----

----

| þ                                                               |  ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934     |
|----------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
|                                                                 |                                                                                                     |
| For      the fiscal year ended      December 31, 2009                |
| or                                                                   |
|                                                                 |                                                                                                     |
|  ̈                                                               |  TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|                                                                 |                                                                                                     |
| For      the transition period from: _____________ to  _____________ |

|   | HAWK      SYSTEMS, INC.                                     |   |
|--------|-------------------------------------------------------------|--------|
|   | (Exact      name of registrant as specified in its charter) |   |

| Delaware                                                                |   | 000-49864                  |   | 65-1089222                                    |
|-------------------------------------------------------------------------|--------|----------------------------|--------|-----------------------------------------------|
| (State      or Other Jurisdictionof      Incorporation or Organization) |   | CommissionFile      Number |   | (I.R.S.      EmployerIdentification      No.) |

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

----

----

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| PART      II                    |                                             |   |   |   |   |
|---------------------------------|--------------------------------------------------|--------|--------|--------|--------|
|                            |                                             |   |   |   |   |
| ITEM      8.               | FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA |   |   | 1      |   |
|                            |                                             |   |   |   |   |
| PART      IV                    |                                        |   |   |   |   |
|                            |                                             |   |   |   |   |
| ITEM      15.    | EXHIBITS      AND FINANCIAL STATEMENT SCHEDULES  |   |   | 2      |   |
|                            |                                             |   |   |   |   |
| SIGNATURES                      |                                             |   |   | 4      |   |

----

----

| Exhibit      No. |   | Description                                                                                                                                                                                                                                                                                                                                      |
|------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 2.1              |   | Agreement      and Plan of Merger, dated February 19, 2009, by and among Explorations      Group, Inc., Hawk Acquisition Corp., and Hawk Biometric Technologies, Inc.      (incorporated by reference to Exhibit 10 to the Company's Current Report      on Form 8-K filed with the SEC on February 26,  2009).                                  |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 3.1              |   | Certificate      of Amendment to Certificate of Incorporation filed with the State of      Delaware on January 2, 2009 (incorporated by reference to Exhibit 3.1 to      the Company's Quarterly Report on Form 10-Q filed with the SEC on August      19, 2009).                                                                                |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 3.2              |   | Certificate      of Amendment to Certificate of Incorporation filed with the State of      Delaware on May 27, 2009 (incorporated by reference to Exhibit 3.2 to the      Company's Quarterly Report on Form 10-Q filed with the SEC on August 19,      2009).                                                                                   |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 3.3              |   | Certificate      of Correction to the Certificate of Amendment to Certificate of      Incorporation filed with the State of Delaware on March 17, 2010      (incorporated by reference to Exhibit 3.3 to the Company's Annual Report      on Form 10-K filed with the SEC on April 15,  2010).                                                   |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 3.4              |   | Certificate      of Amendment to Certificate of Incorporation of Hawk Systems, Inc. filed      with the State of Delaware on March 18, 2010  (incorporated by      reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K filed      with the SEC on April 15, 2010).                                                    |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.1             |   | Unsecured      Promissory Note, dated September 16, 2009, in the principal amount of      $50,000 executed by Hawk Systems, Inc. in favor of Mark Spanakos      (incorporated by reference to Exhibit 10.1 to the Company's Current Report      on Form 8-K filed with the SEC on September 24,    2009).                                        |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.2             |   | Unsecured      Promissory Note, dated September 16, 2009, in the principal amount of      $100,000 executed by Hawk Systems, Inc. in favor of Delilah Holdings, LLC      (incorporated by reference to Exhibit 10.2 to the Company's Current Report      on Form 8-K filed with the SEC on September 24,    2009).                               |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.3             |   | Employment      Agreement between the Company and David Coriaty dated May 1, 2009      (incorporated by reference to Exhibit 10.1 to the Company's Quarterly      Report on Form 10-Q filed with the SEC on August 19,      2009).                                                                                                               |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.4             |   | Employment      Agreement between the Company and Robert E. McCann III dated May 12, 2009      (incorporated by reference to Exhibit 10.2 to the Company's Quarterly      Report on Form 10-Q filed with the SEC on August 19,      2009).                                                                                                       |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.5             |   | Amendment      to Employment Agreement between the Company and Robert E. McCann III dated      August 14, 2009 (incorporated by reference to Exhibit 10.3 to the      Company’s Quarterly Report on Form 10-Q filed with the SEC on August 19,      2009)                                                                                  |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.6             |   | Exclusive      Investment Banking Agreement, dated as of June 4, 2008, by and between      Hawk Biometric Technologies, Inc., and Cresta Capital Strategies, LLC      (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly      Report on Form 10-Q filed with the SEC on August 19,      2009).                          |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.7             |   | Letter      Agreement amending Exclusive Investment Banking Agreement, dated February      13, 2009, by and between Hawk Biometric Technologies, Inc., and Cresta      Capital Strategies, LLC (incorporated by reference to Exhibit 10.5 to the      Company’s Quarterly Report on Form 10-Q filed with the SEC on August 19,      2009). |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.8             |   | Amendment      No. 2 to the Exclusive Investment Banking Agreement, dated November 23,      2009, by and between Hawk Systems, Inc., and Cresta Capital Strategies,      LLC (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly      Report on Form 10-Q filed with the SEC on November 25,      2009).                 |

----

| 10.9   |   | Unsecured      Promissory Note, dated November 23, 2009, in the principal amount of      $250,000 executed by Hawk Systems, Inc. in favor of Cresta Capital      Strategies, LLC (incorporated by reference to Exhibit 10.2 to the      Company's Quarterly Report on Form 10-Q filed with the SEC on November 25,      2009).         |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.10  |   | Employment      Agreement by and between Hawk Systems, Inc. and Michael Diamant dated      December 15, 2009 (incorporated by reference to Exhibit 10.1 to the      Company’s Current Report on Form 10-K filed with the SEC on December 29,      2009).                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.11  |   | Amendment      No. 1 to the Employment Agreement by and between Hawk Systems, Inc. and      Michael Diamant dated January 19, 2010 (incorporated by reference to      Exhibit 10.1 to the Company’s Current Report on Form 10-K filed with the      SEC on January 20, 2010).                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.12  |   | Stipulation      of Settlement by and between Hawk Systems, Inc. and Leonard Tucker, as      co-Trustee of the Tucker Family Spendthrift Trust dated January 25,      2010  (incorporated by reference to Exhibit 10.1 to the      Company’s Current Report on Form 10-K filed with the SEC on January 29,      2010). |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.13  |   | Consulting      Agreement by and between Hawk Systems, Inc. and Griffin Enterprises LLC      dated February 23, 2010 (incorporated by reference to Exhibit 10.1 to the      Company's Current Report on Form 8-K filed with the SEC on March 1,      2010).                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.14  |   | Unsecured      Promissory Note, dated January 31, 2010, in the principal amount of      $100,000 executed by Hawk Systems, Inc. in favor of David      Coriaty  (incorporated by reference to Exhibit 10.14 to the      Company's Annual Report on Form 10-K filed with the SEC on April 15,      2010).                     |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.15  |   | Unsecured      Promissory Note, dated February 1, 2010, in the principal amount of      $40,000 executed by Hawk Systems, Inc. in favor of David      Coriaty  (incorporated by reference to Exhibit 10.15 to the      Company's Annual Report on Form 10-K filed with the SEC on April 15,      2010).                      |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 10.16  |   | Amendment      No. 1 to the Employment Agreement by and between Hawk Systems, Inc. and      David Coriaty dated April 9, 2010  (incorporated by reference to      Exhibit 10.16 to the Company's Annual Report on Form 10-K filed with the      SEC on April 15, 2010).                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 14.1   |   | Code      of Conduct (incorporated by reference to Exhibit 3(i).4 to the Company's      Annual Report on Form 10-KSB filed with the SEC on March 31,      2004).                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 21.1   |   | Subsidiaries      of Hawk Systems, Inc. (incorporated by reference to Exhibit 21.1 to the      Company's Annual Report on Form 10-K filed with the SEC on April 15,      2010).                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 31.1   |   | Certification      of Principal Executive Officer, pursuant to Rules 13a-14(a) and 15d-14(a)      of the Securities Exchange Act of 1934, as amended, adopted pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 31.2   |   | Certification      of Principal Financial Officer, pursuant to Rules 13a-14(a) and 15d-14(a)      under the Securities Exchange Act of 1934, as amended, adopted pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 32.1   |   | Certification      of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.*                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                   |
| 32.2   |   | Certification      of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.*                                                                                                                                                                  |

----

|                         | HAWK      SYSTEMS, INC. |                                      |
|------------------------------|-------------------------|-------------------------------------------|
|                         |                    |                                      |   |
| Date:       May 4, 2010 | By:                     | /s/ Michael Diamant                  |   |
|                         |                    | Michael      Diamant                      |   |
|                         |                    | Chief      Executive Officer and Director |   |
|                         |                    |                                      |   |

----

| Exhibit      No. |   | Description                                                                                                                                                                                                                                                                                                                                      |
|------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 2.1              |   | Agreement      and Plan of Merger, dated February 19, 2009, by and among Explorations      Group, Inc., Hawk Acquisition Corp., and Hawk Biometric Technologies, Inc.      (incorporated by reference to Exhibit 10 to the Company's Current Report      on Form 8-K filed with the SEC on February 26,  2009).                                  |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 3.1              |   | Certificate      of Amendment to Certificate of Incorporation filed with the State of      Delaware on January 2, 2009 (incorporated by reference to Exhibit 3.1 to      the Company's Quarterly Report on Form 10-Q filed with the SEC on August      19, 2009).                                                                                |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 3.2              |   | Certificate      of Amendment to Certificate of Incorporation filed with the State of      Delaware on May 27, 2009 (incorporated by reference to Exhibit 3.2 to the      Company's Quarterly Report on Form 10-Q filed with the SEC on August 19,      2009).                                                                                   |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 3.3              |   | Certificate      of Correction to the Certificate of Amendment to Certificate of      Incorporation filed with the State of Delaware on March 17, 2010      (incorporated by reference to Exhibit 3.3 to the Company's Annual Report      on Form 10-K filed with the SEC on April 15,  2010).                                                   |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 3.4              |   | Certificate      of Amendment to Certificate of Incorporation of Hawk Systems, Inc. filed      with the State of Delaware on March 18, 2010  (incorporated by      reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K filed      with the SEC on April 15, 2010).                                                    |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.1             |   | Unsecured      Promissory Note, dated September 16, 2009, in the principal amount of      $50,000 executed by Hawk Systems, Inc. in favor of Mark Spanakos      (incorporated by reference to Exhibit 10.1 to the Company's Current Report      on Form 8-K filed with the SEC on September 24,    2009).                                        |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.2             |   | Unsecured      Promissory Note, dated September 16, 2009, in the principal amount of      $100,000 executed by Hawk Systems, Inc. in favor of Delilah Holdings, LLC      (incorporated by reference to Exhibit 10.2 to the Company's Current Report      on Form 8-K filed with the SEC on September 24,    2009).                               |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.3             |   | Employment      Agreement between the Company and David Coriaty dated May 1, 2009      (incorporated by reference to Exhibit 10.1 to the Company's Quarterly      Report on Form 10-Q filed with the SEC on August 19,      2009).                                                                                                               |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.4             |   | Employment      Agreement between the Company and Robert E. McCann III dated May 12, 2009      (incorporated by reference to Exhibit 10.2 to the Company's Quarterly      Report on Form 10-Q filed with the SEC on August 19,      2009).                                                                                                       |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.5             |   | Amendment      to Employment Agreement between the Company and Robert E. McCann III dated      August 14, 2009 (incorporated by reference to Exhibit 10.3 to the      Company’s Quarterly Report on Form 10-Q filed with the SEC on August 19,      2009)                                                                                  |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.6             |   | Exclusive      Investment Banking Agreement, dated as of June 4, 2008, by and between      Hawk Biometric Technologies, Inc., and Cresta Capital Strategies, LLC      (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly      Report on Form 10-Q filed with the SEC on August 19,      2009).                          |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.7             |   | Letter      Agreement amending Exclusive Investment Banking Agreement, dated February      13, 2009, by and between Hawk Biometric Technologies, Inc., and Cresta      Capital Strategies, LLC (incorporated by reference to Exhibit 10.5 to the      Company’s Quarterly Report on Form 10-Q filed with the SEC on August 19,      2009). |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.8             |   | Amendment      No. 2 to the Exclusive Investment Banking Agreement, dated November 23,      2009, by and between Hawk Systems, Inc., and Cresta Capital Strategies,      LLC (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly      Report on Form 10-Q filed with the SEC on November 25,      2009).                 |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.9             |   | Unsecured      Promissory Note, dated November 23, 2009, in the principal amount of      $250,000 executed by Hawk Systems, Inc. in favor of Cresta Capital      Strategies, LLC (incorporated by reference to Exhibit 10.2 to the      Company's Quarterly Report on Form 10-Q filed with the SEC on November 25,      2009).                   |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.10            |   | Employment      Agreement by and between Hawk Systems, Inc. and Michael Diamant dated      December 15, 2009 (incorporated by reference to Exhibit 10.1 to the      Company’s Current Report on Form 10-K filed with the SEC on December 29,      2009).                                                                                   |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.11            |   | Amendment      No. 1 to the Employment Agreement by and between Hawk Systems, Inc. and      Michael Diamant dated January 19, 2010 (incorporated by reference to      Exhibit 10.1 to the Company’s Current Report on Form 10-K filed with the      SEC on January 20, 2010).                                                              |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.12            |   | Stipulation      of Settlement by and between Hawk Systems, Inc. and Leonard Tucker, as      co-Trustee of the Tucker Family Spendthrift Trust dated January 25,      2010  (incorporated by reference to Exhibit 10.1 to the      Company’s Current Report on Form 10-K filed with the SEC on January 29,      2010).           |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.13            |   | Consulting      Agreement by and between Hawk Systems, Inc. and Griffin Enterprises LLC      dated February 23, 2010 (incorporated by reference to Exhibit 10.1 to the      Company's Current Report on Form 8-K filed with the SEC on March 1,      2010).                                                                                      |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.14            |   | Unsecured      Promissory Note, dated January 31, 2010, in the principal amount of      $100,000 executed by Hawk Systems, Inc. in favor of David      Coriaty  (incorporated by reference to Exhibit 10.14 to the      Company's Annual Report on Form 10-K filed with the SEC on April 15,      2010).                               |
|             |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.15            |   | Unsecured      Promissory Note, dated February 1, 2010, in the principal amount of      $40,000 executed by Hawk Systems, Inc. in favor of David      Coriaty  (incorporated by reference to Exhibit 10.15 to the      Company's Annual Report on Form 10-K filed with the SEC on April 15,      2010).                                |

----

| 10.16  |   | Amendment      No. 1 to the Employment Agreement by and between Hawk Systems, Inc. and      David Coriaty dated April 9, 2010  (incorporated by reference to      Exhibit 10.16 to the Company's Annual Report on Form 10-K filed with the      SEC on April 15, 2010). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                              |
| 14.1   |   | Code      of Conduct (incorporated by reference to Exhibit 3(i).4 to the Company's      Annual Report on Form 10-KSB filed with the SEC on March 31,      2004).                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                              |
| 21.1   |   | Subsidiaries      of Hawk Systems, Inc. (incorporated by reference to Exhibit 21.1 to the      Company's Annual Report on Form 10-K filed with the SEC on April 15,      2010).                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                              |
| 31.1   |   | Certification      of Principal Executive Officer, pursuant to Rules 13a-14(a) and 15d-14(a)      of the Securities Exchange Act of 1934, as amended, adopted pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002.*                                                    |
|   |   |                                                                                                                                                                                                                                                                              |
| 31.2   |   | Certification      of Principal Financial Officer, pursuant to Rules 13a-14(a) and 15d-14(a)      under the Securities Exchange Act of 1934, as amended, adopted pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002.*                                                 |
|   |   |                                                                                                                                                                                                                                                                              |
| 32.1   |   | Certification      of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.*                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                              |
| 32.2   |   | Certification      of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.*                                                                                                             |

----

|                                                                                                                            |   | Page   |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Reports      of Independent Registered Public Accounting Firms                                                                  |   |   | F-2    |   |
|                                                                                                                            |   |   |   |   |
| Consolidated      Balance Sheets as of December 31, 2009 and 2008                                                          |   |   | F-3    |   |
|                                                                                                                            |   |   |   |   |
| Consolidated      Statements of Operations for the Years Ended December 31, 2009 and      2008                             |   |   | F-4    |   |
|                                                                                                                            |   |   |   |   |
| Consolidated      Statements of Changes in Stockholders’ Deficit for the Years Ended      December 31, 2009 and 2008 |   |   | F-5    |   |
|                                                                                                                            |   |   |   |   |
| Consolidated      Statements of Cash Flows for the Years Ended December 31, 2009 and      2008                             |   |   | F-6    |   |
|                                                                                                                            |   |   |   |   |
| Notes      to Consolidated Financial Statements                                                                                 |   |   | F-7    |   |

----

----

|                                                                                                                                                                                                                                        |   | December      31, 2009 |        |   | December      31, 2008 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-------------|--------|-----------------------------|--------|
| ASSETS                                                                                                                                                                                                                                      |   |                        |        |   |                        |   |
| Current      assets                                                                                                                                                                                                                         |   |                        |        |   |                        |   |
| Prepaid      financing costs                                                                                                                                                                                                                |   | $                           | 17,519      |   |                        | $      | - |   |
| Interest      Receivable                                                                                                                                                                                                                    |   |                        | 18,480      |   |                        |   |   |   |
| TOTAL      CURRENT ASSETS                                                                                                                                                                                                                   |   |                        | 35,999      |   |                        |   | - |   |
| Other      Assets                                                                                                                                                                                                                           |   |                        |        |   |                        |   |   |   |
|   Note      Receivable-Related Party                                                                                                                                                                                              |   |                        | 168,000     |   |                        |   |   |   |
|      Other      assets                                                                                                                                                                                             |   |                        | 5,838       |   |                        |   | - |   |
| TOTAL      OTHER ASSETS                                                                                                                                                                                                                     |   |                        | 173,838     |   |                        |   |   |   |
| TOTAL      ASSETS                                                                                                                                                                                                                           |   | $                           | 209,837     |   |                        | $      | - |   |
|                                                                                                                                                                                                                                        |   |                        |        |   |                        |   |   |   |
| LIABILITIES      & STOCKHOLDERS' DEFICIT                                                                                                                                                                                                |   |                        |        |   |                        |   |   |   |
| Current      liabilities                                                                                                                                                                                                                    |   |                        |        |   |                        |   |   |   |
| Bank      overdraft                                                                                                                                                                                                                         |   | $                           | 44          |   |                        | $      | 17,140 |   |
| Accounts      payable                                                                                                                                                                                                                       |   |                        | 547,049     |   |                        |   | - |   |
| Notes      payable                                                                                                                                                                                                                          |   |                        | 150,000     |   |                        |   |   |   |
| Bond      payable                                                                                                                                                                                                                           |   |                        | 25,000      |   |                        |   | - |   |
| Loan      payable - related party                                                                                                                                                                                                           |   |                        | 313,575     |   |                        |   | 50,705 |   |
| Accrued      liabilities                                                                                                                                                                                                                    |   |                        | 803,911     |   |                        |   | - |   |
| Accrued  payroll      liabilities                                                                                                                                                                                                 |   |                        | 231,567     |   |                        |   | - |   |
| TOTAL      CURRENT LIABILITIES                                                                                                                                                                                                              |   |                        | 2,071,146   |   |                        |   | 67,845 |   |
|                                                                                                                                                                                                                                        |   |                        |        |   |                        |   |   |   |
| Long-term      liabilities                                                                                                                                                                                                                  |   |                        |        |   |                        |   |   |   |
| Due      to related parties                                                                                                                                                                                                                 |   |                        | 31,820      |   |                        |   |   |   |
| Convertible      debenture, net                                                                                                                                                                                                             |   |                        | 44,000      |   |                        |   | - |   |
| TOTAL      LONG-TERM LIABILITIES                                                                                                                                                                                                            |   |                        | 75,820      |   |                        |   | - |   |
| TOTAL      LIABILITIES                                                                                                                                                                                                                      |   |                        | 2,146,966   |   |                        |   | 67,845 |   |
| Stockholders'      deficit                                                                                                                                                                                                                  |   |                        |        |   |                        |   |   |   |
| Preferred      stock                                                                                                                                                                                                                        |   |                        |        |   |                        |   |   |   |
| Series      B - 500,000 shares authorized, $0.01 par value, 587,347 and 599,288 shares      outstanding at December 31, 2009 and December 31, 2008      (1)                                                                                 |   |                        | 5,873       |   |                        |   | 5,993 |   |
| Common      stock                                                                                                                                                                                                                           |   |                        |        |   |                        |   |   |   |
| 100,000,000      shares authorized, $0.01 par value, 35,799,315 shares issued and      outstanding at December 31, 2009 (1)                                                                                                                 |   |                        | 357,993     |   |                        |   | - |   |
| Additional      paid-in capital                                                                                                                                                                                                             |   |                        | 16,047,827  |   |                        |   | 15,615,922 |   |
| Accumulated      deficit during development stage                                                                                                                                                                                           |   |                        | (18,348,822 | )      |                        |   | (15,689,760 | ) |
| TOTAL      STOCKHOLDERS' DEFICIT                                                                                                                                                                                                            |   |                        | (1,937,129  | )      |                        |   | (67,845 | ) |
| TOTAL      LIABILITIES & STOCKHOLDERS' DEFICIT                                                                                                                                                                                          |   | $                           | 209,837     |   |                        | $      | - |   |
|                                                                                                                                                                                                                                        |   |                        |        |   |                        |   |   |   |
|                                                                                                                                                                                                                                        |   |                        |        |   |                        |   |   |   |
| (1)      The October 25, 2007 (date of inception) capital accounts of the Company      have been retroactively restated to reflect the number of shares of Series      B Preferred Stock issued in the merger transaction. See Note      1. |   |

----

|                                                                                                                                                                                                                                        |   | For      the year ended December 31 |       |   | FromOctober 25, 2007(Inception) through      December 31, 2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|--------|-----------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                        |   | 2009                                |       |   | 2008                                                                                    |   |   |   |
| REVENUE                                                                                                                                                                                                                                     |   | $                                   | -          |   |                                                                                    | $      | - |   |   | $ | - |   |
|                                                                                                                                                                                                                                        |   |                                |       |   |                                                                                    |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                                                                                                                                                                                                                     |   |                                |       |   |                                                                                    |   |   |   |   |   |   |   |
| General      and Administrative                                                                                                                                                                                                             |   |                                | 2,496,757  |   |                                                                                    |   | 673,818 |   |   |   | 3,170,575 |   |
| Research      and Development                                                                                                                                                                                                               |   |                                | 109,491    |   |                                                                                    |   | 15,942 |   |   |   | 125,433 |   |
| Total      Operating Expenses                                                                                                                                                                                                               |   |                                | 2,606,248  |   |                                                                                    |   | 689,760 |   |   |   | 3,296,008 |   |
|                                                                                                                                                                                                                                        |   |                                |       |   |                                                                                    |   |   |   |   |   | - |   |
| LOSS      FROM OPERATIONS                                                                                                                                                                                                                   |   |                                | (2,606,248 | )      |                                                                                    |   | (689,760 | ) |   |   | (3,296,008 | ) |
|                                                                                                                                                                                                                                        |   |                                |       |   |                                                                                    |   |   |   |   |   | - |   |
| OTHER      INCOME (EXPENSE)                                                                                                                                                                                                                 |   |                                |       |   |                                                                                    |   |   |   |   |   | - |   |
| Impairment      loss                                                                                                                                                                                                                        |   |                                | -          |   |                                                                                    |   | (15,000,000 | ) |   |   | (15,000,000 | ) |
| Interest      Income                                                                                                                                                                                                                        |   |                                | 18,480     |   |                                                                                    |   |   |   |   |   | 18,480 |   |
| Interest      Expense                                                                                                                                                                                                                       |   |                                | (71,294    | )      |                                                                                    |   | - |   |   |   | (71,294 | ) |
| Total      Other Income (Expense)                                                                                                                                                                                                           |   |                                | (52,814    | )      |                                                                                    |   | (15,000,000 | ) |   |   | (15,052,814 | ) |
|                                                                                                                                                                                                                                        |   |                                |       |   |                                                                                    |   |   |   |   |   | - |   |
| LOSS      BEFORE PROVISION FOR INCOME TAXES                                                                                                                                                                                                 |   |                                | (2,659,062 | )      |                                                                                    |   | (15,689,760 | ) |   |   | (18,348,822 | ) |
|                                                                                                                                                                                                                                        |   |                                |       |   |                                                                                    |   |   |   |   |   | - |   |
| PROVISION      FOR INCOME TAXES                                                                                                                                                                                                             |   |                                | -          |   |                                                                                    |   | - |   |   |   | - |   |
|                                                                                                                                                                                                                                        |   |                                |       |   |                                                                                    |   |   |   |   |   | - |   |
| NET LOSS                                                                                                                                                                                                                               |   | $                                   | (2,659,062 | )      |                                                                                    | $      | (15,689,760 | ) |   | $ | (18,348,822 | ) |
|                                                                                                                                                                                                                                        |   |                                |       |   |                                                                                    |   |   |   |   |   |   |   |
| NET      LOSS PER SHARE,                                                                                                                                                                                                                    |   |                                |       |   |                                                                                    |   |   |   |   |   |   |   |
| BASIC      AND DILUTED                                                                                                                                                                                                                      |   | $                                   | (0.08      | )      |                                                                                    | $      | - |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF                                                                                                                                                                                                             |   |                                |       |   |                                                                                    |   |   |   |   |   |   |   |
| COMMON      SHARES OUTSTANDING                                                                                                                                                                                                              |   |                                |       |   |                                                                                    |   |   |   |   |   |   |   |
| BASIC      AND DILUTED (2)                                                                                                                                                                                                                  |   |                                | 35,799,315 |   |                                                                                    |   | - |   |   |   |   |   |
|                                                                                                                                                                                                                                        |   |                                |       |   |                                                                                    |   |   |   |   |   |   |   |
| (2)      The October 25, 2007 (date of inception) capital accounts of the Company      have been retroactively restated to reflect the number of shares of Series      B Preferred Stock issued in the merger transaction. See Note      1. |   |

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|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   | Deficit      Accumulated |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|--------|-------------------|--------|------------|--------|-------------------------|--------|--------------------------|--------|--------------------------|--------|
|                                                                                                                                                                                                                                        | Preferred      Stock |   | Common      Stock |   | Additional |   | During      Development |   |
|                                                                                                                                                                                                                                        | Shares               |   | Amount            |   | Shares     |   | Amount                  |   | Paid-in      Capital     |   | Stage                    |   |
| Balance      at October 25, 2007 (Inception) (3)                                                                                                                                                                                            |                 |   | 599,288           |   |       | $      | 5,993                   |   |                     |   | -                        |   |   | $ | - |   |   | $ | 15,615,922 |   |   | $ |   |   |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                        |                 |   | -                 |   |       |   | -                       |   |                     |   | -                        |   |   |   | - |   |   |   | - |   |   |   | (15,689,760 | ) |
| Net      loss                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2008                                                                                                                                                                                                           |                 |   | 599,288           |   |       | $      | 5,993                   |   |                     |   | -                        |   |   | $ | - |   |   | $ | 15,615,922 |   |   | $ | (15,689,760 | ) |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   | Deficit      Accumulated |   |
|                                                                                                                                                                                                                                        | Preferred      Stock |   | Common      Stock |   | Additional |   | During      Development |   |
|                                                                                                                                                                                                                                        | Shares               |   | Amount            |   | Shares     |   | Amount                  |   | Paid-in      Capital     |   | Stage                    |   |
| Balance      at December 31, 2008                                                                                                                                                                                                           |                 |   | 599,288           |   |       | $      | 5,993                   |   |                     |   | -                        |   |   | $ | - |   |   | $ | 15,615,922 |   |   | $ | (15,689,760 | ) |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recapitalization      of the Company                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   | 31,299,315               |   |   |   | 312,993 |   |   |   | 26,905 |   |   |   |   |   |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cancellation      of preferred stock                                                                                                                                                                                                        |                 |   | (11,941           | )      |       |   | (119                    | )      |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reimbursement      for Consulting Agreement                                                                                                                                                                                                 |                 |   |              |   |       |   |                    |   |                     |   | 4,500,000           |   |   |  $ | 45,000  |   |   |  $ | 405,000  |   |   |   |   |   |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                                                                                                                                               |                 |   | -                 |   |       |   | -                       |   |                     |   | -                        |   |   |   | - |   |   |   | - |   |   |   | (2,659,062 | ) |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2009                                                                                                                                                                                                           |                 |   | 587,347           |   |       | $      | 5,873                   |   |                     |   | 35,799,315               |   |   | $ | 357,993 |   |   | $ | 16,047,827 |   |   | $ | (18,348,822 | ) |
|                                                                                                                                                                                                                                        |                 |   |              |   |       |   |                    |   |                     |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (3)      The October 25, 2007 (date of inception) capital accounts of the Company      have been retroactively restated to reflect the number of shares of Series      B Preferred Stock issued in the merger transaction. See Note      1. |                 |
|        The      accompanying notes are an integral part of these consolidated financial      statements.                                                                                                                               |                 |

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|                                                                                                          |   | For      the year ended December 31 |       |   | From      October 25, 2007 (Inception) through December 31, |   |
|---------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|--------|-------------------------------------------------------------|--------|
|                                                                                                          |   | 2009                                |       |   |                                                        | 2008*  |   |   |   | 2009 |   |
| Cash      flows from operating activities:                                                                    |   |                                |       |   |                                                        |   |   |   |   |   |   |
| Net      loss                                                                                                 |   | $                                   | (2,659,062 | )      |                                                        | $      | (15,689,760 | ) |   | $ | (18,348,822 | ) |
| Accretion      of interest on convertible debenture                                                           |   |                                | 44,000     |   |                                                        |   | - |   |   |   | 44,000 |   |
| Reverse      merger paid in capital                                                                           |   |                                | 667,742    |   |                                                        |   |   |   |   |   | 667,742 |   |
| Amortization      of deferred financing costs                                                                 |   |                                | 11,680     |   |                                                        |   | - |   |   |   | 11,680 |   |
| Adjustment      to reconcile net loss to net cash (used in) operating      activities                         |   |                                |       |   |                                                        |   |   |   |   |   |   |   |
|                                                                                                          |   |                                |       |   |                                                        |   |   |   |   |   | - |   |
| Changes      in assets and liabilities:                                                                       |   |                                |       |   |                                                        |   |   |   |   |   | - |   |
| Increase      (decrease) from affiliates                                                                      |   |                                | (168,000   | )      |                                                        |   | - |   |   |   | (168,000 | ) |
| Increase      (decrease) in interest receivable                                                               |   |                                | (18,480    | )      |                                                        |   | - |   |   |   | (18,480 | ) |
| Increase      (decrease) in accounts payable                                                                  |   |                                | 547,049    |   |                                                        |   | - |   |   |   | 547,049 |   |
| Increase      (decrease) in loan payable-related party                                                        |   |                                | 262,870    |   |                                                        |   | 50,705 |   |   |   | 313,575 |   |
| Increase      (decrease) in accrued liabilities                                                               |   |                                | 803,911    |   |                                                        |   | - |   |   |   | 803,911 |   |
| Increase      (decrease) from related parties                                                                 |   |                                | 31,820     |   |                                                        |   |   |   |   |   | 31,820 |   |
| Increase      (decrease) in accrued payroll liabilities                                                       |   |                                | 231,566    |   |                                                        |   | - |   |   |   | 231,566 |   |
| Net      cash (used in) operating activities                                                                  |   |                                | (244,904   | )      |                                                        |   | (15,639,055 | ) |   |   | (15,883,959 | ) |
|                                                                                                          |   |                                |       |   |                                                        |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                                    |   |                                | -          |   |                                                        |   | - |   |   |   | - |   |
|                                                                                                          |   |                                |       |   |                                                        |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                                    |   |                                |       |   |                                                        |   |   |   |   |   |   |   |
| Proceeds      from issuance of convertible debenture                                                          |   |                                | 87,000     |   |                                                        |   | - |   |   |   | 87,000 |   |
| Proceeds      from issuance of bonds and notes                                                                |   |                                | 175,000    |   |                                                        |   |   |   |   |   | 175,000 |   |
| Increase      in paid in capital                                                                              |   |                                | -          |   |                                                        |   | 15,621,915 |   |   |   | 15,621,915 |   |
| Net      cash provided by financing activities                                                                |   |                                | 262,000    |   |                                                        |   | 15,621,915 |   |   |   | 15,883,915 |   |
|                                                                                                          |   |                                |       |   |                                                        |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash                                                                          |   |                                | 17,096     |   |                                                        |   | (17,140 | ) |   |   | (44 | ) |
|                                                                                                          |   |                                |       |   |                                                        |   |   |   |   |   |   |   |
| Cash,bank      overdraft beginning of year                                                                    |   |                                | (17,140    | )      |                                                        |   | - |   |   |   | - |   |
| Cash,      bank overdraft end of year                                                                         |   | $                                   | (44        | )      |                                                        | $      | (17,140 | ) |   | $ | (44 | ) |
|                                                                                                          |   |                                |       |   |                                                        |   |   |   |   |   | - |   |
| Supplemental      Cash Flow Information:                                                                      |   |                                |       |   |                                                        |   |   |   |   |   |   |   |
| Cash      paid for interest                                                                                   |   | $                                   | -          |   |                                                        | $      | - |   |   | $ | - |   |
| Cash      paid for income taxes                                                                               |   | $                                   | -          |   |                                                        | $      | - |   |   | $ | - |   |
|                                                                                                          |   |                                |       |   |                                                        |   |   |   |   |   |   |   |
| *The      Company did not commence business operations until August,      2008                                |   |                                |       |   |                                                        |   |   |   |   |   |   |   |
|        The      accompanying notes are an integral part of these consolidated financial      statements. |   |

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|                          |   | December 31, 2009 |      |   | December 31, 2008 |   |
|-------------------------------|--------|-----------------------------|-----------|--------|-----------------------------|--------|
|                          |   |                        |      |   |                        |   |
| Deferred      tax assets      |   | $                           | 103,350   |   |                        | $      | -0- |   |
| Deferred      tax liabilities |   |                        | -0-       |   |                        |   | -0- |   |
| Valuation      allowance      |   |                        | (103,350) |   |                        |   | -0- |   |
| Total                         |   | $                           | 0         |   |                        | $      | 0 |   |

----

| Long-Term      Debt                                         |   | December 31,2009 |     |
|-------------------------------------------------------------|--------|-----------------------|----------|
| Convertible      debenture                                  |   | $                     | 100,000  |   |
| Discount      for beneficial conversion feature and warrant |   |                  | (56,000  | ) |
| Bond      payable                                           |   |                  | 25,000   |   |
| Notes      payable                                          |   |                  | 150,000  |   |
| Due      to related parties                                 |   |                  | 304,348  |   |
| Total                                                       |   |                  | 523,348  |   |
| Less      current portion                                   |   |                  | (479,348 | ) |
|                                                        |   | $                     | 44,000   |   |

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