |   | 29,430,084 |   |
| Subscriptions received                                                                                  |   |          | 450,000     |   |             |   | 250,000 |   |
| Accumulated (deficit)                                                                                   |   |          | (31,881,379 | )      |             |   | (36,535,586 | ) |
| Accumulated other comprehensive income (loss)                                                           |   |          | -           |   |             |   | (1,775,343 | ) |
| Total stockholders' (deficit)                                                                           |   |          | (1,416,922  | )      |             |   | (8,617,702 | ) |
|                                                                                                    |   |          |        |   |             |   |   |   |
| Total liabilities and stockholders' (deficit)                                                           |   | $             | 357,685     |   |             | $      | 7,977,087 |   |

----

|                                                                                                            |   | Three Months Ended March 31 |        |
|-----------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|-------------|
|                                                                                                            |   | 2009                                            |        |   | 2008 |   |
|                                                                                                            |   |                                            |        |   |   |   |
| EXPENSES                                                                                                        |   |                                            |        |   |   |   |
| Consulting                                                                                                      |   | $                                               | 75,595      |   |   | $ | 52,019 |   |
| General and administration                                                                                      |   |                                            | 7,348       |   |   |   | 10,785 |   |
| Interest                                                                                                        |   |                                            | 19,733      |   |   |   | 5,432 |   |
| Professional fees                                                                                               |   |                                            | 25,580      |   |   |   | 87,438 |   |
| Stock-based compensation (Note 9)                                                                               |   |                                            | 42,981      |   |   |   | 917,158 |   |
| Total expenses                                                                                                  |   |                                            | 171,237     |   |   |   | 1,072,832 |   |
|                                                                                                            |   |                                            |        |   |   |   |   |   |
| Net (loss) for the period from operations                                                                       |   |                                            | (171,237    | ) |   |   | (1,072,832 | ) |
|                                                                                                            |   |                                            |        |   |   |   |   |   |
| OTHER INCOME AND EXPENSES                                                                                       |   |                                            |        |   |   |   |   |   |
| Gain on disposition of subsidiaries                                                                             |   |                                            | 4,825,444   |   |   |   | - |   |
| (Loss) from discontinued operations                                                                             |   |                                            | -           |   |   |   | (786,074 | ) |
|                                                                                                            |   |                                            |        |   |   |   |   |   |
| Net income (loss) for the period                                                                                |   | $                                               | 4,654,207   |   |   | $ | (1,858,906 | ) |
|                                                                                                            |   |                                            |        |   |   |   |   |   |
| Other comprehensive income (loss)                                                                               |   |                                            |        |   |   |   |   |   |
| Recovery of other comprehensive loss on disposition of foreign subsidiaries (Foreign currency translation loss) |   | $                                               | 1,775,343   |   |   |   | (194,382 | ) |
|                                                                                                            |   |                                            |        |   |   |   |   |   |
| Comprehensive income (loss)                                                                                     |   | $                                               | 6,429,550   |   |   | $ | (2,053,288 | ) |
|                                                                                                            |   |                                            |        |   |   |   |   |   |
| Net (loss) per common share - basic and fully diluted:                                                          |   |                                            |        |   |   |   |   |   |
|  Net (loss) for the period from operations                                                                 |   | $                                               | -           |   |   | $ | (0.01 | ) |
|  Net income (loss) for the period                                                                          |   | $                                               | 0.03        |   |   | $ | (0.01 | ) |
| (Loss) from discontinued operations                                                                             |   | $                                               | -           |   |   | $ | (0.01 | ) |
|                                                                                                            |   |                                            |        |   |   |   |   |   |
| Weighted average number of common stock outstanding                                                             |   |                                            | 133,517,319 |   |   |   | 131,393,075 |   |

----

|                                                                        |   | Three Months Ended March 31 |       |
|-----------------------------------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                                        |   | 2009                                            |       |   | 2008 |   |
|                                                                        |   |                                            |       |   |   |   |
| Cash from (used in) operating activities:                                   |   |                                            |       |   |   |   |
| Net income (loss)                                                           |   | $                                               | 4,654,207  |   |   | $ | (1,858,906 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                                            |       |   |   |   |   |   |
| Depreciation                                                                |   |                                            | -          |   |   |   | 201,992 |   |
| Imputed interest expense on shareholders' loans                             |   |                                            | 12,829     |   |   |   | 35,828 |   |
| Shares issued for services                                                  |   |                                            | -          |   |   |   | 14,438 |   |
| Stock-based compensation                                                    |   |                                            | 42,981     |   |   |   | 917,158 |   |
| Gain on disposition of subsidiaries                                         |   |                                            | (4,825,444 | ) |   |   | - |   |
| Net change in operating assets and liabilities:                             |   |                                            |       |   |   |   |   |   |
| Current assets of discontinued operations                                   |   |                                            | -          |   |   |   | (122,093 | ) |
| Prepaid expenses and deposits                                               |   |                                            | (29,700    | ) |   |   | - |   |
| Accounts payable                                                            |   |                                            | (22,689    | ) |   |   | 21,502 |   |
| Interest payable                                                            |   |                                            | 6,904      |   |   |   | - |   |
| Liabilities of discontinued operations                                      |   |                                            | -          |   |   |   | 655,639 |   |
| Other current liabilities                                                   |   |                                            | 33,498     |   |   |   | 11,669 |   |
|                                                                        |   |                                            |       |   |   |   |   |   |
| Net cash  (used in) from operating activities                     |   |                                            | (127,414   | ) |   |   | (122,773 | ) |
|                                                                        |   |                                            |       |   |   |   |   |   |
| Cash (used in) investing activities:                                        |   |                                            |       |   |   |   |   |   |
| Purchases of fixed assets                                                   |   |                                            | -          |   |   |   | (4,791 | ) |
| Cash disposed with disposition of subsidiaries                              |   |                                            | (4,056     | ) |   |   | - |   |
|                                                                        |   |                                            |       |   |   |   |   |   |
| Net cash (used in) investing activities                                     |   |                                            | (4,056     | ) |   |   | (4,791 | ) |
|                                                                        |   |                                            |       |   |   |   |   |   |
| Cash from (used in) financing activities:                                   |   |                                            |       |   |   |   |   |   |
| Share subscriptions received                                                |   |                                            | 200,000    |   |   |   | - |   |
| Finders fees paid in cash                                                   |   |                                            | (16,000    | ) |   |   | - |   |
| Repayments of short-term loans                                              |   |                                            | -          |   |   |   | (280,039 | ) |
| Loans received from shareholders                                            |   |                                            | -          |   |   |   | 516,117 |   |
| Repayments of loans from shareholders                                       |   |                                            | -          |   |   |   | (20,492 | ) |
|                                                                        |   |                                            |       |   |   |   |   |   |
| Net cash from financing activities                                          |   |                                            | 184,000    |   |   |   | 215,586 |   |
|                                                                        |   |                                            |       |   |   |   |   |   |
| Effect of other comprehensive income (loss) on cash                         |   |                                            | -          |   |   |   | (97,216 | ) |
|                                                                        |   |                                            |       |   |   |   |   |   |
| Increase (decrease) in cash                                                 |   |                                            | 52,530     |   |   |   | (9,194 | ) |
|                                                                        |   |                                            |       |   |   |   |   |   |
| Cash, beginning of period                                                   |   |                                            | 75,455     |   |   |   | 14,558 |   |
|                                                                        |   |                                            |       |   |   |   |   |   |
| Cash, end of period                                                         |   | $                                               | 127,985    |   |   | $ | 5,364 |   |
|                                                                        |   |                                            |       |   |   |   |   |   |
|  Supplemental Cash Flow Information                                    |   |                                            |       |   |   |   |   |   |
|  Non-cash items                                                        |   |                                            |       |   |   |   |   |   |
|  Imputed interest expense credited to additional paid-in capital       |   |                                            | 12,829     |   |   |   | 35,828 |   |
|  Accounts payable settled in shares                                    |   |                                            | 40,420     |   |   |   | - |   |
|  Other current liabilities settled for shares                          |   |                                            | 491,000    |   |   |   | - |   |
|  Interest paid in cash                                                 |   |                                            | -          |   |   |   | - |   |
|  Dividends paid                                                        |   |                                            | -          |   |   |   | - |   |

----

|                                                                                                 |   | CommonStock |        |   | Amount |   |   | Additional paid-in capital |   |   |  Subscriptionsreceived |   |   | CumulativeOtherComprehensiveIncome (loss) |    |   |  Accumulated(Deficit) |   |       |  Stockholders'(Deficit) |   |
|------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------|--------|--------|--------------------------------------|--------|--------|-----------------------------|--------|--------|------------------------------------------------|---------|--------|----------------------------|--------|------------|------------------------------|--------|
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |    |   |                       |   |       |                         |   |
| Balance December 31, 2008                                                                            |   |        | 131,422,086 |   |   | $      | 13,143 |                                 |   | $      | 29,430,084                  |   |   | $                                              | 250,000 |   |                       | $      | (1,775,343 | )                            |   | $ | (36,535,586 | ) |   | $ | (8,617,702 | ) |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |    |   |                       |   |       |                         |   |   |   |   |   |   |   |   |
| Issue of shares at agreed price of $0.50 per share on March 6, 2009 in settlement of fees payable    |   |        | 882,839     |   |   |   | 88     |                                 |   |   | 441,332                     |   |   |                                           | -       |   |                       |   | -          |                         |   |   | - |   |   |   | 441,420 |   |
| Issue of shares at agreed price of $0.04 per share on January 16, 2009 in settlement of fees payable |   |        | 2,250,000   |   |   |   | 225    |                                 |   |   | 89,775                      |   |   |                                           | -       |   |                       |   | -          |                         |   |   | - |   |   |   | 90,000 |   |
| Subscriptions received for shares pursuant to private placement                                      |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | 200,000 |   |                       |   | -          |                         |   |   | - |   |   |   | 200,000 |   |
| Finders fees paid in cash                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | (16,000                     | )      |   |                                           | -       |   |                       |   | -          |                         |   |   | - |   |   |   | (16,000 | ) |
| Stock-based compensation                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 42,981                      |   |   |                                           | -       |   |                       |   | -          |                         |   |   | - |   |   |   | 42,981 |   |
| Imputed interest on shareholders' loans                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 12,829                      |   |   |                                           | -       |   |                       |   | -          |                         |   |   | - |   |   |   | 12,829 |   |
| Net income for the period                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | -       |   |                       |   | 1,775,343  |                         |   |   | 4,654,207 |   |   |   | 6,429,550 |   |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |    |   |                       |   |       |                         |   |   |   |   |   |   |   |   |
| Balance March 31, 2009                                                                               |   |        | 134,554,925 |   |   | $      | 13,456 |                                 |   | $      | 30,001,001                  |   |   | $                                              | 450,000 |   |                       | $      | -          |                         |   | $ | (31,881,379 | ) |   | $ | (1,416,922 | ) |

----

|                                              |         | Page   |
|---------------------------------------------------|--------------|--------|
|                                              |         |   |
| Consolidated Balance Sheets                       |         | 1      |
|                                              |         |   |
| Consolidated Statements of Operations             |         | 2      |
|                                              |         |   |
| Consolidated Statements of Cash Flows             |         | 3      |
|                                              |         |   |
| Consolidated Statement of Stockholders' (Deficit) |    | 4      |

----

| Note 1 - Basis of Presentation - going concern                   |   | June 30 |        |   | December 31 |   |
|----------------------------------------------------------------------------------------------------------|--------|--------------|-------------|--------|------------------|--------|
|                                                                                                     |   | 2009         |        |   | 2008             |   |
|                                                                                                     |   |         |        |   |             |   |
| ASSETS                                                                                                   |   |         |        |   |             |   |
|                                                                                                     |   |         |        |   |             |   |
| CURRENT ASSETS                                                                                           |   |         |        |   |             |   |
| Cash                                                                                                     |   | $            | 26,337      |   |             | $      | 75,455 |   |
| Current assets of discontinued operations                                                                |   |         | -           |   |             |   | 1,449,497 |   |
| Prepaid expenses and deposits                                                                            |   |         | 11,554      |   |             |   | - |   |
| Total current assets                                                                                     |   |         | 37,891      |   |             |   | 1,524,952 |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| Proceeds receivable for disposition of subsidiaries (Note 3)                                             |   |         | 200,000     |   |             |   | - |   |
| Non-current assets of discontinued operations                                                            |   |         | -           |   |             |   | 6,452,135 |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| Total assets                                                                                             |   | $            | 237,891     |   |             | $      | 7,977,087 |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                                                  |   |         |        |   |             |   |   |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| CURRENT LIABILITIES                                                                                      |   |         |        |   |             |   |   |   |
| Accounts payable, including related party payables of $244,593 (December 31, 2008- $200,223)             |   | $            | 290,287     |   |             | $      | 292,148 |   |
| Interest payable                                                                                         |   |         | 20,033      |   |             |   | 6,148 |   |
| Shareholder loans (Note 5)                                                                               |   |         | 966,370     |   |             |   | 966,370 |   |
| Liabilities of discontinued operations                                                                   |   |         | -           |   |             |   | 14,306,475 |   |
| Other current liabilities, including related party liabilities of $102,500 (December 31, 2008- $577,250) |   |         | 210,113     |   |             |   | 673,648 |   |
| Total current liabilities                                                                                |   |         | 1,486,803   |   |             |   | 16,244,789 |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| Convertible debentures (Note 6)                                                                          |   |         | 350,000     |   |             |   | 350,000 |   |
| Total liabilities                                                                                        |   |         | 1,836,803   |   |             |   | 16,594,789 |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| COMMITMENTS AND CONTINGENCIES (Notes 1, 2, 4, 5, 6, 7, 8, 9, 10 and 11)                                  |   |         |        |   |             |   |   |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| STOCKHOLDERS' (DEFICIT)                                                                                  |   |         |        |   |             |   |   |   |
| Common stock (Note 8)                                                                                    |   |         |        |   |             |   |   |   |
| Authorized 250,000,000 shares at par value of $ 0.0001 each                                              |   |         |        |   |             |   |   |   |
| Issued and outstanding 143,554,925 shares (Dec. 31, 2008 - 131,422,086)                                  |   |         | 14,356      |   |             |   | 13,143 |   |
| Additional paid-in capital                                                                               |   |         | 30,668,451  |   |             |   | 29,430,084 |   |
| Subscriptions received                                                                                   |   |         | -           |   |             |   | 250,000 |   |
| Accumulated (deficit)                                                                                    |   |         | (32,281,719 | )      |             |   | (36,535,586 | ) |
| Accumulated other comprehensive income (loss)                                                            |   |         | -           |   |             |   | (1,775,343 | ) |
| Total stockholders' (deficit)                                                                            |   |         | (1,598,912  | )      |             |   | (8,617,702 | ) |
|                                                                                                     |   |         |        |   |             |   |   |   |
| Total liabilities and stockholders' (deficit)                                                            |   | $            | 237,891     |   |             | $      | 7,977,087 |   |

----

|                                                     |   | Three Months Ended June 30 |        |   | Six Months Ended June 30 |   |
|---------------------------------------------------------------|--------|------------------------------------------------|-------------|--------|----------------------------------------------|--------|
|                                                          |   | 2009                                           |        |   | 2008                                         |   |   | 2009 |   |   | 2008 |   |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |
| EXPENSES                                                      |   |                                           |        |   |                                         |   |   |   |   |   |   |   |
| Consulting                                                    |   | $                                              | 75,267      |   |                                         | $      | 51,439 |   |   | $ | 150,862 |   |   | $ | 103,458 |   |
| General and administration                                    |   |                                           | 6,818       |   |                                         |   | 4,517 |   |   |   | 14,166 |   |   |   | 15,302 |   |
| Interest                                                      |   |                                           | 19,809      |   |                                         |   | 11,897 |   |   |   | 39,542 |   |   |   | 17,329 |   |
| Professional fees                                             |   |                                           | 72,924      |   |                                         |   | 135,058 |   |   |   | 98,504 |   |   |   | 222,496 |   |
| Stock-based compensation (Note 9)                             |   |                                           | 225,522     |   |                                         |   | 917,158 |   |   |   | 268,503 |   |   |   | 1,834,316 |   |
| Total expenses                                                |   |                                           | 400,340     |   |                                         |   | 1,120,069 |   |   |   | 571,577 |   |   |   | 2,192,901 |   |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) for the period from operations                     |   |                                           | (400,340    | )      |                                         |   | (1,120,069 | ) |   |   | (571,577 | ) |   |   | (2,192,901 | ) |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME AND EXPENSES                                     |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Gain on disposition of subsidiaries                           |   |                                           | -           |   |                                         |   | - |   |   |   | 4,825,444 |   |   |   | - |   |
| (Loss) from discontinued operations                           |   |                                           | -           |   |                                         |   | (95,710 | ) |   |   | - |   |   |   | (881,784 | ) |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) for the period                              |   | $                                              | (400,340    | )      |                                         | $      | (1,215,779 | ) |   | $ | 4,253,867 |   |   | $ | (3,074,685 | ) |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss)                             |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation                                  |   | $                                              | -           |   |                                         |   | (112,889 | ) |   | $ | 1,775,343 |   |   |   | (307,271 | ) |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                   |   |                                           | (400,340    | )      |                                         | $      | (1,328,668 | ) |   |   | 6,029,210 |   |   | $ | (3,381,956 | ) |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share - basic and fully diluted: |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) for the period from operations                     |   | $                                              | -           |   |                                         | $      | (0.01 | ) |   | $ | - |   |   | $ | (0.02 | ) |
| Net income (loss) for the period                              |   | $                                              | -           |   |                                         | $      | (0.01 | ) |   | $ | 0.03 |   |   | $ | (0.02 | ) |
| (Loss) from discontinued operations                           |   | $                                              | -           |   |                                         | $      | - |   |   | $ | - |   |   | $ | (0.01 | ) |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common stock outstanding           |   |                                           | 140,686,793 |   |                                         |   | 131,422,086 |   |   |   | 137,121,861 |   |   |   | 131,408,261 |   |

----

|                                                                        |   | Three Months Ended June 30 |     |   | Six Months Ended June 30 |   |
|-----------------------------------------------------------------------------|--------|------------------------------------------------|----------|--------|----------------------------------------------|--------|
|                                                                        |   | 2009                                           |     |   | 2008                                         |   |   | 2009 |   |   | 2008 |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |
| Cash from (used in) operating activities:                                   |   |                                           |     |   |                                         |   |   |   |   |   |   |   |
| Net income (loss)                                                           |   | $                                              | (400,340 | )      |                                         | $      | (1,215,779 | ) |   | $ | 4,253,867 |   |   | $ | (3,074,685 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                |   |                                           | -        |   |                                         |   | 211,377 |   |   |   | - |   |   |   | 413,369 |   |
| Imputed interest expense on shareholders' loans                             |   |                                           | 12,828   |   |                                         |   | 49,107 |   |   |   | 25,657 |   |   |   | 84,935 |   |
| Shares issued for services                                                  |   |                                           | -        |   |                                         |   | 14,437 |   |   |   | - |   |   |   | 28,875 |   |
| Stock-based compensation                                                    |   |                                           | 225,522  |   |                                         |   | 917,158 |   |   |   | 268,503 |   |   |   | 1,834,316 |   |
| Gain on disposition of subsidiaries                                         |   |                                           | -        |   |                                         |   | - |   |   |   | (4,825,444 | ) |   |   | - |   |
| Net change in operating assets and liabilities:                             |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Current assets of discontinued operations                                   |   |                                           | -        |   |                                         |   | (330,358 | ) |   |   | - |   |   |   | (452,451 | ) |
| Prepaid expenses and deposits                                               |   |                                           | 18,146   |   |                                         |   | - |   |   |   | (11,554 | ) |   |   | - |   |
| Accounts payable                                                            |   |                                           | 61,248   |   |                                         |   | 84,226 |   |   |   | 38,559 |   |   |   | 105,728 |   |
| Interest payable                                                            |   |                                           | 6,981    |   |                                         |   | - |   |   |   | 13,885 |   |   |   | - |   |
| Liabilities of discontinued operations                                      |   |                                           | -        |   |                                         |   | 66,285 |   |   |   | - |   |   |   | 721,924 |   |
| Other current liabilities                                                   |   |                                           | (6,033   | )      |                                         |   | 63,716 |   |   |   | 27,465 |   |   |   | 75,385 |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net cash  (used in) from operating activities                     |   |                                           | (81,648  | )      |                                         |   | (139,831 | ) |   |   | (209,062 | ) |   |   | (262,604 | ) |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash (used in) investing activities:                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Purchases of fixed assets                                                   |   |                                           | -        |   |                                         |   | (12,156 | ) |   |   | - |   |   |   | (16,947 | ) |
| Cash disposed with disposition of subsidiaries                              |   |                                           | -        |   |                                         |   | - |   |   |   | (4,056 | ) |   |   | - |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used in) investing activities                                     |   |                                           | -        |   |                                         |   | (12,156 | ) |   |   | (4,056 | ) |   |   | (16,947 | ) |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash from (used in) financing activities:                                   |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Share subscriptions received                                                |   |                                           | -        |   |                                         |   | - |   |   |   | 200,000 |   |   |   | - |   |
| Finders fees paid or payable in cash                                        |   |                                           | (20,000  | )      |                                         |   | - |   |   |   | (36,000 | ) |   |   | - |   |
| Repayments of short-term loans                                              |   |                                           | -        |   |                                         |   | (777,562 | ) |   |   | - |   |   |   | (1,057,601 | ) |
| Loans received from shareholders                                            |   |                                           | -        |   |                                         |   | 966,593 |   |   |   | - |   |   |   | 1,482,710 |   |
| Repayments of loans from shareholders                                       |   |                                           | -        |   |                                         |   | (308 | ) |   |   | - |   |   |   | (20,800 | ) |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net cash from (used in) financing activities                                |   |                                           | (20,000  | )      |                                         |   | 188,723 |   |   |   | 164,000 |   |   |   | 404,309 |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Effect of other comprehensive income (loss) on cash                         |   |                                           | -        |   |                                         |   | (31,530 | ) |   |   | - |   |   |   | (128,746 | ) |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash                                                 |   |                                           | (101,648 | )      |                                         |   | 5,206 |   |   |   | (49,118 | ) |   |   | (3,988 | ) |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash, beginning of period                                                   |   |                                           | 127,985  |   |                                         |   | 5,364 |   |   |   | 75,455 |   |   |   | 14,558 |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash, end of period                                                         |   | $                                              | 26,337   |   |                                         | $      | 10,570 |   |   | $ | 26,337 |   |   | $ | 10,570 |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental Cash Flow Information                                          |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Non-cash items                                                              |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Imputed interest expense credited to additional paid-in capital             |   |                                           | 12,828   |   |                                         |   | 49,107 |   |   |   | 25,657 |   |   |   | 84,935 |   |
| Accounts payable settled in shares                                          |   |                                           | -        |   |                                         |   | - |   |   |   | 40,420 |   |   |   | - |   |
| Other current liabilities settled for shares                                |   |                                           | -        |   |                                         |   | - |   |   |   | 491,000 |   |   |   | - |   |
| Interest paid in cash                                                       |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
| Dividends paid                                                              |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | - |   |

----

|                                                                                            |   | CommonStock |        |   | Amount |   |   | Additional paid-in capital |   |   |  Subscriptionsreceived |   |   | CumulativeOtherComprehensiveIncome (loss) |     |   |  Accumulated(Deficit) |   |       |  Stockholders'(Deficit) |   |
|------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------|--------|--------|--------------------------------------|--------|--------|-----------------------------|--------|--------|------------------------------------------------|----------|--------|----------------------------|--------|------------|------------------------------|--------|
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |     |   |                       |   |       |                         |   |
| Balance December 31, 2008                                                                            |   |        | 131,422,086 |   |   | $      | 13,143 |                                 |   | $      | 29,430,084                  |   |   | $                                              | 250,000  |   |                       | $      | (1,775,343 | )                            |   | $ | (36,535,586 | ) |   | $ | (8,617,702 | ) |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |     |   |                       |   |       |                         |   |   |   |   |   |   |   |   |
| Issue of shares at agreed price of $0.50 per share on March 6, 2009 in settlement of fees payable    |   |        | 882,839     |   |   |   | 88     |                                 |   |   | 441,332                     |   |   |                                           | -        |   |                       |   | -          |                         |   |   | - |   |   |   | 441,420 |   |
| Issue of shares at agreed price of $0.04 per share on January 16, 2009 in settlement of fees payable |   |        | 2,250,000   |   |   |   | 225    |                                 |   |   | 89,775                      |   |   |                                           | -        |   |                       |   | -          |                         |   |   | - |   |   |   | 90,000 |   |
| Subscriptions received for shares pursuant to private placement                                      |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | 200,000  |   |                       |   | -          |                         |   |   | - |   |   |   | 200,000 |   |
| Finders fees paid in cash                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | (16,000                     | )      |   |                                           | -        |   |                       |   | -          |                         |   |   | - |   |   |   | (16,000 | ) |
| Stock-based compensation                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 42,981                      |   |   |                                           | -        |   |                       |   | -          |                         |   |   | - |   |   |   | 42,981 |   |
| Imputed interest on shareholders' loans                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 12,829                      |   |   |                                           | -        |   |                       |   | -          |                         |   |   | - |   |   |   | 12,829 |   |
| Net income for the period                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | -        |   |                       |   | 1,775,343  |                         |   |   | 4,654,207 |   |   |   | 6,429,550 |   |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |     |   |                       |   |       |                         |   |   |   |   |   |   |   |   |
| Balance March 31, 2009                                                                               |   |        | 134,554,925 |   |   | $      | 13,456 |                                 |   | $      | 30,001,001                  |   |   | $                                              | 450,000  |   |                       | $      | -          |                         |   | $ | (31,881,379 | ) |   | $ | (1,416,922 | ) |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |     |   |                       |   |       |                         |   |   |   |   |   |   |   |   |
| Issue of units on April 29, 2009 pursuant to private placement at price of $0.05 per unit            |   |        | 5,000,000   |   |   |   | 500    |                                 |   |   | 249,500                     |   |   |                                           | (250,000 | )      |                       |   | -          |                         |   |   | - |   |   |   | - |   |
| Issue of shares on April 29, 2009 pursuant to private placement at price of $0.05 per share          |   |        | 4,000,000   |   |   |   | 400    |                                 |   |   | 199,600                     |   |   |                                           | (200,000 | )      |                       |   | -          |                         |   |   | - |   |   |   | - |   |
| Finders fees paid or payable                                                                         |   |        | -           |   |   |   | -      |                                 |   |   | (20,000                     | )      |   |                                           | -        |   |                       |   | -          |                         |   |   | - |   |   |   | (20,000 | ) |
| Stock-based compensation                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 225,522                     |   |   |                                           | -        |   |                       |   | -          |                         |   |   | - |   |   |   | 225,522 |   |
| Imputed interest on shareholders' loans                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 12,828                      |   |   |                                           | -        |   |                       |   | -          |                         |   |   | - |   |   |   | 12,828 |   |
| Net (loss) for the period                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | -        |   |                       |   | -          |                         |   |   | (400,340 | ) |   |   | (400,340 | ) |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |     |   |                       |   |       |                         |   |   |   |   |   |   |   |   |
| Balance June 30, 2009                                                                                |   |        | 143,554,925 |   |   | $      | 14,356 |                                 |   | $      | 30,668,451                  |   |   | $                                              | -        |   |                       | $      | -          |                         |   | $ | (32,281,719 | ) |   | $ | (1,598,912 | ) |

----

|                                              |         | Page   |
|---------------------------------------------------|--------------|--------|
|                                              |         |   |
| Consolidated Balance Sheets                       |         | 1      |
|                                              |         |   |
| Consolidated Statements of Operations             |         | 2      |
|                                              |         |   |
| Consolidated Statements of Cash Flows             |         | 3      |
|                                              |         |   |
| Consolidated Statement of Stockholders' (Deficit) |    | 4      |

----

| Note 1 - Basis of Presentation – going concern                                                     |   | September 30 |        |   | December 31 |   |
|----------------------------------------------------------------------------------------------------------|--------|--------------|-------------|--------|-------------|--------|
|                                                                                                     |   | 2009         |        |   | 2008        |   |
|                                                                                                     |   |         |        |   |        |   |
| ASSETS                                                                                                   |   |
|                                                                                                     |   |         |        |   |        |   |
| CURRENT ASSETS                                                                                           |   |         |        |   |        |   |
| Cash                                                                                                     |   | $            | 84,508      |   |        | $      | 75,455 |   |
| Current assets of discontinued operations                                                                |   |         | -           |   |        |   | 1,449,497 |   |
| Prepaid expenses and deposits                                                                            |   |         | -           |   |        |   | - |   |
| Total current assets                                                                                     |   |         | 84,508      |   |        |   | 1,524,952 |   |
|                                                                                                     |   |         |        |   |        |   |   |   |
| Proceeds receivable for disposition of subsidiaries (Note 3)                                             |   |         | 200,000     |   |        |   | - |   |
| Non-current assets of discontinued operations                                                            |   |         | -           |   |        |   | 6,452,135 |   |
|                                                                                                     |   |         |        |   |        |   |   |   |
| Total assets                                                                                             |   | $            | 284,508     |   |        | $      | 7,977,087 |   |
|                                                                                                     |   |         |        |   |        |   |   |   |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                                                  |   |         |        |   |        |   |   |   |
|                                                                                                     |   |         |        |   |        |   |   |   |
| CURRENT LIABILITIES                                                                                      |   |         |        |   |        |   |   |   |
| Accounts payable, including related party payables of $285,258 (December 31, 2008- $200,223)             |   | $            | 318,869     |   |        | $      | 292,148 |   |
| Interest payable                                                                                         |   |         | 27,090      |   |        |   | 6,148 |   |
| Shareholder loans (Note 5)                                                                               |   |         | 966,370     |   |        |   | 966,370 |   |
| Liabilities of discontinued operations                                                                   |   |         | -           |   |        |   | 14,306,475 |   |
| Other current liabilities, including related party liabilities of $117,500 (December 31, 2008- $577,250) |   |         | 235,312     |   |        |   | 673,648 |   |
| Total current liabilities                                                                                |   |         | 1,547,641   |   |        |   | 16,244,789 |   |
|                                                                                                     |   |         |        |   |        |   |   |   |
| Convertible debentures (Note 6)                                                                          |   |         | 350,000     |   |        |   | 350,000 |   |
| Total liabilities                                                                                        |   |         | 1,897,641   |   |        |   | 16,594,789 |   |
|                                                                                                     |   |         |        |   |        |   |   |   |
| COMMITMENTS AND CONTINGENCIES (Notes 1, 2, 4, 5, 6, 7, 8, 9, 10 and 11)                                  |   |         |        |   |        |   |   |   |
|                                                                                                     |   |         |        |   |        |   |   |   |
| STOCKHOLDERS' (DEFICIT)                                                                                  |   |         |        |   |        |   |   |   |
| Common stock (Note 8)                                                                                    |   |         |        |   |        |   |   |   |
| Authorized 250,000,000 shares at par value of $ 0.0001 each                                              |   |         |        |   |        |   |   |   |
| Issued and outstanding 143,554,925 shares (Dec. 31, 2008 - 131,422,086)                                  |   |         | 14,356      |   |        |   | 13,143 |   |
| Additional paid-in capital                                                                               |   |         | 30,833,954  |   |        |   | 29,430,084 |   |
| Subscriptions received                                                                                   |   |         | 82,500      |   |        |   | 250,000 |   |
| Accumulated (deficit)                                                                                    |   |         | (32,543,943 | )      |        |   | (36,535,586 | ) |
| Accumulated other comprehensive income (loss)                                                            |   |         | -           |   |        |   | (1,775,343 | ) |
| Total stockholders' (deficit)                                                                            |   |         | (1,613,133  | )      |        |   | (8,617,702 | ) |
|                                                                                                     |   |         |        |   |        |   |   |   |
| Total liabilities and stockholders' (deficit)                                                            |   | $            | 284,508     |   |        | $      | 7,977,087 |   |

----

|                                              |   | Three Months Ended September 30 |              |   | Nine Months Ended September 30 |   |
|--------------------------------------------------------|--------|-----------------------------------------------------|-------------------|--------|----------------------------------------------------|--------|
|                                                   |   | 2009                                                |              |   | 2008                                               |   |   | 2009 |   |   | 2008 |   |
|                                                   |   |                                                |              |   |                                               |   |   |   |   |   |   |   |
| EXPENSES                                               |   |                                                |              |   |                                               |   |   |   |   |   |   |   |
| Consulting                                             |   | $                                                   | 60,000            |   |                                               | $      | 116,015 |   |   | $ | 210,862 |   |   | $ | 219,473 |   |
| General and administration                             |   |                                                | 6,835             |   |                                               |   | 4,270 |   |   |   | 21,001 |   |   |   | 19,572 |   |
| Interest                                               |   |                                                | 19,886            |   |                                               |   | 13,516 |   |   |   | 59,428 |   |   |   | 30,845 |   |
| Professional fees                                      |   |                                                | 22,829            |   |                                               |   | (27,923 | ) |   |   | 121,333 |   |   |   | 194,573 |   |
| Stock-based compensation (Note 9)                      |   |                                                | 152,674           |   |                                               |   | 928,570 |   |   |   | 421,177 |   |   |   | 2,762,886 |   |
| Total expenses                                         |   |                                                | 262,224           |   |                                               |   | 1,034,448 |   |   |   | 833,801 |   |   |   | 3,227,349 |   |
|                                                   |   |                                                |              |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) for the period from operations              |   |                                                | (262,224          | )      |                                               |   | (1,034,448 | ) |   |   | (833,801 | ) |   |   | (3,227,349 | ) |
|                                                   |   |                                                |              |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME AND EXPENSES                              |   |                                                |              |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Gain on disposition of subsidiaries                    |   |                                                | -                 |   |                                               |   | - |   |   |   | 4,825,444 |   |   |   | - |   |
| (Loss) from discontinued operations                    |   |                                                | -                 |   |                                               |   | (605,140 | ) |   |   | - |   |   |   | (1,486,924 | ) |
|                                                   |   |                                                |              |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) for the period                       |   | $                                                   | (262,224          | )      |                                               | $      | (1,639,588 | ) |   | $ | 3,991,643 |   |   | $ | (4,714,273 | ) |
|                                                   |   |                                                |              |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss)                      |   |                                                |              |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation                           |   | $                                                   | -                 |   |                                               |   | 909 |   |   | $ | 1,775,343 |   |   |   | (306,362 | ) |
|                                                   |   |                                                |              |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                            |   |                                                | (262,224          | )      |                                               | $      | (1,638,679 | ) |   |   | 5,766,986 |   |   | $ | (5,020,635 | ) |
|                                                   |   |                                                |              |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) per common share - basic and fully diluted: |   |                                                |              |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) for the period from operations              |   | $                                                   | -                 |   |                                               | $      | (0.01 | ) |   | $ | (0.01 | ) |   | $ | (0.02 | ) |
| Net income (loss) for the period                       |   | $                                                   | -                 |   |                                               | $      | (0.01 | ) |   | $ | 0.03 |   |   | $ | (0.04 | ) |
| (Loss) from discontinued operations                    |   | $                                                   | -                 |   |                                               | $      | - |   |   | $ | - |   |   | $ | (0.01 | ) |
|                                                   |   |                                                |              |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common stock outstanding    |   |                                                | 143,554,925  |   |                                               |   | 131,422,086  |   |   |   | 139,289,780  |   |   |   | 131,412,852  |   |

----

|                                                                        |   | Three Months Ended September 30 |     |   | Nine Months Ended September 30 |   |
|-----------------------------------------------------------------------------|--------|---------------------------------|----------|--------|--------------------------------|--------|
|                                                                        |   | 2009                            |     |   | 2008                           |   |   | 2009 |   |   | 2008 |   |
|                                                                        |   |                            |     |   |                           |   |   |   |   |
| Cash from (used in) operating activities:                                   |   |                            |     |   |                           |   |   |   |   |   |   |   |
| Net income (loss)                                                           |   | $                               | (262,224 | )      |                           | $      | (1,639,588 | ) |   | $ | 3,991,643 |   |   | $ | (4,714,273 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                |   |                            | -        |   |                           |   | 205,647 |   |   |   | - |   |   |   | 619,016 |   |
| Imputed interest expense on shareholders' loans                             |   |                            | 12,829   |   |                           |   | 50,999 |   |   |   | 38,486 |   |   |   | 135,934 |   |
| Shares issued for services                                                  |   |                            | -        |   |                           |   | 28,875 |   |   |   | - |   |   |   | 57,750 |   |
| Stock-based compensation                                                    |   |                            | 152,674  |   |                           |   | 928,570 |   |   |   | 421,177 |   |   |   | 2,762,886 |   |
| Gain on disposition of subsidiaries                                         |   |                            | -        |   |                           |   | - |   |   |   | (4,825,444 | ) |   |   | - |   |
| Net change in operating assets and liabilities:                             |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Current assets of discontinued operations                                   |   |                            | -        |   |                           |   | 161,320 |   |   |   | - |   |   |   | (291,131 | ) |
| Prepaid expenses and deposits                                               |   |                            | 11,554   |   |                           |   | - |   |   |   | - |   |   |   | - |   |
| Accounts payable                                                            |   |                            | 28,582   |   |                           |   | (27,985 | ) |   |   | 67,141 |   |   |   | 77,743 |   |
| Interest payable                                                            |   |                            | 7,057    |   |                           |   | 1,337 |   |   |   | 20,942 |   |   |   | 1,337 |   |
| Liabilities of discontinued operations                                      |   |                            | -        |   |                           |   | 125,139 |   |   |   | - |   |   |   | 847,063 |   |
| Other current liabilities                                                   |   |                            | 25,199   |   |                           |   | (120,658 | ) |   |   | 52,664 |   |   |   | (45,273 | ) |
|                                                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net cash  (used in) from operating activities                     |   |                            | (24,329  | )      |                           |   | (286,344 | ) |   |   | (233,391 | ) |   |   | (548,948 | ) |
|                                                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Cash (used in) investing activities:                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Purchases of fixed assets                                                   |   |                            | -        |   |                           |   | (24,995 | ) |   |   | - |   |   |   | (41,942 | ) |
| Cash disposed with disposition of subsidiaries                              |   |                            | -        |   |                           |   | - |   |   |   | (4,056 | ) |   |   |   |   |
|                                                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used in) investing activities                                     |   |                            | -        |   |                           |   | (24,995 | ) |   |   | (4,056 | ) |   |   | (41,942 | ) |
|                                                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Cash from (used in) financing activities:                                   |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Share subscriptions received                                                |   |                            | 82,500   |   |                           |   | - |   |   |   | 282,500 |   |   |   | - |   |
| Finders fees paid or payable in cash                                        |   |                            | -        |   |                           |   | - |   |   |   | (36,000 | ) |   |   | - |   |
| Proceeds of convertible debentures received                                 |   |                            | -        |   |                           |   | 350,000 |   |   |   | - |   |   |   | 350,000 |   |
| Repayments of short-term loans                                              |   |                            | -        |   |                           |   | - |   |   |   | - |   |   |   | (1,057,601 | ) |
| Loans received from shareholders                                            |   |                            | -        |   |                           |   | 80,409 |   |   |   | - |   |   |   | 1,563,119 |   |
| Repayments of loans from shareholders                                       |   |                            | -        |   |                           |   | - |   |   |   | - |   |   |   | (20,800 | ) |
|                                                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net cash from financing activities                                          |   |                            | 82,500   |   |                           |   | 430,409 |   |   |   | 246,500 |   |   |   | 834,718 |   |
|                                                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Effect of other comprehensive income (loss) on cash                         |   |                            | -        |   |                           |   | (15,781 | ) |   |   | - |   |   |   | (144,527 | ) |
|                                                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash                                                 |   |                            | 58,171   |   |                           |   | 103,289 |   |   |   | 9,053 |   |   |   | 99,301 |   |
|                                                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Cash, beginning of period                                                   |   |                            | 26,337   |   |                           |   | 10,570 |   |   |   | 75,455 |   |   |   | 14,558 |   |
|                                                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Cash, end of period                                                         |   | $                               | 84,508   |   |                           | $      | 113,859 |   |   | $ | 84,508 |   |   | $ | 113,859 |   |
|                                                                        |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental Cash Flow Information                                          |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Non-cash items                                                              |   |                            |     |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Imputed interest expense credited to additional paid-in capital             |   |                            | 12,829   |   |                           |   | 50,999 |   |   |   | 38,486 |   |   |   | 135,934 |   |
| Accounts payable settled in shares                                          |   |                            | -        |   |                           |   | - |   |   |   | 40,420 |   |   |   | - |   |
| Other current liabilities settled for shares                                |   |                            | -        |   |                           |   | - |   |   |   | 491,000 |   |   |   | - |   |
| Interest paid in cash                                                       |   |                            | -        |   |                           |   | - |   |   |   | - |   |   |   | - |   |
| Dividends paid                                                              |   |                            | -        |   |                           |   | - |   |   |   | - |   |   |   | - |   |

----

|                                                                                            |   | CommonStock |        |   | Amount |   |   | Additional paid-in capital |   |   | Subscriptionsreceived |   |   | CumulativeOtherComprehensiveIncome (loss) |     |   | Accumulated(Deficit) |   |       | Stockholders'(Deficit) |   |
|------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------|--------|--------|--------------------------------------|--------|--------|-----------------------|--------|--------|------------------------------------------------|----------|--------|----------------------|--------|------------|------------------------|--------|
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |     |   |                 |   |       |                   |   |
| Balance December 31, 2008                                                                            |   |        | 131,422,086 |   |   | $      | 13,143 |                                 |   | $      | 29,430,084            |   |   | $                                              | 250,000  |   |                 | $      | (1,775,343 | )                      |   | $ | (36,535,586 | ) |   | $ | (8,617,702 | ) |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |     |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Issue of shares at agreed price of $0.50 per share on March 6, 2009 in settlement of fees payable    |   |        | 882,839     |   |   |   | 88     |                                 |   |   | 441,332               |   |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | 441,420 |   |
| Issue of shares at agreed price of $0.04 per share on January 16, 2009 in settlement of fees payable |   |        | 2,250,000   |   |   |   | 225    |                                 |   |   | 89,775                |   |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | 90,000 |   |
| Subscriptions received for shares pursuant to private placement                                      |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | 200,000  |   |                 |   | -          |                   |   |   | - |   |   |   | 200,000 |   |
| Finders fees paid in cash                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | (16,000               | )      |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | (16,000 | ) |
| Stock-based compensation                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 42,981                |   |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | 42,981 |   |
| Imputed interest on shareholders' loans                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 12,829                |   |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | 12,829 |   |
| Net income for the period                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | -        |   |                 |   | 1,775,343  |                   |   |   | 4,654,207 |   |   |   | 6,429,550 |   |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |     |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Balance March 31, 2009                                                                               |   |        | 134,554,925 |   |   | $      | 13,456 |                                 |   | $      | 30,001,001            |   |   | $                                              | 450,000  |   |                 | $      | -          |                   |   | $ | (31,881,379 | ) |   | $ | (1,416,922 | ) |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |     |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Issue of units on April 29, 2009 pursuant to private placement at price of $0.05 per unit            |   |        | 5,000,000   |   |   |   | 500    |                                 |   |   | 249,500               |   |   |                                           | (250,000 | )      |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Issue of shares on April 29, 2009 pursuant to private placement at price of $0.05 per share          |   |        | 4,000,000   |   |   |   | 400    |                                 |   |   | 199,600               |   |   |                                           | (200,000 | )      |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Finders fees paid or payable                                                                         |   |        | -           |   |   |   | -      |                                 |   |   | (20,000               | )      |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | (20,000 | ) |
| Stock-based compensation                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 225,522               |   |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | 225,522 |   |
| Imputed interest on shareholders' loans                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 12,828                |   |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | 12,828 |   |
| Net (loss) for the period                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | -        |   |                 |   | -          |                   |   |   | (400,340 | ) |   |   | (400,340 | ) |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |     |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Balance June 30, 2009                                                                                |   |        | 143,554,925 |   |   | $      | 14,356 |                                 |   | $      | 30,668,451            |   |   | $                                              | -        |   |                 | $      | -          |                   |   | $ | (32,281,719 | ) |   | $ | (1,598,912 | ) |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |     |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Issue of units on April 29, 2009 pursuant to private placement at price of $0.05 per unit            |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Subscriptions received for shares pursuant to private placement                                      |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | 82,500   |   |                 |   | -          |                   |   |   | - |   |   |   | 82,500 |   |
| Finders fees paid or payable                                                                         |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Stock-based compensation                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 152,674               |   |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | 152,674 |   |
| Imputed interest on shareholders' loans                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 12,829                |   |   |                                           | -        |   |                 |   | -          |                   |   |   | - |   |   |   | 12,829 |   |
| Net (loss) for the period                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | -        |   |                 |   | -          |                   |   |   | (262,224 | ) |   |   | (262,224 | ) |
|                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |     |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Balance September 30, 2009                                                                           |   |        | 143,554,925 |   |   | $      | 14,356 |                                 |   | $      | 30,833,954            |   |   | $                                              | 82,500   |   |                 | $      | -          |                   |   | $ | (32,543,943 | ) |   | $ | (1,613,133 | ) |

----

|                                              |         | Page   |
|---------------------------------------------------|--------------|--------|
|                                              |         |   |
| Report of Independent Public Accountants          |         | 1      |
|                                              |         |   |
| Consolidated Balance Sheet                        |         | 2      |
|                                              |         |   |
| Consolidated Statements of Operations             |         | 3      |
|                                              |         |   |
| Consolidated Statements of Cash Flows             |         | 4      |
|                                              |         |   |
| Consolidated Statement of Stockholders' (Deficit) |         | 5      |
|                                              |         |   |
| Notes to Consolidated Financial Statements        |    | 6      |

----

----

| Note 1 - Basis of Presentation - going concern                                |   | December 31 |        |   | December 31 |   |        | December 31 |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|------------------|-------------|--------|------------------|--------|-------------|------------------|--------|
|                                                                                                                  |   | 2010             |        |   | 2009             |   |        | 2008             |   |
|                                                                                                                  |   |             |        |   |             |   |        |             |   |
| ASSETS                                                                                                                |   |             |        |   |             |   |        |             |   |
|                                                                                                                  |   |             |        |   |             |   |        |             |   |
| CURRENT ASSETS                                                                                                        |   |             |        |   |             |   |        |             |   |
| Cash                                                                                                                  |   | $                | 200,176     |   |             | $      | 19,678      |             |   | $ | 75,455 |   |
| Proceeds receivable for disposition of subsidiaries (Note 3)                                                          |   |             | -           |   |             |   | 200,000     |             |   |   | - |   |
| Current assets of discontinued operations                                                                             |   |             | -           |   |             |   | -           |             |   |   | 1,449,497 |   |
| Total current assets                                                                                                  |   |             | 200,176     |   |             |   | 219,678     |             |   |   | 1,524,952 |   |
|                                                                                                                  |   |             |        |   |             |   |        |             |   |   |   |   |
| Fixed assets (Note 4)                                                                                                 |   |             | 10,000      |   |             |   | -           |             |   |   | - |   |
| Non-current assets of discontinued operations                                                                         |   |             | -           |   |             |   | -           |             |   |   | 6,452,135 |   |
|                                                                                                                  |   |             |        |   |             |   |        |             |   |   |   |   |
| Total assets                                                                                                          |   | $                | 210,176     |   |             | $      | 219,678     |             |   | $ | 7,977,087 |   |
|                                                                                                                  |   |             |        |   |             |   |        |             |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                                                               |   |             |        |   |             |   |        |             |   |   |   |   |
|                                                                                                                  |   |             |        |   |             |   |        |             |   |   |   |   |
| CURRENT LIABILITIES                                                                                                   |   |             |        |   |             |   |        |             |   |   |   |   |
| Accounts payable, including related party payables of $5,000 (2009- $5,000; 2008- $200,223) (Note 10)                 |   | $                | 97,128      |   |             | $      | 73,922      |             |   | $ | 292,148 |   |
| Interest payable                                                                                                      |   |             | 42,559      |   |             |   | 34,148      |             |   |   | 6,148 |   |
| Shareholder loans (Note 5)                                                                                            |   |             | 40,000      |   |             |   | 40,000      |             |   |   | 966,370 |   |
| Liabilities of discontinued operations                                                                                |   |             | -           |   |             |   | -           |             |   |   | 14,306,475 |   |
| Other current liabilities, including related party liabilities of $110,150 (2009- $132,500; 2008- $577,250) (Note 10) |   |             | 256,408     |   |             |   | 291,012     |             |   |   | 673,648 |   |
| Total current liabilities                                                                                             |   |             | 436,095     |   |             |   | 439,082     |             |   |   | 16,244,789 |   |
|                                                                                                                  |   |             |        |   |             |   |        |             |   |   |   |   |
| Convertible debentures (Note 6)                                                                                       |   |             | 250,000     |   |             |   | 350,000     |             |   |   | 350,000 |   |
| Total liabilities                                                                                                     |   |             | 686,095     |   |             |   | 789,082     |             |   |   | 16,594,789 |   |
|                                                                                                                  |   |             |        |   |             |   |        |             |   |   |   |   |
| COMMITMENTS AND CONTINGENCIES (Notes 1, 2, 4, 5, 6, 7, 8, 9, 10 and 11)                                               |   |             |        |   |             |   |        |             |   |   |   |   |
|                                                                                                                  |   |             |        |   |             |   |        |             |   |   |   |   |
| STOCKHOLDERS' (DEFICIT)                                                                                               |   |             |        |   |             |   |        |             |   |   |   |   |
| Common stock (Note 8)                                                                                                 |   |             |        |   |             |   |        |             |   |   |   |   |
| Authorized 250,000,000 shares at par value of $ 0.0001 each                                                           |   |             |        |   |             |   |        |             |   |   |   |   |
| Issued and outstanding 216,304,920 shares (2009-143,554,925; 2008 -131,422,086)                                       |   |             | 21,631      |   |             |   | 14,356      |             |   |   | 13,143 |   |
| Additional paid-in capital                                                                                            |   |             | 32,892,007  |   |             |   | 31,309,410  |             |   |   | 29,430,084 |   |
| Subscriptions received                                                                                                |   |             | 95,014      |   |             |   | 1,013,870   |             |   |   | 250,000 |   |
| Accumulated (deficit)                                                                                                 |   |             | (33,484,571 | )      |             |   | (32,907,040 | )                |   |   | (36,535,586 | ) |
| Accumulated other comprehensive income (loss)                                                                         |   |             | -           |   |             |   | -           |             |   |   | (1,775,343 | ) |
| Total stockholders' (deficit)                                                                                         |   |             | (475,919    | )      |             |   | (569,404    | )                |   |   | (8,617,702 | ) |
|                                                                                                                  |   |             |        |   |             |   |        |             |   |   |   |   |
| Total liabilities and stockholders' (deficit)                                                                         |   | $                | 210,176     |   |             | $      | 219,678     |             |   | $ | 7,977,087 |   |

----

|                                                        |   | Years Ended December 31 |        |
|-------------------------------------------------------------|--------|----------------------------------------|-------------|
|                                                        |   | 2010                                   |        |   | 2009 |   |   | 2008 |   |
|                                                        |   |                                   |        |   |   |   |   |   |   |
| EXPENSES                                                    |   |                                   |        |   |   |   |   |   |   |
| Consulting                                                  |   | $                                      | 129,700     |   |   | $ | 307,191 |   |   | $ | 271,089 |   |
| Finders fees                                                |   |                                   | -           |   |   |   | - |   |   |   | 35,000 |   |
| General and administration                                  |   |                                   | 16,529      |   |   |   | 38,027 |   |   |   | 33,589 |   |
| Interest                                                    |   |                                   | 24,535      |   |   |   | 79,314 |   |   |   | 47,887 |   |
| Professional fees                                           |   |                                   | 130,309     |   |   |   | 234,939 |   |   |   | 302,207 |   |
| Stock-based compensation (Note 9)                           |   |                                   | 276,458     |   |   |   | 537,427 |   |   |   | 3,055,796 |   |
| Total expenses                                              |   |                                   | 577,531     |   |   |   | 1,196,898 |   |   |   | 3,745,568 |   |
|                                                        |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Net (loss) for the year from continuing operations          |   |                                   | (577,531    | ) |   |   | (1,196,898 | ) |   |   | (3,745,568 | ) |
|                                                        |   |                                   |        |   |   |   |   |   |   |   |   |   |
| DISCONTINUED OPERATIONS                                     |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Gain on disposition of subsidiaries (Note 2)                |   |                                   | -           |   |   |   | 4,825,444 |   |   |   | - |   |
| (Loss) from discontinued operations                         |   |                                   | -           |   |   |   | - |   |   |   | (2,028,148 | ) |
|                                                        |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Net income (loss) for the year from discontinued operations |   |                                   | -           |   |   |   | 4,825,444 |   |   |   | (2,028,148 | ) |
|                                                        |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Net income (loss) for the year                              |   | $                                      | (577,531    | ) |   | $ | 3,628,546 |   |   | $ | (5,773,716 | ) |
|                                                        |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss)                           |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Foreign currency translation from discontinued operations   |   | $                                      | -           |   |   | $ | 1,775,343 |   |   | $ | (308,966 | ) |
|                                                        |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                 |   | $                                      | (577,531    | ) |   | $ | 5,403,889 |   |   | $ | (6,082,682 | ) |
|                                                        |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Net (loss) per common share - basic and fully diluted:      |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Net (loss) for the year from continuing operations          |   | $                                      | -           |   |   | $ | (0.01 | ) |   | $ | (0.03 | ) |
| Net income (loss) for the year from discontinued operations |   | $                                      | -           |   |   | $ | 0.03 |   |   | $ | (0.02 | ) |
| Net income (loss) for the year                              |   | $                                      | -           |   |   | $ | 0.03 |   |   | $ | (0.04 | ) |
|                                                        |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Weighted average number of common stock outstanding         |   |                                   | 182,176,885 |   |   |   | 140,364,830 |   |   |   | 131,412,852 |   |

----

|                                                                        |   | Years Ended December 31 |     |
|-----------------------------------------------------------------------------|--------|-------------------------|----------|
|                                                                        |   | 2010                    |     |   | 2009 |   |   | 2008 |   |
| Cash from (used in) operating activities:                                   |   |                    |     |   |   |   |   |   |   |
| Net income (loss)                                                           |   | $                       | (577,531 | ) |   | $ | 3,628,546 |   |   | $ | (5,773,716 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                    |     |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                |   |                    | -        |   |   |   | - |   |   |   | 784,930 |   |
| (Gain) loss on disposition of fixed assets                                  |   |                    | -        |   |   |   | - |   |   |   | (1,218 | ) |
| Imputed interest expense on shareholders' loans                             |   |                    | 2,124    |   |   |   | 51,314 |   |   |   | 188,752 |   |
| Shares issued for services                                                  |   |                    | -        |   |   |   | - |   |   |   | 57,750 |   |
| Stock-based compensation                                                    |   |                    | 276,458  |   |   |   | 537,427 |   |   |   | 3,055,796 |   |
| Gain on disposition of subsidiaries                                         |   |                    | -        |   |   |   | (4,825,444 | ) |   |   | - |   |
| Net change in operating assets and liabilities:                             |   |                    |     |   |   |   |   |   |   |   |   |   |
| Current assets of discontinued operations                                   |   |                    | -        |   |   |   | - |   |   |   | (28,691 | ) |
| Accounts payable                                                            |   |                    | 108,220  |   |   |   | 143,572 |   |   |   | 34,289 |   |
| Interest payable                                                            |   |                    | 22,411   |   |   |   | 28,000 |   |   |   | 6,148 |   |
| Liabilities of discontinued operations                                      |   |                    | -        |   |   |   | - |   |   |   | 956,458 |   |
| Other current liabilities                                                   |   |                    | (34,604  | ) |   |   | 108,364 |   |   |   | (33,829 | ) |
|                                                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash  (used in) from operating activities                     |   |                    | (202,922 | ) |   |   | (328,221 | ) |   |   | (753,331 | ) |
|                                                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash (used in) investing activities:                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Purchases of fixed assets                                                   |   |                    | -        |   |   |   | - |   |   |   | (108,834 | ) |
| Proceeds of disposition of fixed assets                                     |   |                    | -        |   |   |   | - |   |   |   | 3,628 |   |
| Collection of proceeds of disposition of subsidiary                         |   |                    | 200,000  |   |   |   | - |   |   |   | - |   |
| Cash disposed with disposition of subsidiaries                              |   |                    | -        |   |   |   | (4,056 | ) |   |   | - |   |
|                                                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash (used in) investing activities                                     |   |                    | 200,000  |   |   |   | (4,056 | ) |   |   | (105,206 | ) |
|                                                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash from (used in) financing activities:                                   |   |                    |     |   |   |   |   |   |   |   |   |   |
| Share subscriptions received                                                |   |                    | 202,500  |   |   |   | 312,500 |   |   |   | 250,000 |   |
| Finders fees paid in cash                                                   |   |                    | (19,080  | ) |   |   | (36,000 | ) |   |   | - |   |
| Proceeds of convertible debentures received                                 |   |                    | -        |   |   |   | - |   |   |   | 350,000 |   |
| Repayments of short-term loans                                              |   |                    | -        |   |   |   | - |   |   |   | (1,361,821 | ) |
| Loans received from shareholders                                            |   |                    | -        |   |   |   | - |   |   |   | 1,851,005 |   |
| Repayments of loans from shareholders                                       |   |                    | -        |   |   |   | - |   |   |   | (21,123 | ) |
|                                                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash from financing activities                                          |   |                    | 183,420  |   |   |   | 276,500 |   |   |   | 1,068,061 |   |
|                                                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Effect of other comprehensive income (loss) on cash                         |   |                    | -        |   |   |   | - |   |   |   | (148,627 | ) |
|                                                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash                                                 |   |                    | 180,498  |   |   |   | (55,777 | ) |   |   | 60,897 |   |
|                                                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash, beginning of period                                                   |   |                    | 19,678   |   |   |   | 75,455 |   |   |   | 14,558 |   |
|                                                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash, end of period                                                         |   | $                       | 200,176  |   |   | $ | 19,678 |   |   | $ | 75,455 |   |
|                                                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Supplemental Cash Flow Information                                          |   |                    |     |   |   |   |   |   |   |   |   |   |
| Non-cash items                                                              |   |                    |     |   |   |   |   |   |   |   |   |   |
| Imputed interest expense credited to additional paid-in capital             |   |                    | 2,124    |   |   |   | 51,314 |   |   |   | 188,752 |   |
| Interest payable converted to shares                                        |   |                    | 14,000   |   |   |   | - |   |   |   | - |   |
| Accounts payable settled in shares                                          |   |                    | -        |   |   |   | 80,420 |   |   |   | - |   |
| Accounts payable forgiven                                                   |   |                    | -        |   |   |   | 281,378 |   |   |   | - |   |
| Other current liabilities settled for shares                                |   |                    | 85,014   |   |   |   | 491,000 |   |   |   | - |   |
| Shareholder loans settled in shares                                         |   |                    | -        |   |   |   | 861,370 |   |   |   | - |   |
| Shareholder loans forgiven                                                  |   |                    | -        |   |   |   | 65,000 |   |   |   | - |   |
| Fixed asset purchase payable in shares                                      |   |                    | 10,000   |   |   |   | - |   |   |   | - |   |
| Interest paid in cash                                                       |   |                    | -        |   |   |   | - |   |   |   | - |   |
| Dividends paid                                                              |   |                    | -        |   |   |   | - |   |   |   | - |   |

----

|                                                                                                     |   | CommonStock |        |   | Amount |   |   | Additionalpaid-in capital |   |   | Subscriptionsreceived |   |   | CumulativeOtherComprehensiveIncome (loss) |      |   | Accumulated(Deficit) |   |       | Stockholders'(Deficit) |   |
|---------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------|--------|--------|--------------------------------|--------|--------|-----------------------|--------|--------|------------------------------------------------|-----------|--------|----------------------|--------|------------|------------------------|--------|
|                                                                                                          |   |        |        |   |   |   |   |                           |   |   |                  |   |   |                                           |      |   |                 |   |       |                   |   |
| Balance December 31, 2007                                                                                     |   |        | 131,312,086 |   |   | $      | 13,132 |                           |   | $      | 26,127,797            |   |   | $                                              | -         |   |                 | $      | (1,466,377 | )                      |   | $ | (30,761,870 | ) |   | $ | (6,087,318 | ) |
|                                                                                                          |   |        |        |   |   |   |   |                           |   |   |                  |   |   |                                           |      |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Issue of shares for services                                                                                  |   |        | 110,000     |   |   |   | 11     |                           |   |   | 57,739                |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 57,750 |   |
| Stock-based compensation                                                                                      |   |        | -           |   |   |   | -      |                           |   |   | 3,055,796             |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 3,055,796 |   |
| Subscriptions received for units pursuant to private placement                                                |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | 250,000   |   |                 |   | -          |                   |   |   | - |   |   |   | 250,000 |   |
| Imputed interest on shareholders' loans                                                                       |   |        | -           |   |   |   | -      |                           |   |   | 188,752               |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 188,752 |   |
| Net (loss) for the year                                                                                       |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | -         |   |                 |   | (308,966   | )                      |   |   | (5,773,716 | ) |   |   | (6,082,682 | ) |
|                                                                                                          |   |        |        |   |   |   |   |                           |   |   |                  |   |   |                                           |      |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Balance December 31, 2008                                                                                     |   |        | 131,422,086 |   |   | $      | 13,143 |                           |   | $      | 29,430,084            |   |   | $                                              | 250,000   |   |                 | $      | (1,775,343 | )                      |   | $ | (36,535,586 | ) |   | $ | (8,617,702 | ) |
|                                                                                                          |   |        |        |   |   |   |   |                           |   |   |                  |   |   |                                           |      |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Issue of shares at agreed price of $0.50 per share on March 6, 2009 in settlement of fees payable             |   |        | 882,839     |   |   |   | 88     |                           |   |   | 441,332               |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 441,420 |   |
| Issue of shares at agreed price of $0.04 per share on January 16, 2009 in settlement of fees payable          |   |        | 2,250,000   |   |   |   | 225    |                           |   |   | 89,775                |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 90,000 |   |
| Issue of units on April 29, 2009 pursuant to private placement at price of $0.05 per unit                     |   |        | 5,000,000   |   |   |   | 500    |                           |   |   | 249,500               |   |   |                                           | (250,000  | )      |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Subscriptions received for shares pursuant to private placements at $0.05 per share                           |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | 200,000   |   |                 |   | -          |                   |   |   | - |   |   |   | 200,000 |   |
| Issue of shares on April 29, 2009 pursuant to private placement at price of $0.05 per share                   |   |        | 4,000,000   |   |   |   | 400    |                           |   |   | 199,600               |   |   |                                           | (200,000  | )      |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Subscriptions received for shares pursuant to private placement at $0.015 per share                           |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | 112,500   |   |                 |   | -          |                   |   |   | - |   |   |   | 112,500 |   |
| Subscription received for shares pursuant to agreement to settle accounts payable                             |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | 40,000    |   |                 |   | -          |                   |   |   | - |   |   |   | 40,000 |   |
| Subscriptions received for shares pursuant to agreements to settle shareholder loan                           |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | 861,370   |   |                 |   | -          |                   |   |   | - |   |   |   | 861,370 |   |
| Accounts payable forgiven by a shareholder                                                                    |   |        | -           |   |   |   | -      |                           |   |   | 281,378               |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 281,378 |   |
| Shareholder loan forgiven                                                                                     |   |        | -           |   |   |   | -      |                           |   |   | 65,000                |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 65,000 |   |
| Finders fees paid or payable in cash                                                                          |   |        | -           |   |   |   | -      |                           |   |   | (36,000               | )      |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | (36,000 | ) |
| Stock-based compensation                                                                                      |   |        | -           |   |   |   | -      |                           |   |   | 537,427               |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 537,427 |   |
| Imputed interest on shareholders' loans                                                                       |   |        | -           |   |   |   | -      |                           |   |   | 51,314                |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 51,314 |   |
| Net income for the year                                                                                       |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | -         |   |                 |   | 1,775,343  |                   |   |   | 3,628,546 |   |   |   | 5,403,889 |   |
|                                                                                                          |   |        |        |   |   |   |   |                           |   |   |                  |   |   |                                           |      |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Balance December 31, 2009                                                                                     |   |        | 143,554,925 |   |   | $      | 14,356 |                           |   | $      | 31,309,410            |   |   | $                                              | 1,013,870 |   |                 | $      | -          |                   |   | $ | (32,907,040 | ) |   | $ | (569,404 | ) |
|                                                                                                          |   |        |        |   |   |   |   |                           |   |   |                  |   |   |                                           |      |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Issue of shares at agreed price of $0.30 per share on February 17, 2010 in settlement of shareholder loans    |   |        | 1,000,000   |   |   |   | 100    |                           |   |   | 299,900               |   |   |                                           | (300,000  | )      |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Issue of shares at agreed price of $0.02 per share on April 21, 2010 in settlement of fees payable            |   |        | 2,000,000   |   |   |   | 200    |                           |   |   | 39,800                |   |   |                                           | (40,000   | )      |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Subscriptions received for shares pursuant to private placements at $0.015 per share                          |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | 51,500    |   |                 |   | -          |                   |   |   | - |   |   |   | 51,500 |   |
| Issue of shares on April 22, 2010 pursuant to private placement at price of $0.015 per share                  |   |        | 10,933,329  |   |   |   | 1,093  |                           |   |   | 162,907               |   |   |                                           | (164,000  | )      |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Issue of shares April 22, 2010 as finders' fees                                                               |   |        | 750,000     |   |   |   | 75     |                           |   |   | (75                   | )      |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Shares issued April 23, 2010 at agreed price of $0.003 pursuant to conversion of convertible debentures       |   |        | 38,000,000  |   |   |   | 3,800  |                           |   |   | 110,200               |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 114,000 |   |
| Subscriptions received for shares pursuant to private placements at $0.015 per share                          |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | 151,000   |   |                 |   | -          |                   |   |   | - |   |   |   | 151,000 |   |
| Shares issued September 15, 2010 at $0.015 per share pursuant to private placement                            |   |        | 6,666,666   |   |   |   | 667    |                           |   |   | 99,333                |   |   |                                           | (100,000  | )      |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Issue of shares at agreed price of $0.056137 per share on December 29, 2010 in settlement of shareholder loan |   |        | 10,000,000  |   |   |   | 1,000  |                           |   |   | 560,370               |   |   |                                           | (561,370  | )      |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Shares issued December 29, 2010 at $0.015 per share pursuant to private placement                             |   |        | 3,400,000   |   |   |   | 340    |                           |   |   | 50,660                |   |   |                                           | (51,000   | )      |                 |   | -          |                   |   |   | - |   |   |   | - |   |
| Subscription received for shares pursuant to agreement to settle fees payable                                 |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | 85,014    |   |                 |   | -          |                   |   |   | - |   |   |   | 85,014 |   |
| Subscription received for shares pursuant to fixed asset purchase agreement                                   |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | 10,000    |   |                 |   | -          |                   |   |   | - |   |   |   | 10,000 |   |
| Finders fees paid in cash                                                                                     |   |        | -           |   |   |   | -      |                           |   |   | (19,080               | )      |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | (19,080 | ) |
| Stock-based compensation                                                                                      |   |        | -           |   |   |   | -      |                           |   |   | 276,458               |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 276,458 |   |
| Imputed interest on shareholders' loans                                                                       |   |        | -           |   |   |   | -      |                           |   |   | 2,124                 |   |   |                                           | -         |   |                 |   | -          |                   |   |   | - |   |   |   | 2,124 |   |
| Net (loss) for the year                                                                                       |   |        | -           |   |   |   | -      |                           |   |   | -                     |   |   |                                           | -         |   |                 |   | -          |                   |   |   | (577,531 | ) |   |   | (577,531 | ) |
|                                                                                                          |   |        |        |   |   |   |   |                           |   |   |                  |   |   |                                           |      |   |                 |   |       |                   |   |   |   |   |   |   |   |   |
| Balance December 31, 2010                                                                                     |   |        | 216,304,920 |   |   | $      | 21,631 |                           |   | $      | 32,892,007            |   |   | $                                              | 95,014    |   |                 | $      | -          |                   |   | $ | (33,484,571 | ) |   | $ | (475,919 | ) |

----

----

----

----

|   | 1. | The Company’s Chairman and Chief Executive Officer, who was also general manager of the subsidiaries, resigned his positions with Sinobiomed Inc. but retained management control of the subsidiaries by virtue of his nominee’s status as Chief Representative of the subsidiaries, a legal status in China that is difficult to change without cooperation of the incumbent. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | The debt of the subsidiaries in China exceeded the value of the assets and the prospects for generating sufficient cash flow to repay the debt were doubtful. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Assets of the subsidiaries were subject to seizure order as noted above. |
|--------|----|--------------------------------------------------------------------------|

----

----

| Computer equipment | 3 years |
|--------------------|---------|

----

----

|                           |   | December 31,2010 |   |   | December 31,2009 |   |   | December 31,2008 |   |
|--------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|--------|-----------------------|--------|
|                           |   |                  |   |   |                  |   |   |                  |   |
| Computer equipment             |   | $                     | 10,000 |   |                  | $      | -      |                  |   | $ | - |   |
| Less: Accumulated depreciation |   |                  | -      |   |                  |   | -      |                  |   |   | - |   |
|                           |   |                  |   |   |                  |   |   |                  |   |   |   |   |
|                           |   | $                     | 10,000 |   |                  | $      | -      |                  |   | $ | - |   |

----

|   | 1. | the conversion price contained in the convertible debenture issued by the Company in the amount of $100,000 on July 30, 2008, including any accrued and unpaid interest thereon, is amended from $0.30 per share to $0.003 per share; and |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | the conversion price contained in the convertible debenture issued by the Company in the amount of $250,000 on November 11, 2008, including any accrued and unpaid interest thereon, is amended from $0.30 per share to $0.005 per share. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                             |   | 2010   |     |   | 2009   |   |       | 2008   |   |
|--------------------------------------------------|--------|--------|----------|--------|--------|--------|------------|--------|--------|
| Income (loss) for the year ended December 31     |   | $      | (577,531 | )      |   | $      | 3,628,546  |   |   | $ | (5,773,716 | )  |
| Combined federal and state tax rate              |   |   | 39.74    | %      |   |   | 39.74      | %      |   |   | 39.74 | % |
|                                             |   |   |     |   |   |   |       |   |   |   |   |   |
| Expected income tax provision (recovery)         |   | $      | (229,522 | )      |   | $      | 1,442,057  |   |   | $ | (2,294,590 | ) |
| Non-taxable gain on disposition of subsidiaries  |   |   | —  |   |   |   | (1,917,728 | )      |   |   | — |   |
| Non-deductible loss from discontinued operations |   |   | —  |   |   |   | —    |   |   |   | 806,027 |   |
| Non-deductible stock-based compensation expenses |   |   | 109,870  |   |   |   | 213,584    |   |   |   | 1,214,434 |   |
| Non-deductible imputed interest expenses         |   |   | 844      |   |   |   | 20,393     |   |   |   | 16,588 |   |
| Valuation allowance                              |   |   | 118,808  |   |   |   | 241,694    |   |   |   | 257,541 |   |
|                                             |   |   |     |   |   |   |       |   |   |   |   |   |
| Income tax expense                               |   | $      | —  |   |   | $      | —    |   |   | $ | — |   |

----

----

| Exercise Price |   |   | Number of Warrants |   | Expiry Date |
|---------------------|--------|--------|------------------------------|--------|------------------|
| $                   | 0.07   |   |                         |   | 2,500,000        |   | April 29, 2011 |

----

----

----

|                                   |   | Number ofoptions |       |   | WeightedAverageExercisePrice |   |   | WeightedAverageGrant-dateFair Value |   |   | AggregateIntrinsicValue |   |
|----------------------------------------|--------|------------------|------------|--------|------------------------------|--------|--------|-------------------------------------|--------|--------|-------------------------|--------|
| Options Outstanding, January 1, 2007   |   |             | -          |   |                         |   |   |                                |   |   |                    |   |   |
|                                   |   |             |       |   |                         |   |   |                                |   |   |                    |   |   |
| Options granted in 2007                |   |             | 8,000,000  |   |                         |   | 0.06   |                                |   |   | 0.83                    |   |   | $ | nil |   |
|                                   |   |             |       |   |                         |   |   |                                |   |   |                    |   |   |   |   |   |
| Options Outstanding, December 31, 2007 |   |             | 8,000,000  |   |                         |   | 0.06   |                                |   |   | 0.83                    |   |   | $ | nil |   |
|                                   |   |             |       |   |                         |   |   |                                |   |   |                    |   |   |   |   |   |
| Options granted in 2008                |   |             | 500,000    |   |                         |   | 0.06   |                                |   |   | 0.16                    |   |   | $ | nil |   |
|                                   |   |             |       |   |                         |   |   |                                |   |   |                    |   |   |   |   |   |
| Options Outstanding, December 31, 2008 |   |             | 8,500,000  |   |                         |   | 0.06   |                                |   |   | 0.79                    |   |   | $ | nil |   |
|                                   |   |             |       |   |                         |   |   |                                |   |   |                    |   |   |   |   |   |
| Options granted in 2009                |   |             | 15,500,000 |   |                         |   | 0.06   |                                |   |   | 0.05                    |   |   | $ | nil |   |
|                                   |   |             |       |   |                         |   |   |                                |   |   |                    |   |   |   |   |   |
| Options cancelled in 2009              |   |             | 7,800,000  |   |                         |   | 0.06   |                                |   |   | 0.54                    |   |   | $ | nil |   |
|                                   |   |             |       |   |                         |   |   |                                |   |   |                    |   |   |   |   |   |
| Options Outstanding, December 31, 2009 |   |             | 16,200,000 |   |                         |   | 0.06   |                                |   |   | 0.16                    |   |   | $ | nil |   |
|                                   |   |             |       |   |                         |   |   |                                |   |   |                    |   |   |   |   |   |
| Options granted in 2010                |   |             | 5,000,000  |   |                         |   | 0.03   |                                |   |   | 0.13                    |   |   | $ | nil |   |
|                                   |   |             |       |   |                         |   |   |                                |   |   |                    |   |   |   |   |   |
| Options cancelled in 2010              |   |             | 10,250,000 |   |                         |   | 0.06   |                                |   |   | 0.13                    |   |   | $ | nil |   |
|                                   |   |             |       |   |                         |   |   |                                |   |   |                    |   |   |   |   |   |
| Options Outstanding, December 31, 2010 |   |             | 10,950,000 |   |                         |   | 0.05   |                                |   |   | 0.13                    |   |   | $ | nil |   |

|        |   |                  |      |      |   | Weighted        |   |                                |   |               |   |
|------------------|--------|-----------------------|-----------|-----------|--------|-----------------|--------|-------------------------------------|--------|--------------------|--------|
| Vested at   |   | Range ofExercise |      | Number    |   | AverageExercise |   | CompensationExpense to be |   | AggregateIntrinsic |   |
| December 31,     |   | Prices                |      | of Shares |   | Price           |   | Recognized                          |   | Value              |   |
| 2010 and earlier |   |                  | 0.03-0.06 |      |   | 6,783,333       |   |                                | 0.06   |               |   | - |   | $ | nil |   |
| 2010             |   |                  | 0.03      |      |   | 2,500,000       |   |                                | 0.03   |               | $      | 325,000 |   |   | nil |   |
| 2011             |   |                  | 0.03      |      |   | 1,666,667       |   |                                | 0.03   |               |   | 216,667 |   |   | nil |   |
|             |   |                  |      |      |   | 10,950,000      |   |                                |   |               | $      | 541,667 |   | $ | nil |   |

----

|                                              |   | Numberoutstanding |       |   | Total fair value |   |      | Weighted average grant-date fair value |   |
|---------------------------------------------------|--------|-------------------|------------|--------|----------------------------|--------|-----------|------------------------------------------------------------|--------|
|                                              |   |              |       |   |                       |   |      |                                                       |   |
| Non-vested options outstanding, January 1, 2009   |   |              | 1,379,167  |   |                       | $      | 1,190,113 |                                                       |   | $ | 0.843 |   |
|                                              |   |              |       |   |                       |   |      |                                                       |   |   |   |   |
| Options vested in year ended December 31, 2009    |   |              | 11,887,500 |   |                       | $      | 537,427   |                                                       |   | $ | 0.05 |   |
|                                              |   |              |       |   |                       |   |      |                                                       |   |   |   |   |
| Non-vested options outstanding, January 1, 2010   |   |              | 3,362,500  |   |                       | $      | 168,125   |                                                       |   | $ | 0.05 |   |
|                                              |   |              |       |   |                       |   |      |                                                       |   |   |   |   |
| Options vested in year ended December 31, 2010    |   |              | 4,195,833  |   |                       | $      | 276,458   |                                                       |   | $ | 0.07 |   |
|                                              |   |              |       |   |                       |   |      |                                                       |   |   |   |   |
| Non-vested options outstanding, December 31, 2010 |   |              | 4,166,667  |   |                       | $      | 541,667   |                                                       |   | $ | 0.13 |   |

| Expiration Date                    |   | Range ofExercise Prices |   |   | Number |   |   | Weighted average |   |
|-----------------------------------------|--------|-----------------------------------|--------|--------|--------|--------|--------|-----------------------|--------|
| Year Ending December 31, |   | High                              |   |   | Low    |   |   | of Shares        |   |   | exercise price |   |
| 2012                                    |   |                              | 0.06   |   |   |   | 0.06   |                  |   |   | 1,250,000 |   |   | $ | 0.06 |   |
| 2014                                    |   |                              | 0.06   |   |   |   | 0.06   |                  |   |   | 4,700,000 |   |   | $ | 0.06 |   |
| 2015                                    |   |                              | 0.03   |   |   |   | 0.03   |                  |   |   | 5,000,000 |   |   | $ | 0.03 |   |

|                     |   | Marchand May,2007 |    |   | November,2007 |   |    | August,2008repricing |   |         | October,2008 |   |
|--------------------------|--------|------------------------|---------|--------|---------------|--------|---------|----------------------|--------|--------------|--------------|--------|
| Volatility:              |   |                   | 41.0    | %      |          |   | 94      | %                    |   |         | 104          | %      |   |   | 128 | % |
| Risk-free interest rate: |   |                   | 4.92    | %      |          |   | 3.42    | %                    |   |         | 2.06         | %      |   |   | 2.06 | % |
| Dividend yield:          |   |                   | — |   |          |   | — |                 |   |         | —      |   |   |   | — |   |
| Expected lives (years):  |   |                   | 5       |   |          |   | 5       |                 |   | 3.75 to 4.25 |         |   |   | 5 |   |

----

|                     |   | February,2009grant |    |   | February,2009repricing |      |    | September,2010 |   |
|--------------------------|--------|--------------------|---------|--------|------------------------|-----------|---------|----------------|--------|
| Volatility:              |   |               | 149     | %      |                   |      | 149     | %              |   |   | 166 | % |
| Risk-free interest rate: |   |               | 2.06    | %      |                   |      | 2.06    | %              |   |   | 2.06 | % |
| Dividend yield:          |   |               | — |   |                   |      | — |           |   |   | — |   |
| Expected lives (years):  |   |               | 5       |   |                   | 3 to 3.75 |    |           |   | 5 |   |

----

|                                              |   | Page   |
|---------------------------------------------------|--------|--------|
|                                              |   |   |
| Consolidated Balance Sheets                       |   | 1      |
|                                              |   |   |
| Consolidated Statements of Operations             |   | 2      |
|                                              |   |   |
| Consolidated Statements of Cash Flows             |   | 3      |
|                                              |   |   |
| Consolidated Statement of Stockholders' (Deficit) |   | 4      |

----

| Note 1 - Basis of Presentation - going concern                                                           |   | March 31 |        |   | December 31 |   |
|----------------------------------------------------------------------------------------------------------|--------|----------|-------------|--------|-------------|--------|
|                                                                                                     |   | 2010     |        |   | 2009        |   |
|                                                                                                     |   |     |        |   |        |   |
| ASSETS                                                                                                   |   |     |        |   |        |   |
|                                                                                                     |   |     |        |   |        |   |
| CURRENT ASSETS                                                                                           |   |     |        |   |        |   |
| Cash                                                                                                     |   | $        | 6,168       |   |        | $      | 19,678 |   |
| Proceeds receivable for disposition of subsidiaries (Note 3)                                             |   |     | 200,000     |   |        |   | 200,000 |   |
| Total current assets                                                                                     |   |     | 206,168     |   |        |   | 219,678 |   |
|                                                                                                     |   |     |        |   |        |   |   |   |
| Total assets                                                                                             |   | $        | 206,168     |   |        | $      | 219,678 |   |
|                                                                                                     |   |     |        |   |        |   |   |   |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                                                  |   |     |        |   |        |   |   |   |
|                                                                                                     |   |     |        |   |        |   |   |   |
| CURRENT LIABILITIES                                                                                      |   |     |        |   |        |   |   |   |
| Accounts payable, including related party payables of $14,764 (December 31, 2009- $5,000)                |   | $        | 77,144      |   |        | $      | 73,922 |   |
| Interest payable                                                                                         |   |     | 41,052      |   |        |   | 34,148 |   |
| Shareholder loans (Note 5)                                                                               |   |     | 40,000      |   |        |   | 40,000 |   |
| Other current liabilities, including related party liabilities of $147,500 (December 31, 2009- $132,500) |   |     | 319,512     |   |        |   | 291,012 |   |
| Total current liabilities                                                                                |   |     | 477,708     |   |        |   | 439,082 |   |
|                                                                                                     |   |     |        |   |        |   |   |   |
| Convertible debentures (Note 6)                                                                          |   |     | 350,000     |   |        |   | 350,000 |   |
| Total liabilities                                                                                        |   |     | 827,708     |   |        |   | 789,082 |   |
|                                                                                                     |   |     |        |   |        |   |   |   |
| COMMITMENTS AND CONTINGENCIES (Notes 1, 2, 4, 5, 6, 7, 8, 9, 10 and 11)                                  |   |     |        |   |        |   |   |   |
|                                                                                                     |   |     |        |   |        |   |   |   |
| STOCKHOLDERS' (DEFICIT)                                                                                  |   |     |        |   |        |   |   |   |
| Common stock (Note 8)                                                                                    |   |     |        |   |        |   |   |   |
| Authorized 250,000,000 shares at par value of $ 0.0001 each                                              |   |     |        |   |        |   |   |   |
| Issued and outstanding 144,554,925 shares (Dec. 31, 2009 - 143,554,925)                                  |   |     | 14,456      |   |        |   | 14,356 |   |
| Additional paid-in capital                                                                               |   |     | 31,724,216  |   |        |   | 31,309,410 |   |
| Subscriptions received                                                                                   |   |     | 715,370     |   |        |   | 1,013,870 |   |
| Accumulated (deficit)                                                                                    |   |     | (33,075,582 | )      |        |   | (32,907,040 | ) |
| Accumulated other comprehensive income (loss)                                                            |   |     | -           |   |        |   | - |   |
| Total stockholders' (deficit)                                                                            |   |     | (621,540    | )      |        |   | (569,404 | ) |
|                                                                                                     |   |     |        |   |        |   |   |   |
| Total liabilities and stockholders' (deficit)                                                            |   | $        | 206,168     |   |        | $      | 219,678 |   |

----

|                                                          |   | Three Months Ended March 31 |        |
|---------------------------------------------------------------|--------|-----------------------------|-------------|
|                                                          |   | 2010                        |        |   | 2009 |   |
|                                                          |   |                        |        |   |   |   |
| EXPENSES                                                      |   |                        |        |   |   |   |
| Consulting                                                    |   | $                           | 30,000      |   |   | $ | 75,595 |   |
| General and administration                                    |   |                        | 1,058       |   |   |   | 7,348 |   |
| Interest                                                      |   |                        | 7,435       |   |   |   | 19,733 |   |
| Professional fees                                             |   |                        | 15,674      |   |   |   | 25,580 |   |
| Stock-based compensation (Note 9)                             |   |                        | 114,375     |   |   |   | 42,981 |   |
| Total expenses                                                |   |                        | 168,542     |   |   |   | 171,237 |   |
|                                                          |   |                        |        |   |   |   |   |   |
| Net (loss) for the period from operations                     |   |                        | (168,542    | ) |   |   | (171,237 | ) |
|                                                          |   |                        |        |   |   |   |   |   |
| OTHER INCOME AND EXPENSES                                     |   |                        |        |   |   |   |   |   |
| Gain on disposition of subsidiaries                           |   |                        | -           |   |   |   | 4,825,444 |   |
|                                                          |   |                        |        |   |   |   |   |   |
| Net income (loss) for the period                              |   | $                           | (168,542    | ) |   | $ | 4,654,207 |   |
|                                                          |   |                        |        |   |   |   |   |   |
| Other comprehensive income (loss)                             |   |                        |        |   |   |   |   |   |
| Foreign currency translation                                  |   |                        | -           |   |   |   | 1,775,343 |   |
|                                                          |   |                        |        |   |   |   |   |   |
| Comprehensive income (loss)                                   |   | $                           | (168,542    | ) |   | $ | 6,429,550 |   |
|                                                          |   |                        |        |   |   |   |   |   |
| Net income (loss) per common share - basic and fully diluted: |   |                        |        |   |   |   |   |   |
|  Net income (loss) for the period from operations        |   | $                           | -           |   |   | $ | - |   |
|  Net income (loss) for the period                        |   | $                           | -           |   |   | $ | 0.03 |   |
|                                                          |   |                        |        |   |   |   |   |   |
| Weighted average number of common stock outstanding           |   |                        | 144,021,592 |   |   |   | 133,517,319 |   |

----

|                                                                        |   | Three Months Ended March 31 |     |
|-----------------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                                        |   | 2010                        |     |   | 2009 |   |
|                                                                        |   |                        |     |   |   |   |
| Cash from (used in) operating activities:                                   |   |                        |     |   |   |   |
| Net income (loss)                                                           |   | $                           | (168,542 | ) |   | $ | 4,654,207 |   |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                        |     |   |   |   |   |   |
| Imputed interest expense on shareholders' loans                             |   |                        | 531      |   |   |   | 12,829 |   |
| Stock-based compensation                                                    |   |                        | 114,375  |   |   |   | 42,981 |   |
| Gain on disposition of subsidiaries                                         |   |                        | -        |   |   |   | (4,825,444 | ) |
| Net change in operating assets and liabilities:                             |   |                        |     |   |   |   |   |   |
| Prepaid expenses and deposits                                               |   |                        | -        |   |   |   | (29,700 | ) |
| Accounts payable                                                            |   |                        | 3,222    |   |   |   | (22,689 | ) |
| Interest payable                                                            |   |                        | 6,904    |   |   |   | 6,904 |   |
| Other current liabilities                                                   |   |                        | 28,500   |   |   |   | 33,498 |   |
|                                                                        |   |                        |     |   |   |   |   |   |
| Net cash  (used in) from operating activities                     |   |                        | (15,010  | ) |   |   | (127,414 | ) |
|                                                                        |   |                        |     |   |   |   |   |   |
| Cash (used in) investing activities:                                        |   |                        |     |   |   |   |   |   |
| Cash disposed with disposition of subsidiaries                              |   |                        | -        |   |   |   | (4,056 | ) |
|                                                                        |   |                        |     |   |   |   |   |   |
| Net cash (used in) investing activities                                     |   |                        | -        |   |   |   | (4,056 | ) |
|                                                                        |   |                        |     |   |   |   |   |   |
| Cash from (used in) financing activities:                                   |   |                        |     |   |   |   |   |   |
| Share subscriptions received                                                |   |                        | 1,500    |   |   |   | 200,000 |   |
| Finders fees paid or payable in cash                                        |   |                        | -        |   |   |   | (16,000 | ) |
|                                                                        |   |                        |     |   |   |   |   |   |
| Net cash from financing activities                                          |   |                        | 1,500    |   |   |   | 184,000 |   |
|                                                                        |   |                        |     |   |   |   |   |   |
| Effect of other comprehensive income (loss) on cash                         |   |                        | -        |   |   |   | - |   |
|                                                                        |   |                        |     |   |   |   |   |   |
| Increase (decrease) in cash                                                 |   |                        | (13,510  | ) |   |   | 52,530 |   |
|                                                                        |   |                        |     |   |   |   |   |   |
| Cash, beginning of period                                                   |   |                        | 19,678   |   |   |   | 75,455 |   |
|                                                                        |   |                        |     |   |   |   |   |   |
| Cash, end of period                                                         |   | $                           | 6,168    |   |   | $ | 127,985 |   |
|                                                                        |   |                        |     |   |   |   |   |   |
|  Supplemental Cash Flow Information                                    |   |                        |     |   |   |   |   |   |
|  Non-cash items                                                        |   |                        |     |   |   |   |   |   |
|  Imputed interest expense credited to additional paid-in capital       |   |                        | 531      |   |   |   | 12,829 |   |
|  Accounts payable settled in shares                                    |   |                        | -        |   |   |   | 40,420 |   |
|  Other current liabilities settled for shares                          |   |                        | -        |   |   |   | 491,000 |   |
|  Interest paid in cash                                                 |   |                        | -        |   |   |   | - |   |
|  Dividends paid                                                        |   |                        | -        |   |   |   | - |   |

----

|                                                                                                                |   | CommonStock |        |   | Amount |   |   | Additional paid-in capital |   |   |  Subscriptionsreceived |   |   | CumulativeOtherComprehensiveIncome (loss) |      |   |  Accumulated(Deficit) |   |   |  Stockholders'(Deficit) |   |
|---------------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------|--------|--------|---------------------------------|--------|--------|-----------------------------|--------|--------|------------------------------------------------|-----------|--------|----------------------------|--------|--------|------------------------------|--------|
|                                                                                                                |   |        |        |   |   |   |   |                            |   |   |                        |   |   |                                           |      |   |                       |   |   |                         |   |
| Balance December 31, 2009                                                                                           |   |        | 143,554,925 |   |   | $      | 14,356 |                            |   | $      | 31,309,410                  |   |   | $                                              | 1,013,870 |   |                       | $      | -      |                         |   | $ | (32,907,040 | ) |   | $ | (569,404 | ) |
|                                                                                                                |   |        |        |   |   |   |   |                            |   |   |                        |   |   |                                           |      |   |                       |   |   |                         |   |   |   |   |   |   |   |   |
| Subscriptions received for shares pursuant to private placement                                                     |   |        | -           |   |   |   | -      |                            |   |   | -                           |   |   |                                           | 1,500     |   |                       |   | -      |                         |   |   | - |   |   |   | 1,500 |   |
| Shares issued February 17, 2010 at agreed priceof $0.30 per share pursuant to agreements to settle shareholder loan |   |        | 1,000,000   |   |   |   | 100    |                            |   |   | 299,900                     |   |   |                                           | (300,000  | )      |                       |   | -      |                         |   |   | - |   |   |   | - |   |
| Stock-based compensation                                                                                            |   |        | -           |   |   |   | -      |                            |   |   | 114,375                     |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | 114,375 |   |
| Imputed interest on shareholders' loans                                                                             |   |        | -           |   |   |   | -      |                            |   |   | 531                         |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | 531 |   |
| Net (loss) for the period                                                                                           |   |        | -           |   |   |   | -      |                            |   |   | -                           |   |   |                                           | -         |   |                       |   | -      |                         |   |   | (168,542 | ) |   |   | (168,542 | ) |
|                                                                                                                |   |        |        |   |   |   |   |                            |   |   |                        |   |   |                                           |      |   |                       |   |   |                         |   |   |   |   |   |   |   |   |
| Balance March 31, 2010                                                                                              |   |        | 144,554,925 |   |   | $      | 14,456 |                            |   | $      | 31,724,216                  |   |   | $                                              | 715,370   |   |                       | $      | -      |                         |   | $ | (33,075,582 | ) |   | $ | (621,540 | ) |

----

|                                              |         | Page   |
|---------------------------------------------------|--------------|--------|
|                                              |         |   |
| Consolidated Balance Sheets                       |         | 1      |
|                                              |         |   |
| Consolidated Statements of Operations             |         | 2      |
|                                              |         |   |
| Consolidated Statements of Cash Flows             |         | 3      |
|                                              |         |   |
| Consolidated Statement of Stockholders' (Deficit) |    | 4      |

----

| Note 1 - Basis of Presentation - going concern                   |   | June 30 |        |   | December 31 |   |
|----------------------------------------------------------------------------------------------------------|--------|--------------|-------------|--------|------------------|--------|
|                                                                                                     |   | 2010         |        |   | 2009             |   |
|                                                                                                     |   |         |        |   |             |   |
| ASSETS                                                                                                   |   |
|                                                                                                     |   |         |        |   |             |   |
| CURRENT ASSETS                                                                                           |   |         |        |   |             |   |
| Cash                                                                                                     |   | $            | 61,659      |   |             | $      | 19,678 |   |
| Proceeds receivable for disposition of subsidiaries (Note 3)                                             |   |         | 200,000     |   |             |   | 200,000 |   |
| Total current assets                                                                                     |   |         | 261,659     |   |             |   | 219,678 |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| Total assets                                                                                             |   | $            | 261,659     |   |             | $      | 219,678 |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                                                  |   |         |        |   |             |   |   |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| CURRENT LIABILITIES                                                                                      |   |         |        |   |             |   |   |   |
| Accounts payable, including related party payables of $9,764 (December 31, 2009- $5,000)                 |   | $            | 91,731      |   |             | $      | 73,922 |   |
| Interest payable                                                                                         |   |         | 32,477      |   |             |   | 34,148 |   |
| Shareholder loans (Note 5)                                                                               |   |         | 40,000      |   |             |   | 40,000 |   |
| Other current liabilities, including related party liabilities of $162,500 (December 31, 2009- $132,500) |   |         | 339,112     |   |             |   | 291,012 |   |
| Total current liabilities                                                                                |   |         | 503,320     |   |             |   | 439,082 |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| Convertible debentures (Note 6)                                                                          |   |         | 250,000     |   |             |   | 350,000 |   |
| Total liabilities                                                                                        |   |         | 753,320     |   |             |   | 789,082 |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| COMMITMENTS AND CONTINGENCIES (Notes 1, 2, 4, 5, 6, 7, 8, 9, 10 and 11)                                  |   |         |        |   |             |   |   |   |
|                                                                                                     |   |         |        |   |             |   |   |   |
| STOCKHOLDERS' (DEFICIT)                                                                                  |   |         |        |   |             |   |   |   |
| Common stock (Note 8)                                                                                    |   |         |        |   |             |   |   |   |
| Authorized 250,000,000 shares at par value of $ 0.0001 each                                              |   |         |        |   |             |   |   |   |
| Issued and outstanding 196,238,254 shares (Dec. 31, 2009 - 143,554,925)                                  |   |         | 19,624      |   |             |   | 14,356 |   |
| Additional paid-in capital                                                                               |   |         | 32,103,829  |   |             |   | 31,309,410 |   |
| Subscriptions received                                                                                   |   |         | 611,370     |   |             |   | 1,013,870 |   |
| Accumulated (deficit)                                                                                    |   |         | (33,226,484 | )      |             |   | (32,907,040 | ) |
| Accumulated other comprehensive income (loss)                                                            |   |         | -           |   |             |   | - |   |
| Total stockholders' (deficit)                                                                            |   |         | (491,661    | )      |             |   | (569,404 | ) |
|                                                                                                     |   |         |        |   |             |   |   |   |
| Total liabilities and stockholders' (deficit)                                                            |   | $            | 261,659     |   |             | $      | 219,678 |   |

----

|                                                          |   | Three Months Ended June 30 |        |   | Six Months Ended June 30 |   |
|---------------------------------------------------------------|--------|------------------------------------------------|-------------|--------|----------------------------------------------|--------|
|                                                          |   | 2010                                           |        |   | 2009                                         |   |   | 2010 |   |   | 2009 |   |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |
| EXPENSES                                                      |   |                                           |        |   |                                         |   |   |   |   |   |   |   |
| Consulting                                                    |   | $                                              | 33,300      |   |                                         | $      | 75,267 |   |   | $ | 63,300 |   |   | $ | 150,862 |   |
| General and administration                                    |   |                                           | 1,878       |   |                                         |   | 6,818 |   |   |   | 2,936 |   |   |   | 14,166 |   |
| Interest                                                      |   |                                           | 5,956       |   |                                         |   | 19,809 |   |   |   | 13,391 |   |   |   | 39,542 |   |
| Professional fees                                             |   |                                           | 33,518      |   |                                         |   | 72,924 |   |   |   | 49,192 |   |   |   | 98,504 |   |
| Stock-based compensation (Note 9)                             |   |                                           | 76,250      |   |                                         |   | 225,522 |   |   |   | 190,625 |   |   |   | 268,503 |   |
| Total expenses                                                |   |                                           | 150,902     |   |                                         |   | 400,340 |   |   |   | 319,444 |   |   |   | 571,577 |   |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) for the period from operations                     |   |                                           | (150,902    | )      |                                         |   | (400,340 | ) |   |   | (319,444 | ) |   |   | (571,577 | ) |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME AND EXPENSES                                     |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Gain on disposition of subsidiaries                           |   |                                           | -           |   |                                         |   | - |   |   |   | - |   |   |   | 4,825,444 |   |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) for the period                              |   | $                                              | (150,902    | )      |                                         | $      | (400,340 | ) |   | $ | (319,444 | ) |   | $ | 4,253,867 |   |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss)                             |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation                                  |   | $                                              | -           |   |                                         | $      | - |   |   | $ | - |   |   | $ | 1,775,343 |   |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                   |   | $                                              | (150,902    | )      |                                         | $      | (400,340 | ) |   | $ | (319,444 | ) |   | $ | 6,029,210 |   |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share - basic and fully diluted: |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) for the period from operations                     |   | $                                              | -           |   |                                         | $      | - |   |   | $ | - |   |   | $ | - |   |
| Net income (loss) for the period                              |   | $                                              | -           |   |                                         | $      | - |   |   | $ | - |   |   | $ | 0.03 |   |
|                                                          |   |                                           |        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common stock outstanding           |   |                                           | 183,347,779 |   |                                         |   | 140,686,793 |   |   |   | 163,793,321 |   |   |   | 137,121,861 |   |

----

|                                                                        |   | Three Months Ended June 30 |     |   | Six Months Ended June 30 |   |
|-----------------------------------------------------------------------------|--------|------------------------------------------------|----------|--------|----------------------------------------------|--------|
|                                                                        |   | 2010                                           |     |   | 2009                                         |   |   | 2010 |   |   | 2009 |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |
| Cash from (used in) operating activities:                                   |   |                                           |     |   |                                         |   |   |   |   |   |   |   |
| Net income (loss)                                                           |   | $                                              | (150,902 | )      |                                         | $      | (400,340 | ) |   | $ | (319,444 | ) |   | $ | 4,253,867 |   |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Imputed interest expense on shareholders' loans                             |   |                                           | 531      |   |                                         |   | 12,828 |   |   |   | 1,062 |   |   |   | 25,657 |   |
| Stock-based compensation                                                    |   |                                           | 76,250   |   |                                         |   | 225,522 |   |   |   | 190,625 |   |   |   | 268,503 |   |
| Gain on disposition of subsidiaries                                         |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | (4,825,444 | ) |
| Net change in operating assets and liabilities:                             |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Prepaid expenses and deposits                                               |   |                                           | -        |   |                                         |   | 18,146 |   |   |   | - |   |   |   | (11,554 | ) |
| Accounts payable                                                            |   |                                           | 14,587   |   |                                         |   | 61,248 |   |   |   | 17,809 |   |   |   | 38,559 |   |
| Interest payable                                                            |   |                                           | 5,425    |   |                                         |   | 6,981 |   |   |   | 12,329 |   |   |   | 13,885 |   |
| Other current liabilities                                                   |   |                                           | 19,600   |   |                                         |   | (6,033 | ) |   |   | 48,100 |   |   |   | 27,465 |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net cash  (used in) from operating activities                     |   |                                           | (34,509  | )      |                                         |   | (81,648 | ) |   |   | (49,519 | ) |   |   | (209,062 | ) |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash (used in) investing activities:                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash disposed with disposition of subsidiaries                              |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | (4,056 | ) |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used in) investing activities                                     |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | (4,056 | ) |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash from (used in) financing activities:                                   |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Share subscriptions received                                                |   |                                           | 100,000  |   |                                         |   | - |   |   |   | 101,500 |   |   |   | 200,000 |   |
| Finders fees paid or payable in cash                                        |   |                                           | (10,000  | )      |                                         |   | (20,000 | ) |   |   | (10,000 | ) |   |   | (36,000 | ) |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net cash from (used in) financing activities                                |   |                                           | 90,000   |   |                                         |   | (20,000 | ) |   |   | 91,500 |   |   |   | 164,000 |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Effect of other comprehensive income (loss) on cash                         |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash                                                 |   |                                           | 55,491   |   |                                         |   | (101,648 | ) |   |   | 41,981 |   |   |   | (49,118 | ) |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash, beginning of period                                                   |   |                                           | 6,168    |   |                                         |   | 127,985 |   |   |   | 19,678 |   |   |   | 75,455 |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash, end of period                                                         |   | $                                              | 61,659   |   |                                         | $      | 26,337 |   |   | $ | 61,659 |   |   | $ | 26,337 |   |
|                                                                        |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental Cash Flow Information                                          |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Non-cash items                                                              |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Imputed interest expense credited to additional paid-in capital             |   |                                           | 531      |   |                                         |   | 12,828 |   |   |   | 1,062 |   |   |   | 25,657 |   |
| Accounts payable settled in shares                                          |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | 40,420 |   |
| Interest payable converted to shares                                        |   |                                           | 14,000   |   |                                         |   | - |   |   |   | 14,000 |   |   |   | - |   |
| Other current liabilities settled for shares                                |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | 491,000 |   |
| Interest paid in cash                                                       |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
| Dividends paid                                                              |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | - |   |

----

|                                                                                                            |   | CommonStock |        |   | Amount |   |   | Additional paid-in capital |   |   | Subscriptionsreceived |   |   | CumulativeOtherComprehensiveIncome (loss) |      |   | Accumulated(Deficit) |   |   | Stockholders'(Deficit) |   |
|----------------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------|--------|--------|--------------------------------------|--------|--------|-----------------------|--------|--------|------------------------------------------------|-----------|--------|----------------------|--------|--------|------------------------|--------|
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |      |   |                 |   |   |                   |   |
| Balance December 31, 2009                                                                                            |   |        | 143,554,925 |   |   | $      | 14,356 |                                 |   | $      | 31,309,410            |   |   | $                                              | 1,013,870 |   |                 | $      | -      |                   |   | $ | (32,907,040 | ) |   | $ | (569,404 | ) |
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |      |   |                 |   |   |                   |   |   |   |   |   |   |   |   |
| Subscriptions received for shares pursuant to private placement                                                      |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | 1,500     |   |                 |   | -      |                   |   |   | - |   |   |   | 1,500 |   |
| Shares issued February 17, 2010 at agreed price of $0.30 per share pursuant to agreements to settle shareholder loan |   |        | 1,000,000   |   |   |   | 100    |                                 |   |   | 299,900               |   |   |                                           | (300,000  | )      |                 |   | -      |                   |   |   | - |   |   |   | - |   |
| Finders fees paid or payable in cash                                                                                 |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | -         |   |                 |   | -      |                   |   |   | - |   |   |   | - |   |
| Stock-based compensation                                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 114,375               |   |   |                                           | -         |   |                 |   | -      |                   |   |   | - |   |   |   | 114,375 |   |
| Imputed interest on shareholders' loans                                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 531                   |   |   |                                           | -         |   |                 |   | -      |                   |   |   | - |   |   |   | 531 |   |
| Net (loss) for the period                                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | -         |   |                 |   | -      |                   |   |   | (168,542 | ) |   |   | (168,542 | ) |
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |      |   |                 |   |   |                   |   |   |   |   |   |   |   |   |
| Balance March 31, 2010                                                                                               |   |        | 144,554,925 |   |   | $      | 14,456 |                                 |   | $      | 31,724,216            |   |   | $                                              | 715,370   |   |                 | $      | -      |                   |   | $ | (33,075,582 | ) |   | $ | (621,540 | ) |
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |      |   |                 |   |   |                   |   |   |   |   |   |   |   |   |
| Subscriptions received for shares pursuant to private placement                                                      |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | 100,000   |   |                 |   | -      |                   |   |   | - |   |   |   | 100,000 |   |
| Shares issued April 21, 2010 at agreed price of $0.02 per share pursuant to agreements to settle accounts payable    |   |        | 2,000,000   |   |   |   | 200    |                                 |   |   | 39,800                |   |   |                                           | (40,000   | )      |                 |   | -      |                   |   |   | - |   |   |   | - |   |
| Shares issued April 22, 2010 at $0.015 per share pursuant to private placement                                       |   |        | 10,933,329  |   |   |   | 1,093  |                                 |   |   | 162,907               |   |   |                                           | (164,000  | )      |                 |   | -      |                   |   |   | - |   |   |   | - |   |
| Finders fees paid in stock                                                                                           |   |        | 750,000     |   |   |   | 75     |                                 |   |   | (75                   | )      |   |                                           | -         |   |                 |   | -      |                   |   |   | - |   |   |   | - |   |
| Shares issued April 23, 2010 at agreed price of $0.003 pursuant to conversion of convertible debentures              |   |        | 38,000,000  |   |   |   | 3,800  |                                 |   |   | 110,200               |   |   |                                           | -         |   |                 |   | -      |                   |   |   | - |   |   |   | 114,000 |   |
| Finders fees paid or payable in cash                                                                                 |   |        | -           |   |   |   | -      |                                 |   |   | (10,000               | )      |   |                                           | -         |   |                 |   | -      |                   |   |   | - |   |   |   | (10,000 | ) |
| Stock-based compensation                                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 76,250                |   |   |                                           | -         |   |                 |   | -      |                   |   |   | - |   |   |   | 76,250 |   |
| Imputed interest on shareholders' loans                                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 531                   |   |   |                                           | -         |   |                 |   | -      |                   |   |   | - |   |   |   | 531 |   |
| Net (loss) for the period                                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                     |   |   |                                           | -         |   |                 |   | -      |                   |   |   | (150,902 | ) |   |   | (150,902 | ) |
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                  |   |   |                                           |      |   |                 |   |   |                   |   |   |   |   |   |   |   |   |
| Balance June 30, 2010                                                                                                |   |        | 196,238,254 |   |   | $      | 19,624 |                                 |   | $      | 32,103,829            |   |   | $                                              | 611,370   |   |                 | $      | -      |                   |   | $ | (33,226,484 | ) |   | $ | (491,661 | ) |

----

|                                              |         | Page   |
|---------------------------------------------------|--------------|--------|
|                                              |         |   |
| Consolidated Balance Sheets                       |         | 1      |
|                                              |         |   |
| Consolidated Statements of Operations             |         | 2      |
|                                              |         |   |
| Consolidated Statements of Cash Flows             |         | 3      |
|                                              |         |   |
| Consolidated Statement of Stockholders' (Deficit) |    | 4      |

----

| Note 1 - Basis of Presentation - going concern                                                           |   | September 30 |        |   | December 31 |   |
|----------------------------------------------------------------------------------------------------------|--------|-------------------|-------------|--------|------------------|--------|
|                                                                                                     |   | 2010              |        |   | 2009             |   |
|                                                                                                     |   |              |        |   |             |   |
| ASSETS                                                                                                   |   |              |        |   |             |   |
|                                                                                                     |   |              |        |   |             |   |
| CURRENT ASSETS                                                                                           |   |              |        |   |             |   |
| Cash                                                                                                     |   | $                 | 40,401      |   |             | $      | 19,678 |   |
| Proceeds receivable for disposition of subsidiaries (Note 3)                                             |   |              | 200,000     |   |             |   | 200,000 |   |
| Total current assets                                                                                     |   |              | 240,401     |   |             |   | 219,678 |   |
|                                                                                                     |   |              |        |   |             |   |   |   |
| Total assets                                                                                             |   | $                 | 240,401     |   |             | $      | 219,678 |   |
|                                                                                                     |   |              |        |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                                                  |   |              |        |   |             |   |   |   |
|                                                                                                     |   |              |        |   |             |   |   |   |
| CURRENT LIABILITIES                                                                                      |   |              |        |   |             |   |   |   |
| Accounts payable, including related party payables of $9,764 (December 31, 2009- $5,000)                 |   | $                 | 69,958      |   |             | $      | 73,922 |   |
| Interest payable                                                                                         |   |              | 37,518      |   |             |   | 34,148 |   |
| Shareholder loans (Note 5)                                                                               |   |              | 40,000      |   |             |   | 40,000 |   |
| Other current liabilities, including related party liabilities of $162,500 (December 31, 2009- $132,500) |   |              | 353,552     |   |             |   | 291,012 |   |
| Total current liabilities                                                                                |   |              | 501,028     |   |             |   | 439,082 |   |
|                                                                                                     |   |              |        |   |             |   |   |   |
| Convertible debentures (Note 6)                                                                          |   |              | 250,000     |   |             |   | 350,000 |   |
| Total liabilities                                                                                        |   |              | 751,028     |   |             |   | 789,082 |   |
|                                                                                                     |   |              |        |   |             |   |   |   |
| COMMITMENTS AND CONTINGENCIES (Notes 1, 2, 4, 5, 6, 7, 8, 9, 10 and 11)                                  |   |              |        |   |             |   |   |   |
|                                                                                                     |   |              |        |   |             |   |   |   |
| STOCKHOLDERS' (DEFICIT)                                                                                  |   |              |        |   |             |   |   |   |
| Common stock (Note 8)                                                                                    |   |              |        |   |             |   |   |   |
| Authorized 250,000,000 shares at par value of $ 0.0001 each                                              |   |              |        |   |             |   |   |   |
| Issued and outstanding 202,904,920 shares (Dec. 31, 2009 - 143,554,925)                                  |   |              | 20,291      |   |             |   | 14,356 |   |
| Additional paid-in capital                                                                               |   |              | 32,225,776  |   |             |   | 31,309,410 |   |
| Subscriptions received                                                                                   |   |              | 561,370     |   |             |   | 1,013,870 |   |
| Accumulated (deficit)                                                                                    |   |              | (33,318,064 | )      |             |   | (32,907,040 | ) |
| Total stockholders' (deficit)                                                                            |   |              | (510,627    | )      |             |   | (569,404 | ) |
|                                                                                                     |   |              |        |   |             |   |   |   |
| Total liabilities and stockholders' (deficit)                                                            |   | $                 | 240,401     |   |             | $      | 219,678 |   |

----

|                                                          |   | Three Months Ended September 30 |        |   | Nine Months Ended September 30 |   |
|---------------------------------------------------------------|--------|-----------------------------------------------------|-------------|--------|----------------------------------------------------|--------|
|                                                          |   | 2010                                                |        |   | 2009                                               |   |   | 2010 |   |   | 2009 |   |
|                                                          |   |                                                |        |   |                                               |   |   |   |   |   |   |   |
| EXPENSES                                                      |   |                                                |        |   |                                               |   |   |   |   |   |   |   |
| Consulting                                                    |   | $                                                   | 25,000      |   |                                               | $      | 60,000 |   |   | $ | 88,300 |   |   | $ | 210,862 |   |
| General and administration                                    |   |                                                | 8,913       |   |                                               |   | 6,835 |   |   |   | 11,849 |   |   |   | 21,001 |   |
| Interest                                                      |   |                                                | 5,572       |   |                                               |   | 19,886 |   |   |   | 18,963 |   |   |   | 59,428 |   |
| Professional fees                                             |   |                                                | 25,012      |   |                                               |   | 22,829 |   |   |   | 74,204 |   |   |   | 121,333 |   |
| Stock-based compensation (Note 9)                             |   |                                                | 27,083      |   |                                               |   | 152,674 |   |   |   | 217,708 |   |   |   | 421,177 |   |
| Total expenses                                                |   |                                                | 91,580      |   |                                               |   | 262,224 |   |   |   | 411,024 |   |   |   | 833,801 |   |
|                                                          |   |                                                |        |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) for the period from operations                     |   |                                                | (91,580     | )      |                                               |   | (262,224 | ) |   |   | (411,024 | ) |   |   | (833,801 | ) |
|                                                          |   |                                                |        |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME AND EXPENSES                                     |   |                                                |        |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Gain on disposition of subsidiaries                           |   |                                                | -           |   |                                               |   | - |   |   |   | - |   |   |   | 4,825,444 |   |
|                                                          |   |                                                |        |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) for the period                              |   | $                                                   | (91,580     | )      |                                               | $      | (262,224 | ) |   | $ | (411,024 | ) |   | $ | 3,991,643 |   |
|                                                          |   |                                                |        |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss)                             |   |                                                |        |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation                                  |   | $                                                   | -           |   |                                               | $      | - |   |   | $ | - |   |   | $ | 1,775,343 |   |
|                                                          |   |                                                |        |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                   |   | $                                                   | (91,580     | )      |                                               | $      | (262,224 | ) |   | $ | (411,024 | ) |   | $ | 5,766,986 |   |
|                                                          |   |                                                |        |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share - basic and fully diluted: |   |                                                |        |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) for the period from operations                     |   | $                                                   | -           |   |                                               | $      | - |   |   | $ | - |   |   | $ | (0.01 | ) |
| Net income (loss) for the period                              |   | $                                                   | -           |   |                                               | $      | - |   |   | $ | - |   |   | $ | 0.03 |   |
|                                                          |   |                                                |        |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common stock outstanding           |   |                                                | 197,325,210 |   |                                               |   | 143,554,925 |   |   |   | 175,093,445 |   |   |   | 139,289,780 |   |

----

|                                                                        |   | Three Months Ended September 30 |    |   | Nine Months Ended September 30 |   |
|-----------------------------------------------------------------------------|--------|-----------------------------------------------------|---------|--------|----------------------------------------------------|--------|
|                                                                        |   | 2010                                                |    |   | 2009                                               |   |   | 2010 |   |   | 2009 |   |
|                                                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |
| Cash from (used in) operating activities:                                   |   |                                                |    |   |                                               |   |   |   |   |   |   |   |
| Net income (loss)                                                           |   | $                                                   | (91,580 | )      |                                               | $      | (262,224 | ) |   | $ | (411,024 | ) |   | $ | 3,991,643 |   |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Imputed interest expense on shareholders' loans                             |   |                                                | 531     |   |                                               |   | 12,829 |   |   |   | 1,593 |   |   |   | 38,486 |   |
| Stock-based compensation                                                    |   |                                                | 27,083  |   |                                               |   | 152,674 |   |   |   | 217,708 |   |   |   | 421,177 |   |
| Gain on disposition of subsidiaries                                         |   |                                                | -       |   |                                               |   | - |   |   |   | - |   |   |   | (4,825,444 | ) |
| Net change in operating assets and liabilities:                             |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Prepaid expenses and deposits                                               |   |                                                | -       |   |                                               |   | 11,554 |   |   |   | - |   |   |   | - |   |
| Accounts payable                                                            |   |                                                | (21,773 | )      |                                               |   | 28,582 |   |   |   | (3,964 | ) |   |   | 67,141 |   |
| Interest payable                                                            |   |                                                | 5,041   |   |                                               |   | 7,057 |   |   |   | 17,370 |   |   |   | 20,942 |   |
| Other current liabilities                                                   |   |                                                | 14,440  |   |                                               |   | 25,199 |   |   |   | 62,540 |   |   |   | 52,664 |   |
|                                                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net cash  (used in) from operating activities                     |   |                                                | (66,258 | )      |                                               |   | (24,329 | ) |   |   | (115,777 | ) |   |   | (233,391 | ) |
|                                                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Cash (used in) investing activities:                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Cash disposed with disposition of subsidiaries                              |   |                                                | -       |   |                                               |   | - |   |   |   | - |   |   |   | (4,056 | ) |
|                                                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used in) investing activities                                     |   |                                                | -       |   |                                               |   | - |   |   |   | - |   |   |   | (4,056 | ) |
|                                                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Cash from (used in) financing activities:                                   |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Share subscriptions received                                                |   |                                                | 50,000  |   |                                               |   | 82,500 |   |   |   | 151,500 |   |   |   | 282,500 |   |
| Finders fees paid or payable in cash                                        |   |                                                | (5,000  | )      |                                               |   | - |   |   |   | (15,000 | ) |   |   | (36,000 | ) |
|                                                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net cash from financing activities                                          |   |                                                | 45,000  |   |                                               |   | 82,500 |   |   |   | 136,500 |   |   |   | 246,500 |   |
|                                                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash                                                 |   |                                                | (21,258 | )      |                                               |   | 58,171 |   |   |   | 20,723 |   |   |   | 9,053 |   |
|                                                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Cash, beginning of period                                                   |   |                                                | 61,659  |   |                                               |   | 26,337 |   |   |   | 19,678 |   |   |   | 75,455 |   |
|                                                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Cash, end of period                                                         |   | $                                                   | 40,401  |   |                                               | $      | 84,508 |   |   | $ | 40,401 |   |   | $ | 84,508 |   |
|                                                                        |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental Cash Flow Information                                          |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Non-cash items                                                              |   |                                                |    |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Imputed interest expense credited to additional paid-in capital             |   |                                                | 531     |   |                                               |   | 12,829 |   |   |   | 1,593 |   |   |   | 38,486 |   |
| Accounts payable settled in shares                                          |   |                                                | -       |   |                                               |   | - |   |   |   | - |   |   |   | 40,420 |   |
| Interest payable converted to shares                                        |   |                                                | 14,000  |   |                                               |   | - |   |   |   | 14,000 |   |   |   | - |   |
| Other current liabilities settled for shares                                |   |                                                | -       |   |                                               |   | - |   |   |   | - |   |   |   | 491,000 |   |
| Interest paid in cash                                                       |   |                                                | -       |   |                                               |   | - |   |   |   | - |   |   |   | - |   |
| Dividends paid                                                              |   |                                                | -       |   |                                               |   | - |   |   |   | - |   |   |   | - |   |

----

|                                                                                                            |   | CommonStock |        |   | Amount |   |   | Additional paid-in capital |   |   |  Subscriptionsreceived |   |   | CumulativeOtherComprehensiveIncome (loss) |      |   |  Accumulated(Deficit) |   |   |  Stockholders'(Deficit) |   |
|----------------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------|--------|--------|--------------------------------------|--------|--------|-----------------------------|--------|--------|------------------------------------------------|-----------|--------|----------------------------|--------|--------|------------------------------|--------|
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |      |   |                       |   |   |                         |   |
| Balance December 31, 2009                                                                                            |   |        | 143,554,925 |   |   | $      | 14,356 |                                 |   | $      | 31,309,410                  |   |   | $                                              | 1,013,870 |   |                       | $      | -      |                         |   | $ | (32,907,040 | ) |   | $ | (569,404 | ) |
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |      |   |                       |   |   |                         |   |   |   |   |   |   |   |   |
| Subscriptions received for shares pursuant to private placement                                                      |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | 1,500     |   |                       |   | -      |                         |   |   | - |   |   |   | 1,500 |   |
| Shares issued February 17, 2010 at agreed price of $0.30 per share pursuant to agreements to settle shareholder loan |   |        | 1,000,000   |   |   |   | 100    |                                 |   |   | 299,900                     |   |   |                                           | (300,000  | )      |                       |   | -      |                         |   |   | - |   |   |   | - |   |
| Stock-based compensation                                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 114,375                     |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | 114,375 |   |
| Imputed interest on shareholders' loans                                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 531                         |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | 531 |   |
| Net (loss) for the period                                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | -         |   |                       |   | -      |                         |   |   | (168,542 | ) |   |   | (168,542 | ) |
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |      |   |                       |   |   |                         |   |   |   |   |   |   |   |   |
| Balance March 31, 2010                                                                                               |   |        | 144,554,925 |   |   | $      | 14,456 |                                 |   | $      | 31,724,216                  |   |   | $                                              | 715,370   |   |                       | $      | -      |                         |   | $ | (33,075,582 | ) |   | $ | (621,540 | ) |
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |      |   |                       |   |   |                         |   |   |   |   |   |   |   |   |
| Subscriptions received for shares pursuant to private placement                                                      |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | 100,000   |   |                       |   | -      |                         |   |   | - |   |   |   | 100,000 |   |
| Shares issued April 21, 2010 at agreed price of $0.02 per share pursuant to agreement to settle accounts payable     |   |        | 2,000,000   |   |   |   | 200    |                                 |   |   | 39,800                      |   |   |                                           | (40,000   | )      |                       |   | -      |                         |   |   | - |   |   |   | - |   |
| Shares issued April 22, 2010 at $0.015 per share pursuant to private placement                                       |   |        | 10,933,329  |   |   |   | 1,093  |                                 |   |   | 162,907                     |   |   |                                           | (164,000  | )      |                       |   | -      |                         |   |   | - |   |   |   | - |   |
| Finders fees paid in stock                                                                                           |   |        | 750,000     |   |   |   | 75     |                                 |   |   | (75                         | )      |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | - |   |
| Shares issued April 23, 2010 at agreed price of $0.003 pursuant to conversion of convertible debentures              |   |        | 38,000,000  |   |   |   | 3,800  |                                 |   |   | 110,200                     |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | 114,000 |   |
| Finders fees paid in cash                                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | (10,000                     | )      |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | (10,000 | ) |
| Stock-based compensation                                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 76,250                      |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | 76,250 |   |
| Imputed interest on shareholders' loans                                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 531                         |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | 531 |   |
| Net (loss) for the period                                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | -         |   |                       |   | -      |                         |   |   | (150,902 | ) |   |   | (150,902 | ) |
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |      |   |                       |   |   |                         |   |   |   |   |   |   |   |   |
| Balance June 30, 2010                                                                                                |   |        | 196,238,254 |   |   | $      | 19,624 |                                 |   | $      | 32,103,829                  |   |   | $                                              | 611,370   |   |                       | $      | -      |                         |   | $ | (33,226,484 | ) |   | $ | (491,661 | ) |
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |      |   |                       |   |   |                         |   |   |   |   |   |   |   |   |
| Subscriptions received for shares pursuant to private placement                                                      |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | 50,000    |   |                       |   | -      |                         |   |   | - |   |   |   | 50,000 |   |
| Shares issued April 21, 2010 at agreed price of $0.02 per share pursuant to agreements to settle accounts payable    |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | - |   |
| Shares issued September 15, 2010 at $0.015 per share pursuant to private placement                                   |   |        | 6,666,666   |   |   |   | 667    |                                 |   |   | 99,333                      |   |   |                                           | (100,000  | )      |                       |   | -      |                         |   |   | - |   |   |   | - |   |
| Finders fees paid or payable in stock                                                                                |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | - |   |
| Shares issued April 23, 2010 at agreed price of $0.003 pursuant to conversion of convertible debentures              |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | - |   |
| Finders fees paid in cash                                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | (5,000                      | )      |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | (5,000 | ) |
| Stock-based compensation                                                                                             |   |        | -           |   |   |   | -      |                                 |   |   | 27,083                      |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | 27,083 |   |
| Imputed interest on shareholders' loans                                                                              |   |        | -           |   |   |   | -      |                                 |   |   | 531                         |   |   |                                           | -         |   |                       |   | -      |                         |   |   | - |   |   |   | 531 |   |
| Net (loss) for the period                                                                                            |   |        | -           |   |   |   | -      |                                 |   |   | -                           |   |   |                                           | -         |   |                       |   | -      |                         |   |   | (91,580 | ) |   |   | (91,580 | ) |
|                                                                                                                 |   |        |        |   |   |   |   |                                 |   |   |                        |   |   |                                           |      |   |                       |   |   |                         |   |   |   |   |   |   |   |   |
| Balance September 30, 2010                                                                                           |   |        | 202,904,920 |   |   | $      | 20,291 |                                 |   | $      | 32,225,776                  |   |   | $                                              | 561,370   |   |                       | $      | -      |                         |   | $ | (33,318,064 | ) |   | $ | (510,627 | ) |

----

| 1. | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3. | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1. | We plan to create a position to segregate duties consistent with control objectives and plan to increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us; and |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | We plan to implement more rigorous procedures for back-up and retention of financial data. |
|----|--------------------------------------------------------------------------------------------|

----

| Name                          |   | Age |   | Positions and Offices Held            |
|-------------------------------|--------|-----|--------|------------------------------------------------------|
| George Yu(1)                  |   | 38  |   | President and Chief Executive Officer and a Director |
| Dr. Anchie Y. Kuo(2)          |   | 50  |   | Former President and Chief Executive Officer         |
| Ka Yu(3)                      |   | 40  |   | Secretary, Treasurer and Director                    |
| Chris Metcalf(4)              |   | 41  |   | Former Chairman of the Board and Former Director     |
| Dr. Kim Kiat Ong(5)           |   | 55  |   | Former Director                                      |
| Dr. Zhi –Xin Wang(6)    |   | 57  |   | Former Director                                      |
| Khuat Leok (Lionel) Choong(7) |   | 49  |   | Chief Financial Officer                              |
| Ban-Jun Yang(8)               |   | 54  |   | Former President, CEO and Former Director            |
| Robert Ip(9)                  |   | 53  |   | Former Director                                      |
| Hon. Larry W. Campbell(10)    |   | 61  |   | Former Director                                      |
| Asher Zwebner(11)             |   | 47  |   | Former Chief Financial Officer                       |

| (1) | Mr. George Yu was appointed as the Company’s President and CEO on September 1, 2010.  On January 28, 2011, Mr. Yu was appointed as a director of the Company. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr. Kuo was appointed as Company’s President and CEO on February 9, 2009.  Mr. Kuo resigned as the Company’s President and CEO on July 2, 2010. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mr. Yu was appointed as the President, CEO, Secretary, Treasurer and director of the Company on October 31, 2006, until March 1, 2007, and was the CFO of the Company from October 31, 2006, to December 28, 2006.  Mr. Yu was elected as a director of the Company on March 1, 2007, and appointed as the Secretary and Treasurer of the Company on March 1, 2007. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Mr. Metcalf was elected as a director of the Company on March 1, 2007, and became the Company’s Chairman of the Board on February 12, 2009.  Mr. Metcalf resigned as the Company’s Chairman of the Board and as a director of the Company on January 28, 2011. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Dr. Ong was elected as a director of the Company on March 1, 2007 and resigned as a director of the Company on April 16, 2010. |
|-----|--------------------------------------------------------------------------------------------------------------------------------|

| (6) | Dr. Zhi-Xin Wang was appointed a director of the Company on May 14, 2007 and resigned as a director of the Company on April 15, 2010. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Mr. Choong was appointed the Company’s Chief Financial Officer on October 2, 2008, effective September 1, 2008. |
|-----|-----------------------------------------------------------------------------------------------------------------------|

| (8) | Mr. Yang was elected as a director of the Company on March 1, 2007 and appointed as the President and CEO of the Company on March 1, 2007.  Mr. Yang resigned as the Company’s President, CEO and a director on February 10, 2009. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | Mr. Ip was elected as a director of the Company on March 1, 2007, and resigned as a director of the Company on January 5, 2009. |
|-----|---------------------------------------------------------------------------------------------------------------------------------|

| (10) | Hon. Larry Campbell was appointed a director of the Company on October 12, 2007, and resigned as a director of the Company on January 7, 2009. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | Mr. Zwebner was the CFO, Treasurer and a director of the Company until October 30, 2006.  Mr. Zwebner was re-appointed as the CFO of the Company on December 28, 2006, and again re-appointed as the CFO of the Company on March 1, 2007.  Mr. Zwebner resigned as the Company’s CFO effective August 31, 2008. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | (i) | all individuals serving as the Company’s principal executive officer or acting in a similar capacity during the last completed fiscal year (“PEO”), regardless of compensation level |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | the Company’s two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year and whose total compensation exceeds $100,000; and |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | up to two additional individuals for whom disclosure would have been provided pursuant to paragraph (ii) but for the fact that the individual was not serving as an executive officer of the Company at the end of the last completed fiscal year. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name andprincipalposition       |   | Year   |   | Salary($) |   |   | Bonus($) |   |   | Stockawards($) |   |   | Optionawards($) |   |   | Nonequityincentiveplancompensation($) |      |   | Nonqualifieddeferredcompensationearnings($) |   |   | All othercompensation($) |   |   | Total($) |   |
|--------------------------------------|--------|--------|--------|-----------|--------|--------|----------|--------|--------|----------------|--------|--------|-----------------|--------|--------|---------------------------------------|-----------|--------|---------------------------------------------|--------|--------|-------------------------------|--------|--------|----------|--------|
|                                 |   |   |   |      |   |   |     |   |   |           |   |   |            |   |   |                                  |      |   |                                        |   |   |                          |   |   |     |   |
| Banjun Yang(1)                       |   | 2008   |   | $         | 60,000 |   |     | $      | Nil    |           |   | $      | Nil             |   |   | $                                     | Nil       |   |                                        | $      | Nil    |                          |   | $      | Nil      |   |   | $ | Nil |   |   | $ | 60,000 |   |
| Former President, CEO & Director |   | 2007   |   | $         | 54,000 |   |     | $      | Nil    |           |   | $      | Nil             |   |   |                                  | 1,893,900 | (6)    |                                        | $      | Nil    |                          |   | $      | Nil      |   |   | $ | Nil |   |   | $ | 1,947,900 |   |
|                                 |   |   |   |      |   |   |     |   |   |           |   |   |            |   |   |                                  |      |   |                                        |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
| Asher Zwebner(2)                     |   | 2008   |   | $         | Nil    |   |     | $      | Nil    |           |   | $      | 85,400          |   |   | $                                     | Nil       |   |                                        | $      | Nil    |                          |   | $      | Nil      |   |   | $ | Nil |   |   | $ | 85,400 |   |
| Former                               |   | 2007   |   | $         | Nil    |   |     | $      | Nil    |           |   | $      | 57,750          |   |   | $                                     | Nil       |   |                                        | $      | Nil    |                          |   | $      | Nil      |   |   | $ | Nil |   |   | $ | 57,750 |   |
| CFO                                  |   |   |   |      |   |   |     |   |   |           |   |   |            |   |   |                                  |      |   |                                        |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
|                                 |   |   |   |      |   |   |     |   |   |           |   |   |            |   |   |                                  |      |   |                                        |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
| Dr. Anchie Kuo(3)                    |   | 2010   |   | $         | 30,000 |   |     | $      | Nil    |           |   | $      | Nil             |   |   | $                                     | Nil       |   |                                        | $      | Nil    |                          |   | $      | Nil      |   |   | $ | Nil |   |   | $ | 30,000 |   |
| Former President & CEO           |   | 2009   |   | $         | 53,750 |   |     | $      | Nil    |           |   | $      | Nil             |   |   | $                                     | 450,000   | (7)    |                                        | $      | Nil    |                          |   | $      | Nil      |   |   | $ | Nil |   |   | $ | 503,750 |   |
|                                 |   |   |   |      |   |   |     |   |   |           |   |   |            |   |   |                                  |      |   |                                        |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
| Lionel Choong(4)                     |   | 2010   |   | $         | 60,000 |   |     | $      | Nil    |           |   | $      | Nil             |   |   | $                                     | Nil       |   |                                        | $      | Nil    |                          |   | $      | Nil      |   |   | $ | Nil |   |   | $ | 60,000 |   |
| CFO                                  |   | 2009   |   | $         | 60,000 |   |     | $      | Nil    |           |   | $      | Nil             |   |   | $                                     | 135,000   |   |                                        | $      | Nil    |                          |   | $      | Nil      |   |   | $ | Nil |   |   | $ | 195,000 |   |
|                                 |   | 2008   |   | $         | 20,000 |   |     | $      | Nil    |           |   | $      | Nil             |   |   | $                                     | 80,000    |   |                                        | $      | Nil    |                          |   | $      | Nil      |   |   | $ | Nil |   |   | $ | 100,000 |   |
|                                 |   |   |   |      |   |   |     |   |   |           |   |   |            |   |   |                                  |      |   |                                        |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
| George Yu(5)                         |   | 2010   |   | $         | 20,000 |   |     | $      | Nil    |           |   | $      | Nil             |   |   | $                                     | 650,000   |   |                                        | $      | Nil    |                          |   | $      | Nil      |   |   | $ | Nil |   |   | $ | 670,000 |   |
| President, CEO & Director        |   |   |   |      |   |   |     |   |   |           |   |   |            |   |   |                                  |      |   |                                        |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |

| (1) | Mr. Yang was elected as a director of the Company on March 1, 2007 and appointed as the President and CEO of the Company on March 1, 2007.  Mr. Yang resigned as the Company’s President, CEO and a director on February 10, 2009. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr. Zwebner was the CFO, Treasurer and a director of the Company until October 30, 2006.  Mr. Zwebner was re-appointed as the CFO of the Company on December 28, 2006, and again re-appointed as the CFO of the Company on March 1, 2007.  Mr. Zwebner resigned as the Company’s CFO effective August 31, 2008. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mr. Kuo was appointed as Company’s President and CEO on February 9, 2009.  Mr. Kuo resigned as the Company’s President and CEO on July 2, 2010. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Mr. Choong was appointed the Company’s Chief Financial Officer on October 2, 2008, effective September 1, 2008. |
|-----|-----------------------------------------------------------------------------------------------------------------------|

| (5) | Mr. George Yu was appointed as the Company’s President and CEO on September 1, 2010.  On January 28, 2011, Mr. Yu was appointed as a director of the Company. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | These stock options that were granted to Banjun Yang expired on May 11, 2009 as a result of Mr. Yang’s resignation on February 10, 2009. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | These stock options that were granted to Dr. Anchie Kuo expired on September 28, 2010 as a result of Dr. Kuo’s resignation on July 2, 2010. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|                                      |   | Option awards                                            |      | Stock awards |                                                            |
|-------------------------------------------|--------|---------------------------------------------------------------|-----------|-------------------|-----------------------------------------------------------------|
| Name                                      |   | Number ofsecuritiesunderlyingunexercisedoptions(#)exercisable |      |              | Number ofsecuritiesunderlyingunexercisedoptions(#)unexercisable |   |   | Equityincentiveplanawards:Number ofsecuritiesunderlyingunexercisedunearnedoptions(#) |   |   | Optionexerciseprice($) |   | Optionexpirationdate |   | Numberof sharesor unitsof stockthat havenotvested(#) |   |   | Marketvalue ofsharesof unitsof stockthathave notvested($) |   |   | Equityincentiveplanawards:Numberofunearnedshares,units orotherrightsthat havenot vested(#) |   |   | Equityincentiveplanawards:Market orpayoutvalue ofunearnedshares,units orotherrightsthat havenot vested($) |   |
|                                      |   |                                                          |      |              |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| George Yu(1)President, CEO & Director |   |                                                          | 833,333   |              |                                                            |   | 4,166,667 |   |   |   | Nil |   |   | $ | 0.03 |   | Sept. 1, 2015 |   |   | Nil |   |   | $ | Nil |   |   |   | Nil |   |   | $ | Nil |   |
| Lionel Choong(2)CFO                       |   |                                                          | 2,700,000 |              |                                                            |   | Nil |   |   |   | Nil |   |   | $ | 0.06 |   | Feb. 9, 2014 |   |   | Nil |   |   | $ | Nil |   |   |   | Nil |   |   | $ | Nil |   |

| (1) | Mr. George Yu was appointed as the Company’s President and CEO on September 1, 2010.  On January 28, 2011, Mr. Yu was appointed as a director of the Company.  At year end, Mr. Yu had 833,333 stock options that were vested and outstanding and 4,166,667 stock options that were not vested yet. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr. Choong was appointed the Company’s Chief Financial Officer on October 2, 2008, effective September 1, 2008.  At year end, Mr. Choong had 2,700,000 stock options that were vested and outstanding. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                |   | Feesearned orpaid incash($) |   |   | Stockawards($) |   |   | Optionawards($) |   |   | Non-equityincentive plancompensation($) |   |   | Nonqualifieddeferredcompensationearnings($) |   |   | All othercompensation($) |   |   | Total($) |   |
|---------------------|--------|---------------------------------------|--------|--------|----------------|--------|--------|-----------------|--------|--------|----------------------------------------------|--------|--------|---------------------------------------------|--------|--------|-------------------------------|--------|--------|----------|--------|
|                |   |                                  |   |   |           |   |   |            |   |   |                                         |   |   |                                        |   |   |                          |   |   |     |   |
| Ka Yu(1)            |   |                                  | Nil    |   |           |   | Nil    |            |   |   | Nil                                          |   |   |                                        | Nil    |   |                          |   | Nil    |     |   |   | Nil |   |   |   | Nil |   |
| Chris Metcalf(2)    |   |                                  | Nil    |   |           |   | Nil    |            |   |   | Nil                                          |   |   |                                        | Nil    |   |                          |   | Nil    |     |   |   | Nil |   |   |   | Nil |   |
| Dr. Kim Kiat Ong(3) |   |                                  | Nil    |   |           |   | Nil    |            |   |   | Nil                                          |   |   |                                        | Nil    |   |                          |   | Nil    |     |   |   | Nil |   |   |   | Nil |   |
| Dr. Zhi-Xin Wang(4) |   |                                  | Nil    |   |           |   | Nil    |            |   |   | Nil                                          |   |   |                                        | Nil    |   |                          |   | Nil    |     |   |   | Nil |   |   |   | Nil |   |

| (1) | Mr. Yu was appointed as the President, CEO, Secretary, Treasurer and director of the Company on October 31, 2006, until March 1, 2007, and was the CFO of the Company from October 31, 2006, to December 28, 2006.  Mr. Yu was elected as a director of the Company on March 1, 2007, and appointed as the Secretary and Treasurer of the Company on March 1, 2007.  At year end, Mr. Yu had 500,000 stock options outstanding which were granted on March 1, 2007.  The options were re-priced from exercise price of $0.50 per share to $0.06 per share on February 9, 2009, resulting in stock-based compensation expense of $10,000 being recognized in the three months ended March 31, 2009. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr. Metcalf was elected as a director of the Company on March 1, 2007, and became the Company’s Chairman of the Board on February 12, 2009.  On January 28, 2011, Mr. Metcalf resigned as Chairman of the Board and a director of the Company.  At year end, Mr. Metcalf had 2,000,000 stock options outstanding which was comprised of 500,000 stock options that were granted on March 1, 2007 and 1,500,000 stock options that were granted on February 26, 2009.  The options granted in 2007 were re-priced from exercise price of $0.50 per share to $0.06 per share on February 9, 2009, resulting in stock-based compensation expense of $10,000 being recognized in the three months ended March 31, 2009. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Dr. Kim Kiat Ong was elected as a director of the Company on March 1, 2007 and resigned as a director of the Company on April 16, 2010.  At year end, Dr. Ong did not have any stock options outstanding as his stock options expired on July 15, 2010. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Dr. Zhi-Xin Wang was appointed a director of the Company on May 14, 2007 and resigned as a director of the Company on April 15, 2010.  At year end, Dr. Wang did not have any stock options outstanding as his stock options expired on July 14, 2010. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name and Address ofBeneficial Owner                                                                   | Position                     |   | Amount and Nature ofBeneficial Ownership |       |   | Percent of Common Stock(1) |   |
|---------------------------------------------------------------------------------------------------------------------------|-----------------------------------|--------|--------------------------------------------------------------|------------|--------|-------------------------------------------|--------|
| Shan Ming Gu                                                                                                              | Shareholder                       |   |                                                         | 30,000,000 | (2)    |                                      |   | 13.2 | % |
| #902, No. 55, Lane 789, Qinghu Road, Qingpu District, Shanghai, PRC                                                       |                              |   |                                                         |       |   |                                      |   |   |   |
|                                                                                                                      |                              |   |                                                         |       |   |                                      |   |   |   |
| Ka Yu                                                                                                                     | Secretary, Treasurer and Director |   |                                                         | 5,500,000  | (3)    |                                      |   | 2.4 | % |
| Room 402, Bldg. C, 555 Hai-Lun Road                                                                                       |                              |   |                                                         |       |   |                                      |   |   |   |
| Shanghai, China  200080                                                                                              |                              |   |                                                         |       |   |                                      |   |   |   |
|                                                                                                                      |                              |   |                                                         |       |   |                                      |   |   |   |
| Chris Metcalf                                                                                                             | Former Chairman and Director(4)   |   |                                                         | 2,000,000  | (5)    |                                      |   | ( | *) |
| 111 Congress Avenue, Suite 400, Austin, TX  78701                                                                    |                              |   |                                                         |       |   |                                      |   |   |   |
|                                                                                                                      |                              |   |                                                         |       |   |                                      |   |   |   |
| Lionel Choong                                                                                                             | Chief Financial Officer           |   |                                                         | 2,700,000  | (6)    |                                      |   | 1.2 | % |
| Flat 7C, Hawaii Hao Yuan, Palace Garden (Yu Jing Hua Yuan), Zhang Mu Tao Town, Dongguan District, Guangdong 523360, China |                              |   |                                                         |       |   |                                      |   |   |   |
|                                                                                                                      |                              |   |                                                         |       |   |                                      |   |   |   |
| George Yu                                                                                                                 | President, CEO and Director       |   |                                                         | 1,874,999  | (7)    |                                      |   | ( | *) |
| Flat 4, 8/F, Man Yuen Bldg                                                                                                |                              |   |                                                         |       |   |                                      |   |   |   |
| Man Yuen Street                                                                                                           |                              |   |                                                         |       |   |                                      |   |   |   |
| Yau Ma Tei, Kowloon                                                                                                       |                              |   |                                                         |       |   |                                      |   |   |   |
| Hong Kong                                                                                                                 |                              |   |                                                         |       |   |                                      |   |   |   |
|                                                                                                                      |                              |   |                                                         |       |   |                                      |   |   |   |
| Dennis Kam Thai Leong                                                                                                     | Shareholder                       |   |                                                         | 46,964,462 | (8)    |                                      |   | 20.7 | % |
| 6C Tower 2 South Bay Palace, South Bay Close 29-31, Hong Kong                                                             |                              |   |                                                         |       |   |                                      |   |   |   |
|                                                                                                                      |                              |   |                                                         |       |   |                                      |   |   |   |
| Accelera Evolution Limited                                                                                                | Shareholder                       |   |                                                         | 31,964,463 | (9)    |                                      |   | 14.8 | % |
| P.O. Box 309 Ugland House, Grand Cayman KY1-1104, Cayman Islands                                                          |                              |   |                                                         |       |   |                                      |   |   |   |
|                                                                                                                      |                              |   |                                                         |       |   |                                      |   |   |   |
| Accelera Ventures Ltd.                                                                                                    | Shareholder                       |   |                                                         | 13,999,999 | (10)   |                                      |   | 6.2 | % |
| East Asia Chambers                                                                                                        |                              |   |                                                         |       |   |                                      |   |   |   |
| P.O. Box 901                                                                                                              |                              |   |                                                         |       |   |                                      |   |   |   |
| Road Town, Tortola                                                                                                        |                              |   |                                                         |       |   |                                      |   |   |   |
| British Virgin Islands                                                                                                    |                              |   |                                                         |       |   |                                      |   |   |   |
|                                                                                                                      |                              |   |                                                         |       |   |                                      |   |   |   |
| Directors and Officers as a group (3 persons)                                                                             |                              |   |                                                         | 10,074,999 | (11)   |                                      |   | 4.3 | % |

----

| (1) | Beneficial ownership of Common Stock has been determined for this purpose in accordance with Rule 13d-3 under the Exchange Act, under which a person is deemed to be the beneficial owner of securities if such person has or shares voting power or investment power with respect to such securities, has the right to acquire beneficial ownership within 60 days or acquires such securities with the purpose or effect of changing or influencing the control of the Company. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | This figure includes 10,000,000 shares directly owned by Shan Ming Gu, 10,000,000 shares owned by Mr. Gu’s wife, Ms. Li Hua Han, which are deemed to be indirectly beneficially owned by Mr. Gu, and 10,000,000 shares owned by Mr. Gu’s daughter, Ms. Jian Ying Gu, who resides with Mr. Gu and which shares are deemed to be indirectly beneficially owned by Mr. Gu. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | This figure includes 2,000,000 shares directly owned by Mr. Ka Yu, 500,000 stock options which have already vested and 3,000,000 shares owned by Mr. Ka Yu’s wife, Ms. Hui Wang, which are deemed to be indirectly beneficially owned by Mr. Yu. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Mr. Metcalf was elected as a director of the Company on March 1, 2007, and became the Company’s Chairman of the Board on February 12, 2009.  Mr. Metcalf resigned as the Company’s Chairman of the Board and as a director of the Company on January 28, 2011. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | This figure includes 2,000,000 stock options which have already vested. |
|-----|-------------------------------------------------------------------------|

| (6) | This figure includes 2,700,000 stock options which have already vested. |
|-----|-------------------------------------------------------------------------|

| (7) | This figure includes 1,458,000 stock options which have already vested and 416,666 stock options which will vest within 60 days of the Determination Date. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | This figure includes 1,000,000 shares directly owned by Mr. Leong, 31,964,463 shares and 13,999,999 shares owned by Accelera Evolution Limited and Accelera Ventures Ltd., respectively, which are deemed to be indirectly owned and controlled by Mr. Leong in his capacity as a director of each entity. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | These shares are deemed to be indirectly owned and controlled by Mr. Dennis Kam Thai Leong in his capacity as a director of Accelera Evolution Limited. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | These shares are deemed to be indirectly owned and controlled by Mr. Dennis Kam Thai Leong in his capacity as a director of Accelera Ventures Ltd. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | This figure includes 5,000,000 shares owned directly and indirectly by the current directors and executive officers as well as 4,658,333 stock options with have already vested and 416,666 stock options which will vest within 60 days of the Determination Date. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | 1. | the conversion price contained the convertible debenture issued by the Company to Accelera Evolution Limited in the amount of $100,000 on July 30, 2008, including any accrued and unpaid interest thereon, is amended from $0.30 per share to $0.003 per share; and |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | the conversion price contained in the convertible debenture issued by the Company to Accelera Ventures Ltd. in the amount of $250,000 on November 11, 2008, including any accrued and unpaid interest thereon, which was transferred from Accelera Ventures Ltd. to Accelera Evolution Limited and then such transfer was subsequently cancelled, is amended from $0.30 per share to $0.005 per share. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| FinancialStatements forYear EndedDecember 31 |   | Audit Fees(1) |   |   | Audit RelatedFees(2) |   |   | Tax Fees(3) |   |   | All Other Fees(4) |   |
|-------------------------------------------------------------|--------|--------------------|--------|--------|---------------------------|--------|--------|------------------|--------|--------|-----------------------------|--------|
| 2010                                                        |   | $                  | Nil    |   |                      | $      | Nil    |             |   | $      | Nil                         |   |   | $ | Nil |   |
| 2009                                                        |   | $                  | 18,000 |   |                      | $      | Nil    |             |   | $      | Nil                         |   |   | $ | Nil |   |
| 2008                                                        |   | $                  | 88,500 |   |                      | $      | Nil    |             |   | $      | Nil                         |   |   | $ | Nil |   |
| 2007                                                        |   | $                  | 88,900 |   |                      | $      | Nil    |             |   | $      | Nil                         |   |   | $ | 111,200 |   |

| (1) | The aggregate fees billed for the fiscal year for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory engagements for that fiscal years. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The aggregate fees billed in the fiscal year for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported in Note 1. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The aggregate fees billed in the fiscal year for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | The aggregate fees billed in the fiscal year for the products and services provided by the principal accountant, other than the services reported in Notes (1), (2) and (3). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| Exhibit No. |   | Description of Exhibit                                                                                                                                    |
|------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1*             |   | Memorandum of Association for Wanxin Bio-Technology Limited                                                                                                         |
| 3.2*             |   | Articles of Association for Wanxin Bio-Technology Limited                                                                                                           |
| 3.3*             |   | Memorandum of Association for Manhing Enterprises Limited                                                                                                           |
| 3.4*             |   | Articles of Association for Manhing Enterprises Limited                                                                                                             |
| 3.5(1)           |   | Certificate of Incorporation of CDoor Corp.                                                                                                                         |
| 3.6(2)           |   | Certificate of Amendment to the Certificate of Incorporation of CDoor Corp.                                                                                         |
| 5.1*             |   | Legal opinion with respect to the ownership of Manhing Enterprises Limited                                                                                          |
| 5.2*             |   | Legal opinion with respect to the ownership of Shanghai Wanxing Bio-pharmaceuticals Co., Ltd.                                                                       |
| 10.1*            |   | Extension Agreement between CDoor Corp., Wanxing Bio-Technology Limited and all the Shareholders of Wanxin Bio-Technology Limited, dated effective January 4, 2007. |
| 10.2*            |   | Share Purchase Agreement between CDoor Corp., Wanxin Bio-Technology Limited and all the shareholders of Wanxin Bio-Technology Limited, dated December 21, 2006.     |
| 10.3*            |   | Contract for cooperation development of rh-Interferonα-2a project between Shanghai Wanxing and Fudan University, dated September 26, 1997.                     |
| 10.4*            |   | Contract for cooperation development of rh-Interferonα-2b project between Shanghai Wanxing and Fudan University, dated June 8, 1998.                           |
| 10.5*            |   | Technology of Leflunomide Transfer Contract between Shanghai Wanxing and China People 2nd Army Hospital University, dated March 11, 2002.                           |
| 10.6*            |   | Collaboration and License Agreement between Shanghai Wanxing and Second Military Medical University, PLA, dated March 22, 2001.                                     |
| 10.7*            |   | Memorandum of Understanding between Shanghai Wanxing and the World Health Organization, dated February 12, 2003.                                                    |
| 10.8*            |   | Collaborative Research, Development and Supply Agreement between Shanghai Wanxing and the Program for Appropriate Technology in Health, dated December 22, 2005.    |
| 10.9*            |   | Multi-Party Agreement between Shanghai Wanxing, Second Military Medical University and the Program for Appropriate Technology in Health, dated December 22, 2005.   |
| 10.10*           |   | Authorization Letter issued by Second Military Medical University to Shanghai Wanxing, dated January 20, 2006.                                                      |
| 10.11*           |   | Fixed Asset Loan Contract between Shanghai Wanxing and China Industrial and Commercial Bank Pudong Shangchuan Branch, dated May 23, 2000.                           |
| 10.12*           |   | Suretyship Contract between Shangahi Wanxing and Shanghai JinYuan Real Estate Development Co., Ltd., dated May 14, 2001.                                            |
| 10.13*           |   | Maximum Value Mortgage Contract between Shanghai Wanxing and China Construction Bank Shanghai Branch, dated October 17, 2002.                                       |
| 10.14*           |   | Current Capital Loan Contract (6) between Shanghai Wanxing and China Industrial Commercial Bank Pudong Branch, dated April 23, 2003.                                |
| 10.15*           |   | Loan Contract #9 between Shanghai Wanxing and Agricultural Bank of China, dated May 16, 2003.                                                                       |
| 10.16*           |   | Current Capital Loan Contract (5) between Shanghai Wanxing and China Industrial and Commercial Bank Pudong Branch, dated September 13, 2003.                        |
| 10.17*           |   | Current Capital Loan Contract (4) between Shanghai Wanxing and China Industrial and Commercial Bank Pudong Branch, dated January 9, 2004.                           |

----

| Exhibit No. |   | Description of Exhibit                                                                                                                                                                        |
|------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.18*           |   | Current Capital Loan Contract (3) between Shanghai Wanxing and China Industrial and Commercial Bank Pudong Branch, dated January 12, 2004.                                                              |
| 10.19*           |   | Current Capital Loan Contract (2) between Shanghai Wanxing and China Industrial and Commercial Bank Pudong Branch, dated January 14, 2004.                                                              |
| 10.20*           |   | Loan Contract between Shanghai Wanxing and Shenzhen Development Bank Co., Ltd., dated August 5, 2004.                                                                                                   |
| 10.21*           |   | Short-Term Loan Contract between Shanghai Wanxing and Industrial Bank Shanghai Branch, dated December 20, 2004.                                                                                         |
| 10.22*           |   | Short-Term Loan Contract (8) between Shanghai Wanxing and Industrial Bank Shanghai Branch, dated December 20, 2004.                                                                                     |
| 10.23*           |   | Deed of Indemnity provided by Mr. Ban-Jun Yang to Shanghai Wanxing, dated December 2006.                                                                                                                |
| 10.24*           |   | Settlement Agreement between Shanghai Wanxing and the Agriculture Bank of China, Shanghai Wujiaochang Branch, dated September 15, 2006.                                                                 |
| 10.25*           |   | Settlement Agreement between Shanghai Wanxing and the Industrial and Commercial Bank Pudong Branch, dated October 25, 2006.                                                                             |
| 10.26*           |   | Settlement Agreement between Shanghai Wanxing and the Shenzhen Development Bank Shanghai Lujiazui Branch, dated October 25, 2006.                                                                       |
| 10.27*           |   | Settlement Agreement between Shanghai Wanxing and China Construction Bank Shanghai Yangpu Branch, dated October 24, 2006.                                                                               |
| 10.28(2)         |   | Corporate Consulting Services Agreement between Sinobiomed Inc. and Asher Zwebner, dated effective January 1, 2007.                                                                                     |
| 10.29(2)         |   | Consulting Agreement between Sinobiomed Inc. and Michael Tan, dated effective March 1, 2007.                                                                                                            |
| 10.30(3)         |   | Consulting Agreement between Sinobiomed Inc. and Dr. Dicken S.C. Ko, dated April 12, 2007.                                                                                                              |
| 10.31(4)         |   | Equity Transfer Contract, dated as of August 6, 2007, by and between Shanghai Wanxing Bio-pharmaceuticals Co., Ltd. and the equity owners of Suzhou Boai Medical Development Company.                   |
| 10.32(5)         |   | Cancellation Agreement of the Equity Transfer Contract between Shanghai Wanxing Bio-pharmaceuticals Co., Ltd. and the equity owners of Suzhou Boai Medical Development Company, dated January 22, 2008. |
| 10.33(6)         |   | Settlement Agreement dated April 3, 2008, between Shanghai Wanxing and the China Construction Bank Corporation.                                                                                         |
| 10.34(6)         |   | Settlement Agreement dated April 8, 2008, between Shanghai Wanxing and the Industrial Bank Co., Ltd., Shanghai branch.                                                                                  |
| 10.35(7)         |   | Convertible Debenture of Sinobiomed Inc. in the principal sum of $100,000 issued to Accelera Evolution Limited.                                                                                         |
| 10.36(7)         |   | Share Purchase Warrant Certificate for up to 300,000 common shares of Sinobiomed Inc. issued to Accelera Evolution Limited.                                                                             |
| 10.37(7)         |   | Share Purchase Piggyback Warrant Certificate for up to 600,000 common shares of Sinobiomed Inc. issued to Accelera Evolution Limited.                                                                   |
| 10.38(8)         |   | Corporate Consulting Services Agreement dated effective September 1, 2008, between the Company and Lionel Choong.                                                                                       |
| 10.39(9)         |   | Convertible Debenture of Sinobiomed Inc. in the principal sum of $250,000 issued to Accelera Ventures Ltd.                                                                                              |
| 10.40(9)         |   | Share Purchase Warrant Certificate for up to 750,000 common shares of Sinobiomed Inc. issued to Accelera Ventures Ltd.                                                                                  |
| 10.41(9)         |   | Share Purchase Piggyback Warrant Certificate for up to 1,500,000 common shares of Sinobiomed Inc. issued to Accelera Ventures Ltd.                                                                      |

----

| Exhibit No. |   | Description of Exhibit                                                                                                                                           |
|------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.42(10)        |   | Corporate Consulting Services Agreement dated February 9, 2009, between the Company and Anchie Kuo.                                                                        |
| 10.43(11)        |   | Amendment Agreement between Sinobiomed Inc. and Accelera Evolution Limited, dated April 20, 2010.                                                                          |
| 10.44(12)        |   | Executive Employment Agreement, dated September 1, 2010, by and between Sinobiomed Inc. and Mr. George Yu.                                                                 |
| 10.45(13)        |   | Asset Purchase Agreement, dated December 10, 2010, between Sinobiomed Inc. and Keychain, Ltd.                                                                              |
| 10.46(14)        |   | Purchase and Sale Agreement, dated December 17, 2010, between Sinobiomed, Inc., China Nonferrous Metals Resource Geological Survey Inc. and Wanxin Bio-Technology Limited. |
| 10.47(15)        |   | Settlement and Conversion of Debt Letter Agreement between Michael Tan and Sinobiomed Inc., dated December 2, 2010.                                                        |
| 31.1             |   | Certificate pursuant to Rule 13a-14(a)                                                                                                                                     |
| 31.2             |   | Certificate pursuant to Rule 13a-14(a)                                                                                                                                     |
| 32.1             |   | Certificate pursuant to 18 U.S.C. Section 1350                                                                                                                             |
| 32.2             |   | Certificate pursuant to 18 U.S.C. Section 1350                                                                                                                             |
| 99.1*            |   | Patent Certificate for aFGF issued by State Intellectual Property Office of the P.R. China, dated September 22, 2004.                                                      |
| 99.2*            |   | Patent Certificate for Ethelphazine issued by State Intellectual Property Office of the P.R. China, dated November 11, 2004.                                               |
| 99.3*            |   | Patent Certificate for IFN issued by State Intellectual Property Office of the P.R. China, dated October 20, 2004.                                                         |
| 99.4*            |   | Notice of publication and essential examination of invention patent for rBAT issued by State Intellectual Property Office of the P.R. China, dated October 29, 2004.       |
| 99.5*            |   | Accepting Notice for the Patent Application for rh-HRF issued by State Intellectual Property Office of the P.R. China, dated October 22, 2004.                             |
| 99.6*            |   | Accepting Notice for the Patent Application for rhK1 issued by State Intellectual Property Office of the P.R. China, dated June 19, 2006.                                  |
| 99.7*            |   | Accepting Notice for the Patent Application for rhSCF issued by State Intellectual Property Office of the P.R. China, dated February 4, 2005.                              |
| 99.8*            |   | Patent Certificate for Plasmodium Fusion Antigen issued by the United States Patent Office, dated September 5, 2006.                                                       |
| 99.9(16)         |   | Audit Committee Charter                                                                                                                                                    |
| 99.10(16)        |   | Audit Committee Procedures for Whistleblowers                                                                                                                              |
| 99.11(10)        |   | Stock Option Agreement dated February 9, 2009, between the Company and Anchie Kuo.                                                                                         |
| 99.12(10)        |   | Stock Option Agreement dated February 9, 2009, between the Company and Lionel Choong Khuat Leok.                                                                           |
| 99.13(12)        |   | Stock Option Agreement, dated September 1, 2010, by and between, Sinobiomed Inc. and Mr. George Yu.                                                                        |

| (*) | Previously filed on Form 8-K/A-1 with the SEC via EDGAR on January 16, 2007, and incorporated herein by reference. |
|-----|--------------------------------------------------------------------------------------------------------------------|

| (1) | Previously filed on Form SB-2 with the SEC via EDGAR on September 19, 2005, and incorporated herein by reference. |
|-----|-------------------------------------------------------------------------------------------------------------------|

| (2) | Previously filed on Form 10-KSB with the SEC via EDGAR on March 28, 2007, and incorporated herein by reference. |
|-----|-----------------------------------------------------------------------------------------------------------------|

| (3) | Previously filed on Form 10-QSB with the SEC via EDGAR on May 18, 2007, and incorporated herein by reference. |
|-----|---------------------------------------------------------------------------------------------------------------|

----

| (4) | Previously filed on Form 8-K with the SEC via EDGAR on August 10, 2007, and incorporated herein by reference. |
|-----|--------------------------------------------------------------------------------------------------------------------|

| (5) | Previously filed on Form 8-K with the SEC via EDGAR on March 31, 2008, and incorporated herein by reference. |
|-----|--------------------------------------------------------------------------------------------------------------|

| (6) | Previously filed on Form 8-K with the SEC via EDGAR on April 21, 2008, and incorporated herein by reference. |
|-----|--------------------------------------------------------------------------------------------------------------|

| (7) | Previously filed on Form 8-K with the SEC via EDGAR on August 8, 2008, and incorporated herein by reference. |
|-----|--------------------------------------------------------------------------------------------------------------|

| (8) | Previously filed on Form 8-K with the SEC via EDGAR on October 8, 2008, and incorporated herein by reference. |
|-----|---------------------------------------------------------------------------------------------------------------|

| (9) | Previously filed on Form 10-Q with the SEC via EDGAR on November 19, 2008, and incorporated herein by reference. |
|-----|------------------------------------------------------------------------------------------------------------------|

| (10) | Previously filed on Form 8-K with the SEC via EDGAR on February 24, 2009, and incorporated herein by reference. |
|------|-----------------------------------------------------------------------------------------------------------------|

| (11) | Previously filed on Form 8-K with the SEC via EDGAR on April 28, 2010, and incorporated herein by reference. |
|------|--------------------------------------------------------------------------------------------------------------|

| (12) | Previously filed on Form 8-K with the SEC via EDGAR on September 9, 2010, and incorporated herein by reference. |
|------|-----------------------------------------------------------------------------------------------------------------|

| (13) | Previously filed on Form 8-K with the SEC via EDGAR on December 15, 2010, and incorporated herein by reference. |
|------|-----------------------------------------------------------------------------------------------------------------|

| (14) | Previously filed on Form 8-K with the SEC via EDGAR on December 22, 2010, and incorporated herein by reference. |
|------|-----------------------------------------------------------------------------------------------------------------|

| (15) | Previously filed on Form 8-K with the SEC via EDGAR on January 5, 2011, and incorporated herein by reference. |
|------|---------------------------------------------------------------------------------------------------------------|

| (16) | Previously filed on Form 10-QSB with the SEC via EDGAR on August 14, 2007, and incorporated herein by reference. |
|------|------------------------------------------------------------------------------------------------------------------|

----

|   | SINOBIOMED INC.                       |
|--------|---------------------------------------|
|   | (Registrant)                          |
|   | By: /s/ George Yu                     |
|   | George Yu                             |
|   | President and Chief Executive Officer |

| Signature                  |         | Title                             |         | Date           |
|----------------------------|--------------|-----------------------------------|--------------|----------------|
|                       |         |                              |         |           |
| /s/ George Yu              |         | President and Chief Executive     |         | March 31, 2011 |
| George Yu                  |         | Officer and Director              |         |           |
|                       |         |                              |         |           |
| /s/ Ka Yu                  |         | Secretary, Treasurer and Director |         | March 31, 2011 |
| Ka Yu                      |         |                              |         |           |
|                       |         |                              |         |           |
| /s/ Khuat Leok Choong      |         | Chief Financial Officer           |         | March 31, 2011 |
| Khuat Leok (Lionel) Choong |         |                              |         |           |
|                       |    |                              |    |           |

----

| Exhibit # |         |                                            |         | Page#  |
|-----------|--------------|-------------------------------------------------|--------------|--------|
| 31.1      |         | Certificate pursuant to Rule 13a-14(a).         |         | 60     |
|      |         |                                            |         |   |
| 31.2      |         | Certificate pursuant to Rule 13a-14(a).         |         | 62     |
|      |         |                                            |         |   |
| 32.1      |         | Certificate pursuant to 18 U.S.C. Section 1350. |         | 64     |
|      |         |                                            |         |   |
| 32.2      |    | Certificate pursuant to 18 U.S.C. Section 1350. |    | 65     |

----