----

----

| Nevada                                                         | 68-0677944                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

| 5940 South Rainbow Boulevard, Las Vegas, Nevada | 89118      |
|-------------------------------------------------|------------|
| (Address of principal executive offices)        | (Zip Code) |

| Large accelerated filer o           | Accelerated filer o              |
|-------------------------------------|----------------------------------|
| Non-accelerated filer   o | Smaller reporting company ý |

----

----

----

----

| · | increased competitive pressures from existing competitors and new entrants; |
|--------|-----------------------------------------------------------------------------|

| · | our ability to efficiently and effectively finance our operations; |
|--------|--------------------------------------------------------------------|

| · | deterioration in general or regional economic conditions; |
|--------|-----------------------------------------------------------|

| · | adverse state or federal legislation or regulation that increases the costs of compliance; |
|--------|--------------------------------------------------------------------------------------------|

| · | ability to achieve future sales levels or other operating results; |
|--------|--------------------------------------------------------------------|

| · | operational inefficiencies in distribution or other systems; |
|--------|--------------------------------------------------------------|

| · | the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | the MMA and apparel industry and market; |
|--------|------------------------------------------|

| · | the availability of capital to fund our business plan and the resulting dilution caused by the raising of capital through the sale of shares; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| · | product manufacturing and sourcing; |
|--------|-------------------------------------|

| · | changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate; |
|--------|-------------------------------------------------------------------------------------------------------------------|

| · | inability to efficiently manage our operations; |
|--------|-------------------------------------------------|

| · | the inability of management to effectively implement our strategies and business plans; and |
|--------|---------------------------------------------------------------------------------------------|

| · | the other risks and uncertainties detailed in this report. |
|--------|------------------------------------------------------------|

----

| PART II |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| Item 7  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 5      |
| Item 8  | Financial Statements and Supplementary Data                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 10     |
| Item 9A | Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 11     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| PART IV |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| Item 15 | Exhibits, Financial Statement Schedules                                                                                                                                 | 12     |

----

| Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|--------|---------------------------------------------------------------------------------------------|

----

----

----

----

| ● | The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The Company has not paid any dividends on common stock since our inception and do not anticipate paying dividends on our common stock in the foreseeable future. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The expected life of the award is computed using the “simplified” method as permitted under the provisions of Staff Accounting Bulletin (“SAB”) 107. SAB 107’s guidance was extended indefinitely by SAB 110. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The expected volatility is based on the historical volatility of our common stock based on the daily quoted closing trading prices. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------|

| ● | The forfeiture rate is based on an estimate of awards not expected to fully vest. |
|---------|-----------------------------------------------------------------------------------|

----

| Item 8 | Financial Statements and Supplementary Data |
|--------|---------------------------------------------|

----

| Item 9A | Controls and Procedures |
|---------|-------------------------|

----

| Item 15 |   Exhibits, Financial Statement Schedules |
|---------|-----------------------------------------------------|

| Number                                         | Exhibit                                                                                                                                               |
|------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                                           | Rule 13a-14(a) Certification of Principal Executive Officer                                                                                           |
| 31.2                                           | Rule 13a-14(a) Certification of Principal Financial Officer                                                                                           |
| 32.1                                           | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Executive Officer |
| 32.2                                           | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Financial Officer |
| 101.INS*                                       | Interactive Data Files Pursuant to Rule 405 of Regulation S-T                                                                                         |
|                                           |                                                                                                                                                  |
| *   To be provided by amendment |

----

|                               |   | Respect Your Universe, Inc.           |
|------------------------------------|--------|---------------------------------------|
|                               |   |                                  |
| Date:  November 19, 2012 |   | /s/ David Campisi                     |
|                               |   | David Campisi,Chief Executive Officer |

| Signature                        |   | Title                                        |   | Date              |
|----------------------------------|--------|----------------------------------------------|--------|-------------------|
|  /s/ Kristian J. Andresen   |   | Director and Secretary                       |   | November 19, 2012 |
| Kristian J. Andresen             |   |                                         |   |              |
|  /s/ David Campisi     |   |  Director and Chief Executive Officer   |   | November 19, 2012 |
| David Campisi                    |   | (Principal Executive Officer)                |   |              |
|                             |   |                                         |   |              |
| /s/ John Wood                    |   | President and Director                       |   | November 19, 2012 |
| John Wood                        |   |                                         |   |              |
|  /s/ Emmanuel K. Brown |   | Director                                     |   | November 19, 2012 |
| Emmanuel K. Brown                |   |                                         |   |              |
|  /s/ Munir Ali              |   | Director                                     |   | November 19, 2012 |
| Munir Ali                        |   |                                         |   |              |
|  /s/ Steven H. Eklund  |   |  Chief Financial Officer                |   | November 19, 2012 |
| Steven H. Eklund                 |   | (Principal Financial and Accounting Officer) |   |              |

----

----

| Respect Your Universe, Inc.                                          |   |
|----------------------------------------------------------------------|--------|
| (A Development Stage Company)                                        |   |
| Balance Sheets                                                       |   |
|                                                                 |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |
|                                                                 |   | December 31, 2011 |   |   |   |   |
|                                                                 |   | As Restated * |   |   | December 31, 2010 |   |
|                                                                 |   |   |   |   |   |   |
| ASSETS                                                               |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |
| Current assets                                                       |   |   |   |   |   |   |
| Cash                                                                 |   | $ | 2,698,719 |   |   | $ | 3,308 |   |
| Inventory                                                            |   |   | 178,541 |   |   |   | - |   |
| Deposits                                                             |   |   | 194,723 |   |   |   | - |   |
| Prepaid expenses                                                     |   |   | 764,768 |   |   |   |   |   |
| Total current assets                                                 |   |   | 3,836,751 |   |   |   | 3,308 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Property and equipment - net                                         |   |   | 47,349 |   |   |   | - |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Other assets                                                         |   |   |   |   |   |   |   |   |
| Patents and trademarks - net                                         |   |   | 17,101 |   |   |   | - |   |
| Website development - net                                            |   |   | 4,667 |   |   |   | - |   |
| Total other assets                                                   |   |   | 21,768 |   |   |   | - |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Total assets                                                         |   | $ | 3,905,868 |   |   | $ | 3,308 |   |
|                                                                 |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                       |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Current liabilities                                                  |   |   |   |   |   |   |   |   |
| Accounts payable and accrued liabilities                             |   | $ | 409,130 |   |   | $ | 61,442 |   |
| Accounts payable - related party                                     |   |   | 63,177 |   |   |   | 406,252 |   |
| Loans payable - related party                                        |   |   | 25,000 |   |   |   | 20,000 |   |
| Total current liabilities                                            |   |   | 497,307 |   |   |   | 487,694 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Stockholders’ equity (deficit)                                 |   |   |   |   |   |   |   |   |
| Common stock, $0.001 par value, 500,000,000                          |   |   |   |   |   |   |   |   |
|     shares authorized; 39,433,378 and 23,995,500 |   |   |   |   |   |   |   |   |
|     shares issued and outstanding, respectively  |   |   | 39,434 |   |   |   | 23,996 |   |
| Additional paid in capital                                           |   |   | 11,420,979 |   |   |   | 1,066,054 |   |
| Deficit accumulated during the development stage                     |   |   | (8,051,852 | ) |   |   | (1,574,436 | ) |
| Total stockholders’ equity (deficit)                           |   |   | 3,408,561 |   |   |   | (484,386 | ) |
|                                                                 |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity (deficit)                 |   | $ | 3,905,868 |   |   | $ | 3,308 |   |
|                                                                 |   |   |   |   |   |   |   |   |

----

| Respect Your Universe, Inc.                                          |   |
|----------------------------------------------------------------------|--------|
| (A Development Stage Company)                                        |   |
| Statements of Operations                                             |   |
|                                                                 |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   | From November 21, 2008 |   |
|                                                                 |   |   |   |   |   |   |   | (Inception) to |   |
|                                                                 |   | December 31, 2011 |   |   |   |   |   | December 31, 2011 |   |
|                                                                 |   | As Restated * |   |   | December 31, 2010 |   |   | As Restated* |   |
|                                                                 |   |   |   |   |   |   |   |   |   |
| Revenue                                                              |   | $ | 2,821 |   |   | $ | - |   |   | $ | 4,808 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of revenue                                                      |   |   |  - |   |   |   | - |   |   |   | 9,214 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit (loss)                                                  |   |   | 2,821 |   |   |   | - |   |   |   | (4,406 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketing and advertising                                            |   |   | 760,863 |   |   |   | - |   |   |   | 829,833 |   |
| Marketing and advertising - related party                            |   |   | 63,900 |   |   |   | - |   |   |   | 63,900 |   |
| Product creation                                                     |   |   | 10,216 |   |   |   | - |   |   |   | 10,216 |   |
| Product creation - related party                                     |   |   | 356,144 |   |   |   | 1,000,701 |   |   |   | 1,356,845 |   |
| General and administrative                                           |   |   | 5,257,224 |   |   |   | 156,517 |   |   |   | 5,754,762 |   |
| Loss on impairment of website                                        |   |   | 31,890 |   |   |   | - |   |   |   | 31,890 |   |
| Total operating expenses                                             |   |   | 6,480,237 |   |   |   | 1,157,218 |   |   |   | 8,047,446 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                             |   | $ | (6,477,416 | ) |   | $ | (1,157,218 | ) |   | $ | (8,051,852 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per common share -                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|      basic and diluted                      |   | $ | (0.20 | ) |   | $ | (0.05 | ) |   | $ | (0.40 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|      shares outstanding during the period - |   |   |   |   |   |   |   |   |   |   |   |   |
|      basic and diluted                      |   |   | 32,260,909 |   |   |   | 22,052,911 |   |   |   | 20,133,972 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Respect Your Universe, Inc.                                             |   |
|-------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                           |   |
| Statement of Stockholders' Equity (Deficit)                             |   |
| From November 21, 2008 (Inception) to December 31, 2011                 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   | Total |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   | During the |   |   | Stock |   |   | Stockholders' |   |
|                                                                    |   | Common Stock, $0.001 Par Value |   |   | Additional |   |   | Development |   |   | Subscriptions |   |   | Equity |   |
|                                                                    |   | Shares |   |   | Amount |   |   | Paid in Capital |   |   | Stage |   |   | Receivable |   |   | (Deficit) |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock - founders ($0.001/share)                      |   |   | 6,250,000 |   |   | $ | 6,250 |   |   | $ | - |   |   | $ | - |   |   | $ | (6,250 | ) |   | $ | - |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss - period ended December 31, 2008                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (49,831 | ) |   |   | - |   |   |   | (49,831 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2008                                              |   |   | 6,250,000 |   |   |   | 6,250 |   |   |   | - |   |   |   | (49,831 | ) |   |   | (6,250 | ) |   |   | (49,831 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Receipt of cash on subscription receivable                              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,250 |   |   |   | 6,250 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock for cash and subscription                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      receivable ($0.001, 0.01 and $0.10/share) |   |   | 7,855,000 |   |   |   | 7,855 |   |   |   | 161,145 |   |   |   | - |   |   |   | (33,000 | ) |   |   | 136,000 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share-based compensation - stock ($0.001 and $0.10/share)               |   |   | 3,058,500 |   |   |   | 3,059 |   |   |   | 228,541 |   |   |   | - |   |   |   | - |   |   |   | 231,600 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock in conversion of debt ($0.10/share)            |   |   | 1,067,000 |   |   |   | 1,067 |   |   |   | 105,633 |   |   |   | - |   |   |   | - |   |   |   | 106,700 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss - year ended December 31, 2009                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (367,387 | ) |   |   | - |   |   |   | (367,387 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2009                                              |   |   | 18,230,500 |   |   |   | 18,231 |   |   |   | 495,319 |   |   |   | (417,218 | ) |   |   | (33,000 | ) |   |   | 63,332 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Receipt of cash on subscription receivable                              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 33,000 |   |   |   | 33,000 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock for cash ($0.10/share)                         |   |   | 3,765,000 |   |   |   | 3,765 |   |   |   | 372,735 |   |   |   | - |   |   |   | - |   |   |   | 376,500 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share-based compensation - stock ($0.10/share)                          |   |   | 2,000,000 |   |   |   | 2,000 |   |   |   | 198,000 |   |   |   | - |   |   |   | - |   |   |   | 200,000 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss - year ended December 31, 2010                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,157,218 | ) |   |   | - |   |   |   | (1,157,218 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2010                                              |   |   | 23,995,500 |   |   |   | 23,996 |   |   |   | 1,066,054 |   |   |   | (1,574,436 | ) |   |   | - |   |   |   | (484,386 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock and warrants for cash                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      ($0.10 - $1.00/share)                     |   |   | 13,917,069 |   |   |   | 13,917 |   |   |   | 6,110,317 |   |   |   | - |   |   |   | - |   |   |   | 6,124,234 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share-based compensation - stock ($0.10 - $1.27/share), as restated     |   |   | 1,520,809 |   |   |   | 1,521 |   |   |   | 574,619 |   |   |   | - |   |   |   | - |   |   |   | 576,140 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share-based compensation - options, as restated                         |   |   | - |   |   |   | - |   |   |   | 3,623,590 |   |   |   | - |   |   |   | - |   |   |   | 3,623,590 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share-based compensation - warrants                                     |   |   | - |   |   |   | - |   |   |   | 46,399 |   |   |   | - |   |   |   | - |   |   |   | 46,399 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss - year ended December 31, 2011, as restated                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (6,477,416 | ) |   |   | - |   |   |   | (6,477,416 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2011, as restated                                 |   |   | 39,433,378 |   |   | $ | 39,434 |   |   | $ | 11,420,979 |   |   | $ | (8,051,852 | ) |   | $ | - |   |   | $ | 3,408,561 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Respect Your Universe, Inc.                                                 |   |
|-----------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                               |   |
| Statements of Cash Flows                                                    |   |
|                                                                        |   |   |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   | From |   |
|                                                                        |   |   |   |   |   |   |   | November 21, 2008 |   |
|                                                                        |   | Year Ended |   |   | (Inception) to |   |
|                                                                        |   | December 31, 2011 |   |   |   |   |   | December 31, 2011 |   |
|                                                                        |   | As Restated * |   |   | December 31, 2010 |   |   | As Restated * |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                        |   |   |   |   |   |   |   |   |   |
| Net loss                                                                    |   | $ | (6,477,416 | ) |   | $ | (1,157,218 | ) |   | $ | (8,051,852 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                               |   |   | 8,526 |   |   |   | - |   |   |   | 14,221 |   |
| Share-based compensation expense - stock                                    |   |   | 347,818 |   |   |   | 200,000 |   |   |   | 773,723 |   |
| Share-based compensation expense - options                                  |   |   | 3,623,590 |   |   |   | - |   |   |   | 3,623,590 |   |
| Share-based compensation expense - warrants                                 |   |   | 46,399 |   |   |   | - |   |   |   | 46,399 |   |
| Loss on impairment of website                                               |   |   | 31,890 |   |   |   | - |   |   |   | 31,890 |   |
| Changes in operating assets and liabilities:                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Inventory                                                                   |   |   | (178,541 | ) |   |   | - |   |   |   | (178,541 | ) |
| Deposits                                                                    |   |   | (194,723 | ) |   |   | - |   |   |   | (194,723 | ) |
| Prepaid expenses                                                            |   |   | (536,446 | ) |   |   | - |   |   |   | (536,446 | ) |
| Accounts payable and accrued liabilities                                    |   |   | 347,688 |   |   |   | 61,442 |   |   |   | 409,130 |   |
| Accounts payable and accrued liabilities - related party                    |   |   | (343,075 | ) |   |   | 406,252 |   |   |   | 63,177 |   |
| Net cash used in operating activities                                       |   |   | (3,324,290 | ) |   |   | (489,524 | ) |   |   | (3,999,432 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchases of property and equipment                                         |   |   | (49,127 | ) |   |   | - |   |   |   | (49,127 | ) |
| Patents and trademarks                                                      |   |   | (18,269 | ) |   |   | - |   |   |   | (18,269 | ) |
| Website development                                                         |   |   | (42,137 | ) |   |   | - |   |   |   | (42,137 | ) |
| Net cash used in investing activities                                       |   |   | (109,533 | ) |   |   | - |   |   |   | (109,533 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from loans payable - related party                                 |   |   | 25,000 |   |   |   | 20,000 |   |   |   | 151,700 |   |
| Repayment of loans payable - related party                                  |   |   | (20,000 | ) |   |   | - |   |   |   | (20,000 | ) |
| Proceeds from issuance of common stock and warrants                         |   |   | 6,124,234 |   |   |   | 409,500 |   |   |   | 6,675,984 |   |
| Net cash provided by financing activities                                   |   |   | 6,129,234 |   |   |   | 429,500 |   |   |   | 6,807,684 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash                                             |   |   | 2,695,411 |   |   |   | (60,024 | ) |   |   | 2,698,719 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash - beginning of period                                                  |   |   | 3,308 |   |   |   | 63,332 |   |   |   | - |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash - end of period                                                        |   | $ | 2,698,719 |   |   | $ | 3,308 |   |   | $ | 2,698,719 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental Disclosure of Non-Cash Financing Activity                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued in exchange for debt                                           |   | $ | - |   |   | $ | - |   |   | $ | 106,700 |   |
| Prepaid expenses                                                            |   | $ | 228,322 |   |   | $ | - |   |   | $ | 228,322 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

| Leasehold improvements         | 1 year  |
|--------------------------------|---------|
| Computers and office equipment | 5 years |
| Software                       | 3 years |
| Furniture and fixtures         | 7 years |

|                           |   | 2011   |   |   | 2010   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|
|                           |   |   |   |   |   |   |
| Leasehold improvements         |   | $      | 2,400  |   |   | $      | - |   |
| Computers and office equipment |   |   | 11,998 |   |   |   | - |   |
| Computer software              |   |   | 30,500 |   |   |   | - |   |
| Furniture and fixtures         |   |   | 4,230  |   |   |   | - |   |
|                           |   |   | 49,128 |   |   |   | - |   |
| Accumulated depreciation       |   |   | (1,779 | )      |   |   | - |   |
|                           |   | $      | 47,349 |   |   | $      | - |   |

|                       |   | 2011   |   |   | 2010   |   |
|----------------------------|--------|--------|--------|--------|--------|--------|
|                       |   |   |   |   |   |   |
| Patent and trademark costs |   | $      | 18,269 |   |   | $      | - |   |
| Accumulated amortization   |   |   | (1,168 | )      |   |   | - |   |
|                       |   | $      | 17,101 |   |   | $      | - |   |

----

|                      |   | 2011   |   |   | 2010   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|
|                      |   |   |   |   |   |   |
| Website development costs |   | $      | 4,667  |   |   | $      | - |   |
| Accumulated amortization  |   |   | -      |   |   |   | - |   |
|                      |   | $      | 4,667  |   |   | $      | - |   |

----

----

| ● | The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The Company has not paid any dividends on common stock since our inception and does not anticipate paying dividends on our common stock in the foreseeable future. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The expected term of the award is computed using the “simplified” method as permitted under the provisions of Staff Accounting Bulletin (“SAB”) 107. SAB 107’s guidance was extended indefinitely by SAB 110. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The expected volatility is based on the historical volatility of our common stock based on the daily quoted closing trading prices. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------|

| ● | The forfeiture rate is based on an estimate of awards not expected to fully vest. |
|---------|-----------------------------------------------------------------------------------|

----

|                                                  |   | 2011   |       |   | 2010   |   |
|-------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                  |   |   |       |   |   |   |
| Stock options, exercise price $0.69 - $2.26           |   |   | 3,242,170  |   |   |   | - |   |
| Common stock warrants, conversion price $1.27 - $1.80 |   |   | 5,440,151  |   |   |   | - |   |
| Unvested, forfeitable restricted stock grants         |   |   | 1,406,250  |   |   |   | - |   |
| Total common stock equivalents                        |   |   | 10,088,571 |   |   |   | - |   |

|   | · | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|              |   |   |      |   | Common Stock Shares |   |      | Common Stock Options |   |   |     |   |
|-------------------|--------|--------|-----------|--------|---------------------|--------|-----------|----------------------|--------|--------|----------|--------|
|              |   | Cash   |      |   | Quantity            |   |      | Fair MarketValue     |   |   | Quantity |   |   | Fair MarketValue |   |   | TotalCompensation |   |
|              |   |   |      |   |                |   |      |                 |   |   |     |   |   |   |   |   |   |   |
| February 2010 (1) |   | $      | 314,860   |   |                |   | 500,000   |                 |   | $      | 50,000   |   |   |   | - |   |   | $ | - |   |   | $ | 364,860 |   |
| May 2010 (1)      |   |   | 585,000   |   |                |   | 1,500,000 |                 |   |   | 150,000  |   |   |   | - |   |   |   | - |   |   |   | 735,000 |   |
| July 2011 (2)     |   |   | 350,000   |   |                |   | -         |                 |   |   | -        |   |   |   | 600,000 |   |   |   | 1,304,937 |   |   |   | 1,654,937 |   |
|              |   | $      | 1,249,860 |   |                |   | 2,000,000 |                 |   | $      | 200,000  |   |   |   | 600,000 |   |   | $ | 1,304,937 |   |   | $ | 2,754,797 |   |

| (1)  | Fair value of $0.10/share was based upon recent cash offerings to third parties. |
|-----------|----------------------------------------------------------------------------------|

| (2) | In connection with the 600,000 stock options granted on July 1, 2011, the Black-Scholes assumptions used were as follows: |
|-----|---------------------------------------------------------------------------------------------------------------------------|

----

| Exercise price          | $2.26    |
|-------------------------|----------|
| Expected dividends      | 0%       |
| Expected volatility     | 127%     |
| Risk free interest rate | 3.22%    |
| Expected term of option | 10 years |
| Expected forfeitures    | 0%       |

| (A) | Stock Issued for Cash |
|-----|-----------------------|

----

| (B) | Stock Issued for Cash and Warrants – Private Placement dated June 2011 |
|-----|------------------------------------------------------------------------------|

|                          |   |             |      |   | Vesting Schedule |   |
|-------------------------------|--------|------------------|-----------|--------|------------------|--------|
|      Date |   | Quantity Granted |      |   | 2011             |   |   | 2012 andThereafter |   |
|                          |   |             |      |   |             |   |   |   |   |
| August 2011                   |   |             | 750,000   |   |             |   | 93,750 |   |   |   | 656,250 |   |
| December 2011                 |   |             | 1,000,000 |   |             |   | 250,000 |   |   |   | 750,000 |   |
|                          |   |             | 1,750,000 |   |             |   | 343,750 |   |   |   | 1,406,250 |   |

----

| Prepaid balance - December 31, 2010    |   | $      | -       |   |
|----------------------------------------|--------|--------|---------|--------|
| Issuances of stock for future services |   |   | 234,017 |   |
| Amortization of prepaid balance        |   |   | (5,695  | )      |
| Prepaid balance - December 31, 2011    |   | $      | 228,322 |   |

|           |   | Quantity |                      |   |       |   |                      | Vesting Schedule |   |   |                |
|----------------|--------|----------|---------------------------|--------|------------|--------|---------------------------|------------------|--------|--------|---------------------|
| Date           |   | Granted  |                      |   | Fair Value |   |                      | 2011             |   |   | 2012 and Thereafter |   |   | Expiration |
|           |   |     |                      |   |       |   |                      |             |   |   |                |   |   |   |   |   |
| June 2011      |   |     | 1,800,000                 |   |       | $      | 1,149,652                 |             |   |   | 1,800,000           |   |   |   |   |   |   | 5 – 10 |   | Years |
| July 2011      |   |     |    950,000 |   |       |   | 1,991,263                 |             |   |   | 950,000             |   |   | - |   |   |   | 10 |   | Years |
| August 2011    |   |     |    228,670 |   |       |   |    246,415 |             |   |   | 228,670             |   |   | - |   |   |   | 10 |   | Years |
| September 2011 |   |     | 13,500                    |   |       |   | 17,301                    |             |   |   | 13,500              |   |   | - |   |   |   | 10 |   | Years |
| October 2011   |   |     | 250,000                   |   |       |   | 271,718                   |             |   |   | 200,000             |   |   | 50,000 |   |   |   | 10 |   | Years |
|           |   |     | 3,242,170                 |   |       | $      | 3,676,349                 |             |   |   |  3,192,170     |   |   |   |  50,000 |   |   |   |   |   |   |

| Exercise price          | $0.69 - $2.26 |
|-------------------------|---------------|
| Expected dividends      | 0%            |
| Expected volatility     | 127% - 136%   |
| Risk free interest rate | 1.92% - 3.22% |
| Expected term of option | 5 - 10 years  |
| Expected forfeitures    | 0%            |

----

|                            | Options   |   | WeightedAverageExercise Price |   | Weighted AverageRemainingContractual Life |       | AverageIntrinsicValue |   |
|---------------------------------|-----------|--------|-------------------------------|--------|-------------------------------------------|------------|-----------------------|--------|
|                            |      |   |                          |   |                                      |       |                  |   |   |   |
| Balance - December 31, 2010     | -         |   | $                             | -      |                                      |       |                  |   |   |   |
| Granted                         | 3,242,170 |   | $                             | 1.24   |                                      |       |                  |   |   |   |
| Exercised                       | -         |   | $                             | -      |                                      |       |                  |   |   |   |
| Forfeited                       | -         |   | $                             | -      |                                      |       |                  |   |   |   |
| Outstanding - December 31, 2011 | 3,242,170 |   | $                             | 1.24   |                                      | 8.28 years |                  | $      | 558,000 |   |
| Exercisable - December 31, 2011 | 3,192,170 |   | $                             | 1.26   |                                      | 8.76 years |                  | $      | 511,500 |   |

| Grant date fair value of options  - 2011         |   | $      | 3,676,349 |   |
|------------------------------------------------------------|--------|--------|-----------|--------|
| Weighted average grant date fair value - 2011              |   | $      | 1.18      |   |
|                                                       |   |   |      |   |
| Outstanding options held by related parties – 2011   |   |   | 1,928,670 |   |
| Exercisable options held by related parties – 2011   |   |   | 1,928,670 |   |
| Fair value of stock options held by related parties - 2011 |   | $      | 2,696,995 |   |

| (E) | Warrants |
|-----|----------|

|        |   | Quantity |   |       |   |   | Vesting Schedule |   |   |
|-------------|--------|----------|--------|------------|--------|--------|------------------|--------|--------|
| Date        |   | Granted  |   | Fair Value |   |   | 2011             |   |   | 2012 |   | Expiration |
|        |   |     |   |       |   |   |             |   |   |   |   |   |   |
| August 2011 |   |     | 50,000 |       |   | $      | 92,798           |   |   |   | 25,000 |   |   |   | 25,000 |   | 3   Years |

| Exercise price           | $1.27   |
|--------------------------|---------|
| Expected dividends       | 0%      |
| Expected volatility      | 128%    |
| Risk free interest rate  | 0.55%   |
| Expected term of warrant | 3 years |
| Expected forfeitures     | 0%      |

----

|                            |   Warrants |   | WeightedAverageExercise Price |   | Weighted AverageRemainingContractual Life |
|---------------------------------|----------------------|--------|-------------------------------|--------|-------------------------------------------|
|                            |                 |   |                          |   |                                      |   |
| Outstanding - December 31, 2010 | -                    |   | $                             | -      |                                      | - |
| Exercisable - December 31, 2010 | -                    |   | $                             | -      |                                      | - |
| Granted                         | 5,465,151            |   | $                             | 1.80   |                                      | - |
| Exercised                       | -                    |   | $                             | -      |                                      | - |
| Forfeited/Cancelled             | -                    |   | $                             | -      |                                      | - |
| Outstanding - December 31, 2011 | 5,465,151            |   | $                             | 1.80   |                                      | 1.49 |
| Exercisable - December 31, 2011 | 5,440,151            |   | $                             | 1.80   |                                      | 1.47 |

|                              |   | 2011   |     |   | 2010   |
|-----------------------------------|--------|--------|----------|--------|--------|
| Gross deferred tax assets:        |   |   |     |   |   |
| Net operating loss carry forwards |   | $      | (954,525 | )      |   | $ | (388,000 | ) |
| Total deferred tax assets         |   |   | 954,525  |   |   |   | 388,000 |   |
| Less: valuation allowance         |   |   | (954,525 | )      |   |   | (388,000 | ) |
| Net deferred tax asset recorded   |   | $      | -        |   |   | $ | - |   |

----

|                                           |   | 2011   |       |   | 2010   |   |
|------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                           |   |   |       |   |   |   |
| Expected tax expense (benefit) – federal |   | $      | (2,202,321 | )      |   | $      | (393,000 | ) |
| Non-deductible stock compensation              |   |   | 1,247,796  |   |   |   | 68,000 |   |
| Impairment loss                                |   |   | 11,000     |   |   |   | - |   |
| Valuation allowance                            |   |   | 943,525    |   |   |   | 325,000 |   |
| Actual tax expense (benefit)                   |   | $      | -          |   |   | $      | - |   |

----

| Date         |   | Quantity Granted |   |   | Fair Value |   | Vesting Schedule |   | Expiration                             |
|--------------|--------|------------------|--------|--------|------------|--------|------------------|--------|----------------------------------------|
|         |   |             |   |   |       |   |             |   |                                   |
| January 2012 |   |             | 15,000 |   |       | $      | 11,650           |   |    15,000 upon issuance |   | 10    Years |

| Exercise price           | $0.98    |
|--------------------------|----------|
| Expected dividends       | 0%       |
| Expected volatility      | 145%     |
| Risk free interest rate  | 0.30%    |
| Expected term of warrant | 10 years |

| Term of agreement | 1 year   |
|-------------------|----------|
| Annual salary     | $180,000 |
| Number of options | 100,000  |
| Severance         | $180,000 |

| (D) | Stock Issued for Cash and Warrants |
|-----|------------------------------------|

----

| Date         |   | Quantity Granted |    |   | Fair Value |   | Vesting Schedule |   | Expiration           |
|--------------|--------|------------------|---------|--------|------------|--------|------------------|--------|----------------------|
|         |   |             |    |   |       |   |             |   |                 |
| January 2012 |   |             | 770,000 |   |       | $      | 722,924          |   | 770,000 over 4 years |   | 10   Years |

| Exercise price          | $1.00       |
|-------------------------|-------------|
| Expected dividends      | 0%          |
| Expected volatility     | 145%        |
| Risk free interest rate | 0.39%       |
| Expected term of option | 6 -10 years |
| Expected forfeitures    | 0%          |

| Date         |   | Quantity Granted |       | Fair Value |   | Vesting Schedule |   | Expiration            |
|--------------|--------|------------------|------------|------------|--------|------------------|--------|-----------------------|
|         |   |             |       |       |   |             |   |                  |
| January 2012 |   |             | 100,000(1) |       | $      | 86,859           |   | 100,000 upon issuance |   | 5    Years |

| Exercise price           | $1.20   |
|--------------------------|---------|
| Expected dividends       | 0%      |
| Expected volatility      | 145%    |
| Risk free interest rate  | 0.77%   |
| Expected term of warrant | 5 years |
| Expected forfeitures     | 0%      |

----

|   | 1) | With respect to a stock for services arrangement entered into in December of 2011, which included payment of cash and 1,000,000 shares of stock in exchange for future marketing services over a 13 month period, the Company noted the agreement included a quarterly vesting schedule for the shares granted, and in the event of termination any unvested shares would be forfeited. The Company’s original accounting treated the 1,000,000 shares as issued and recorded a prepaid expense at the outset of the arrangement, based on the fair value of the shares at the contract start date. The Company had treated the shares in the same manner as if it had paid cash, in line with ASC 505-50-25-4.  However, the Company did not take into account SEC Staff Announcement ASC 505-50-S99-1, which requires that public registrants treat unvested, forfeitable shares as unissued until the future services are received.  The Company also incorrectly concluded a performance commitment was achieved as of the contract start date. However, since there is no sufficiently large disincentive for non-performance present in the contract, a performance commitment and therefore a measurement date was not reached upon the contract start date. Alternatively, the Company was required to defer measurement until completion of services by the counterparty. Based on the preceding, the Company concluded the original accounting for this contract is incorrect for the measurement date and for treating the shares as issued and recording a prepaid expense as of December 31, 2011 for the value of unvested, forfeitable shares. The table below reflects the adjustments necessary to correct this error. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2) | With respect to a separate stock for services arrangement entered into in August 2011 for 750,000 shares of stock for future services over a two-year period, the Company has reviewed and concluded that the accounting for this contract should have been treated similar to the contract discussed in item 1 above.  The measurement date should have been based on performance completion given there was no sufficiently large disincentive for non-performance and therefore no performance commitment at the contract start date.  Performance completion occurs ratably over eight quarters whereupon a corresponding portion of the total shares is no longer subject to forfeiture.  Based on the preceding, the Company concluded that the shares under the arrangement should not have been considered issued and therefore no prepaid balance should have been recorded at the contract start date.  Additionally, because the measurement dates differ from our reporting dates, the Company should have recognized an expense based on the estimated fair value of the stock at the reporting dates and subsequently re-measured the stock at the measurement dates, adjusting the expense accordingly.  The table below reflects the adjustments necessary to correct this error. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3) | Additionally, upon review of the Company’s accounting for employee stock options, it was determined that the formula used to calculate the expected term under the simplified method, within the Black-Scholes fair market valuation model for 2011 employee stock options was incorrectly and inconsistently applied.  The table below reflects the adjustments necessary to correct this error. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                               | As PreviouslyReported |   |       | Adjustments |   |   | As Restated |   |
|--------------------------------------------------------------------------------------------------------------------|-----------------------|--------|------------|-------------|--------|--------|-------------|--------|
|                                                                                                               |                  |   |       |        |   |   |        |   |   |
| ASSETS                                                                                                             |                  |   |       |        |   |   |        |   |   |
|                                                                                                               |                  |   |       |        |   |   |        |   |   |
| Current assets:                                                                                                    |                  |   |       |        |   |   |        |   |   |
| Prepaid expenses*                                                                                             |                  | $      | 2,091,341  |        |   | $      | (1,326,573  | )      |   | $ | 764,268 |   |
| Total current assets                                                                                               |                  |   | 5,163,324  |        |   |   | (1,326,573  | )      |   |   | 3,836,751 |   |
|                                                                                                               |                  |   |       |        |   |   |        |   |   |   |   |   |
| Other assets:                                                                                                      |                  |   |       |        |   |   |        |   |   |   |   |   |
| Prepaid stock compensation                                                                                         |                  |   | 297,656    |        |   |   | (297,656    | )      |   |   | - |   |
| Total other assets                                                                                                 |                  |   | 319,424    |        |   |   | (297,656    | )      |   |   | 21,768 |   |
|                                                                                                               |                  |   |       |        |   |   |        |   |   |   |   |   |
| Total assets                                                                                                       |                  | $      | 5,530,097  |        |   | $      | (1,624,229  | )      |   | $ | 3,905,868 |   |
|                                                                                                               |                  |   |       |        |   |   |        |   |   |   |   |   |
|                                                                                                               |                  |   |       |        |   |   |        |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                         |                  |   |       |        |   |   |        |   |   |
|                                                                                                               |                  |   |       |        |   |   |        |   |   |   |   |   |
| Current liabilities:                                                                                               |                  |   |       |        |   |   |        |   |   |   |   |   |
| Accounts payable and accrued liabilities                                                                           |                  |   | 365,067    |        |   |   | 44,063      |   |   |   | 409,130 |   |
| Total current liabilities                                                                                          |                  |   | 453,244    |        |   |   | 44,063      |   |   |   | 497,307 |   |
|                                                                                                               |                  |   |       |        |   |   |        |   |   |   |   |   |
| Stockholders’ equity:                                                                                        |                  |   |       |        |   |   |        |   |   |   |   |   |
| Common stock, $0.001 par value, 500,000,000                                                                        |                  |   |       |        |   |   |        |   |   |   |   |   |
|     shares authorized; 40,839,628 shares issued                                                |                  |   |       |        |   |   |        |   |   |   |   |   |
|     and outstanding, as previously    reported, and 39,433,378 as restated |                  |   | 40,840     |        |   |   | (1,406      | )      |   |   | 39,434 |   |
| Additional paid in capital                                                                                         |                  |   | 13,261,289 |        |   |   | (1,840,310  | )      |   |   | 11,420,979 |   |
| Deficit accumulated during the development stage                                                                   |                  |   | (8,225,276 | )           |   |   | 173,424     |   |   |   | (8,051,852 | ) |
| Total stockholders’ equity                                                                                   |                  |   | 5,076,853  |        |   |   | (1,668,292  | )      |   |   | 3,408,561 |   |
|                                                                                                               |                  |   |       |        |   |   |        |   |   |   |   |   |
| Total liabilities and stockholders' equity                                                                         |                  | $      | 5,530,097  |        |   | $      | (1,624,229  | )      |   | $ | 3,905,868 |   |

----

|                                                                 |   | As PreviouslyReported |       |   | Adjustments |   |       | As Restated |   |
|----------------------------------------------------------------------|--------|-----------------------|------------|--------|-------------|--------|------------|-------------|--------|
| Operating expenses:                                                  |   |                  |       |   |        |   |       |        |   |
| Marketing and advertising                                            |   | $                     | 830,540    |   |        | $      | (69,677    | )           |   | $ | 760,863 |   |
| General and administrative                                           |   |                  | 5,360,971  |   |        |   | (103,747   | )           |   |   | 5,257,224 |   |
| Total operating expenses                                             |   |                  | 6,653,661  |   |        |   | (173,424   | )           |   |   | 6,480,237 |   |
|                                                                 |   |                  |       |   |        |   |       |        |   |   |   |   |
| Net loss                                                             |   | $                     | (6,650,840 | )      |        | $      | 173,424    |        |   | $ | (6,477,416 | ) |
|                                                                 |   |                  |       |   |        |   |       |        |   |   |   |   |
| Net loss per common share -                                          |   |                  |       |   |        |   |       |        |   |   |   |   |
|      basic and diluted                      |   | $                     | (0.20      | )      |        | $      | -          |        |   | $ | (0.20 | ) |
|                                                                 |   |                  |       |   |        |   |       |        |   |   |   |   |
| Weighted average number of common                                    |   |                  |       |   |        |   |       |        |   |   |   |   |
|      shares outstanding during the period - |   |                  |       |   |        |   |       |        |   |   |   |   |
|      basic and diluted                      |   |                  | 33,742,783 |   |        |   | (1,481,874 | )           |   |   | 32,260,909 |   |

|                                                                 |   | As PreviouslyReported |       |   | Adjustments |   |     | As Restated |   |
|----------------------------------------------------------------------|--------|-----------------------|------------|--------|-------------|--------|----------|-------------|--------|
| Operating expenses:                                                  |   |                  |       |   |        |   |     |        |   |
| Marketing and advertising                                            |   | $                     | 899,510    |   |        | $      | (69,677  | )           |   | $ | 829,833 |   |
| General and administrative                                           |   |                  | 5,858,509  |   |        |   | (103,747 | )           |   |   | 5,754,762 |   |
| Total operating expenses                                             |   |                  | 8,220,870  |   |        |   | (173,424 | )           |   |   | 8,047,446 |   |
|                                                                 |   |                  |       |   |        |   |     |        |   |   |   |   |
| Net loss                                                             |   | $                     | (8,225,276 | )      |        | $      | 173,424  |        |   | $ | (8,051,852 | ) |
|                                                                 |   |                  |       |   |        |   |     |        |   |   |   |   |
| Net loss per common share -                                          |   |                  |       |   |        |   |     |        |   |   |   |   |
|      basic and diluted                      |   | $                     | (0.41      | )      |        | $      | 0.01     |        |   | $ | (0.40 | ) |
|                                                                 |   |                  |       |   |        |   |     |        |   |   |   |   |
| Weighted average number of common                                    |   |                  |       |   |        |   |     |        |   |   |   |   |
|      shares outstanding during the period - |   |                  |       |   |        |   |     |        |   |   |   |   |
|      basic and diluted                      |   |                  | 20,263,232 |   |        |   | (129,260 | )           |   |   | 20,133,972 |   |

----

|                                                    | As PreviouslyReported |   |       | Adjustments |   |   | As Restated |   |
|---------------------------------------------------------|-----------------------|--------|------------|-------------|--------|--------|-------------|--------|
|                                                    |                  |   |       |        |   |   |        |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                    |                  |   |       |        |   |   |        |
|                                                    |                  |   |       |        |   |   |        |   |   |
| Net loss                                                |                  | $      | (6,650,840 | )           |   | $      | 173,424     |   |   | $ | (6,477,416 | ) |
| Share-based compensation - stock*                       |                  |   | 483,588    |        |   |   | (135,770    | )      |   |   | 347,818 |   |
| Share-based compensation - options                      |                  |   | 3,751,705  |        |   |   | (128,115    | )      |   |   | 3,623,590 |   |
| Accounts payable and accrued liabilities                |                  |   | 303,625    |        |   |   | 44,063      |   |   |   | 347,688 |   |
| Net cash used in operating activities                   |                  | $      | (3,324,291 | )           |   | $      | 1           |   |   | $ | (3,324,290 | ) |
|                                                    |                  |
| Supplemental Disclosures of Non-Cash Financing Activity |                  |
| Prepaid Expenses                                        |                  | $      | 2,183,440  |        |   | $      | (1,955,118  | )      |   | $ | 228,322 |   |

|                                                    | As PreviouslyReported |   |       | Adjustments |   |   | As Restated |   |
|---------------------------------------------------------|-----------------------|--------|------------|-------------|--------|--------|-------------|--------|
|                                                    |                  |   |       |        |   |   |        |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                    |                  |   |       |        |   |   |        |
|                                                    |                  |   |       |        |   |   |        |   |   |
| Net loss                                                |                  | $      | (8,225,276 | )           |   | $      | 173,424     |   |   | $ | (8,051,852 | ) |
| Share-based compensation - stock*                       |                  |   | 915,188    |        |   |   | (135,770    | )      |   |   | 779,418 |   |
| Share-based compensation - options                      |                  |   | 3,751,705  |        |   |   | (128,115    | )      |   |   | 3,623,590 |   |
| Accounts payable and accrued liabilities                |                  |   | 365,067    |        |   |   | 44,063      |   |   |   | 409,130 |   |
| Net cash used in operating activities                   |                  | $      | (3,999,433 | )           |   | $      | (1          | )      |   | $ | 3,999,432 |   |
|                                                    |                  |
| Supplemental Disclosures of Non-Cash Financing Activity |                  |
| Prepaid Expenses                                        |                  | $      | 2,183,440  |        |   | $      | 1,955,118   |   |   | $ | 228,322 |   |

----