----

----

| x      | QUARTERLY REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended July 31, 2009               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                    |
|  ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______to_______ |

| Nevada                          | 88-0448626          |
|---------------------------------|---------------------|
| (State or other jurisdiction of | (IRS Employer       |
| incorporation or organization)  | Identification No.) |

----

| Large accelerated filer  ̈ | Accelerated filer  ̈   |
|--------------------------------|----------------------------|
| Non-accelerated filer  ̈   | Smaller reporting companyx |

----

|                                                                      |                                                                  | Page   |
|---------------------------------------------------------------------------|-----------------------------------------------------------------------|--------|
|                                                                      |                                                                  |   |
| Balance Sheets at July 31, 2009 (unaudited) and December 31, 2008         | F-2                                                                   |
|                                                                      |                                                                  |   |
| Statement of Operations for the three and six months ended                |                                                                  |
|                                                                      | July 31, 2009 and three and six  months ended July 31, 2008 | F-3    |
|                                                                      |                                                                  |   |
| Statement of Changes in Shareholders' Deficit for the period from         |                                                                  |
|                                                                      | November 11, 2007 through July 31, 2009 (unaudited)                   | F-4    |
|                                                                      |                                                                  |   |
| Statement of Cash Flows for six months ended July 31, 2009 and            |                                                                  |
|                                                                      | six months ended July 31, 2008                                        | F-5    |
|                                                                      |                                                                  |   |
| Notes to Financial Statements                                             | F-6                                                                   |
|                                                                      |                                                                  |
| Item 2. Management’s Discussion and Analysis of Financial Condition |                                                                  |
|                                                                      | and Results of Operations                                             | 22     |
|                                                                      |                                                                  |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk        | 26                                                                    |
|                                                                      |                                                                  |
| Item 4T. Controls and Procedures                                          | 26                                                                    |
|                                                                      |                                                                  |
| Part II – Other Information                                         | 27                                                                    |
|                                                                      |                                                                  |
| Signatures                                                                | 29                                                                    |
|                                                                      |                                                                  |

----

|                                                            |   | July 31,    |       |   | December 31, |   |
|-----------------------------------------------------------------|--------|-------------|------------|--------|--------------|--------|
|                                                            |   | 2009        |       |   | 2008         |   |
|                                                            |   | (Unaudited) |       |   | (Audited)    |   |
| Assets                                                          |   |        |       |   |         |   |
| Cash                                                            |   | $           | 24,391     |   |         | $      | 292 |   |
| Accounts receivable                                             |   |        | —    |   |         |   | 20,000 |   |
| Deposits                                                        |   |        | 3,750      |   |         |   | 3,750 |   |
| Prepaid expenses                                                |   |        | 2,740      |   |         |   | 8,045 |   |
| Notes receivable (Note 5)                                       |   |        | 719        |   |         |   | 120,750 |   |
| Investment securities - marked to market (Note 1)               |   |        | 140,000    |   |         |   | 35,000 |   |
| Property and equipment, less accumulated depreciation           |   |        |       |   |         |   |   |   |
| of $660 (July 31) and $268 (December 31)                        |   |        | 7,385      |   |         |   | 2,032 |   |
| Other assets                                                    |   |        | 10         |   |         |   | 4,948 |   |
|                                                            |   |        |       |   |         |   |   |   |
| Total assets                                                    |   | $           | 178,995    |   |         | $      | 194,817 |   |
|                                                            |   |        |       |   |         |   |   |   |
| Liabilities and Shareholders’ Deficit                     |   |        |       |   |         |   |   |   |
| Current liabilities:                                            |   |        |       |   |         |   |   |   |
| Accounts and notes payable:                                     |   |        |       |   |         |   |   |   |
| Accounts payable, related party (Note 3)                        |   | $           | 74,623     |   |         | $      | 46,757 |   |
| Accounts payable, other                                         |   |        | 483,204    |   |         |   | 229,563 |   |
| Derivative liability, convertible notes payable (Note 4)        |   |        | 20,534     |   |         |   | — |   |
| Notes payable, related party (Note 3)                           |   |        | 166,084    |   |         |   | 33,292 |   |
| Notes payable, other (Note 4)                                   |   |        | 35,200     |   |         |   | 75,654 |   |
| Convertible notes payable (Note 4)                              |   |        | 55,000     |   |         |   | 225,000 |   |
| Payroll liabilities (Note 7)                                    |   |        | 52,576     |   |         |   | 52,576 |   |
| Accrued expenses                                                |   |        | 5,962      |   |         |   | 3,576 |   |
| Accrued interest payable:                                       |   |        |       |   |         |   |   |   |
| Interest payable, convertible notes (Note 4)                    |   |        | 7,277      |   |         |   | 21,426 |   |
| Interest payable, related party notes (Note 3)                  |   |        | 34,366     |   |         |   | 914 |   |
| Interest payable, notes payable other (Note 4)                  |   |        | 11,276     |   |         |   | 1,156 |   |
|                                                            |   |        |       |   |         |   |   |   |
| Total current liabilities                                       |   |        | 946,102    |   |         |   | 689,914 |   |
|                                                            |   |        |       |   |         |   |   |   |
| Commitments and contingencies                                   |   |        | —    |   |         |   |   |   |
|                                                            |   |        |       |   |         |   |   |   |
| Shareholders’ deficit: (Notes 1 & 9)                  |   |        |       |   |         |   |   |   |
| Preferred stock, $.001 par value; 10,000,000 shares authorized, |   |        |       |   |         |   |   |   |
| -0- (July 31) and 170,800 (December 31) shares                  |   |        |       |   |         |   |   |   |
| issued and outstanding                                          |   |        | —    |   |         |   | 171 |   |
| Common stock, $.001 par value; 500,000,000 shares authorized,   |   |        |       |   |         |   |   |   |
| 272,870,977 (July 31) and 119,589,047 (December 31) shares      |   |        |       |   |         |   |   |   |
| issued and outstanding                                          |   |        | 272,871    |   |         |   | 119,589 |   |
| Additional paid-in capital                                      |   |        | 6,786,462  |   |         |   | 1,517,040 |   |
| Accumulated deficit                                             |   |        | (7,826,440 | )      |         |   | (2,131,897 | ) |
|                                                            |   |        |       |   |         |   |   |   |
| Total shareholders' deficit                                     |   |        | (767,107   | )      |         |   | (495,097 | ) |
|                                                            |   |        |       |   |         |   |   |   |
| Total liabilities and shareholders' deficit                     |   | $           | 178,995    |   |         | $      | 194,817 |   |

----

|                                                     |   | Three months |        |   | Three months |   |       | Six months |   |   | Six months  |   |
|----------------------------------------------------------|--------|--------------|-------------|--------|--------------|--------|------------|------------|--------|--------|-------------|--------|
|                                                     |   | ended        |        |   | ended        |   |       | ended      |   |   | ended       |   |
|                                                     |   | July 31,     |        |   | July 31,     |   |       | July 31,   |   |   | July 31,    |   |
|                                                     |   | 2009         |        |   | 2008         |   |       | 2009       |   |   | 2008        |   |
|                                                     |   |         |        |   |         |   |       |       |   |   |        |   |
| Operating costs and expenses:                            |   |         |        |   |         |   |       |       |   |   |        |   |
| Product development expense                              |   | $            | 5,552       |   |         | $      | 6,194      |       |   | $      | 15,745      |   |   | $ | 14,294 |   |
| Selling, general and administrative expenses             |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| Related party (Note 3)                                   |   |         | 73,100      |   |         |   | 29,400     |       |   |   | 179,200     |   |   |   | 91,600 |   |
| Loss on debt extinguishment                              |   |         | 197,545     |   |         |   | -          |       |   |   | 197,545     |   |   |   | - |   |
| Other (Note 6)                                           |   |         | 282,585     |   |         |   | 210,854    |       |   |   | 562,580     |   |   |   | 286,172 |   |
|                                                     |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| Total operating costs and expenses                       |   |         | (558,782    | )      |         |   | (246,448   | )          |   |   | (955,070    | )      |   |   | (392,066 | ) |
|                                                     |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| Other income (expense)                                   |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| Unrealized gain (loss) on investments (Note 1)           |   |         | -           |   |         |   | -          |       |   |   | 35,000      |   |   |   | - |   |
| Stock-based compensation (Note 9)                        |   |         | (3,233,324  | )      |         |   | -          |       |   |   | (3,350,324  | )      |   |   | - |   |
| Interest (expense) income, amortization                  |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| of convertible note discount (Note 4)                    |   |         | (878        | )      |         |   | -          |       |   |   | (8,202      | )      |   |   | - |   |
| Interest expense (Notes 3 & 4)                       |   |         | (3,420      | )      |         |   | (6,727     | )          |   |   | (16,711     | )      |   |   | (12,437 | ) |
| Fair value adjustment of derivative liabilities (Note 4) |   |         | 20,533      |   |         |   | -          |       |   |   | 6,049       |   |   |   | - |   |
|                                                     |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
|                                                     |   |         | (3,217,089  | )      |         |   | (6,727     | )          |   |   | (3,334,188  | )      |   |   | (12,437 | ) |
|                                                     |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| Loss before income taxes                                 |   |         | (3,775,871  | )      |         |   | (253,175   | )          |   |   | (4,289,258  | )      |   |   | (404,503 | ) |
|                                                     |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| Income tax provision (Note 8)                            |   |         | -           |   |         |   | -          |       |   |   | -           |   |   |   | - |   |
|                                                     |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| Net loss                                                 |   | $            | (3,775,871  | )      |         | $      | (253,175   | )          |   | $      | (4,289,258  | )      |   | $ | (404,503 | ) |
|                                                     |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| Basic and diluted loss per common share                  |   | $            | (0.01       | )      |         | $      | (0.00      | )          |   | $      | (0.02       | )      |   | $ | (0.01 | ) |
|                                                     |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| Weighted average common shares                           |   |         |        |   |         |   |       |       |   |   |        |   |   |   |   |   |
| outstanding (Notes 1 & 9)                            |   |         | 258,604,414 |   |         |   | 85,178,128 |       |   |   | 217,813,214 |   |   |   | 62,424,692 |   |

----

|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  | Common stock                                                                          |                                                                                  | Preferred stock                                                                       |                                                                                  |                                                                                  |                                                                                  | Total shareholders                                                                    |
|----------------------------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  | Shares                                                                                |                                                                                  | Par value                                                                             |                                                                                  | Shares                                                                                |                                                                                  | Par value                                                                             |   | Additional paid-in Capital |   | Accumulated deficit |   | deficit |
| Balance at November 11, 2007 Inception Date  |                 - |                                                                                              |  $                                                                                           |               -             |                                                                                  |                                                                                  |               - |                                                                                  |  $                                                                               |               - |                                                                                  |  $                                                                               |               - |   |  $ |                  - |   |  $ |                - |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                     |                                                                                              |                                                                                              |                                                                                              |                 - |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |   |   |               - |   |   |          (24,545) |   |   |        (24,545) |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at January 31, 2008                  |                                                                                              |                                                                                              |                 - |                                                                                              |                                                                                  |               - |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |   |   |               - |   |   |          (24,545) |   |   |        (24,545) |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| February 2008 through January 2009,          |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |
|                                         | sale of common stock (Notes 1 & 9)                                                            | *                                                                                                 |                                                                                              |  123,780,829                                                                                 |                                                                                  |                                                                                  |       123,781                                           |                                                                                  |                                                                                  |       131,800                                           |                                                                                  |                                                                                  |             132 |   |   |    1,513,887 |   |   |                  - |   |   |    1,637,800 |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 2008, issuance of common            |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |
|                                         | stock for debt (Notes 1 & 9)                                                                  | *                                                                                                 |                                                                                              |      8,219,178                                                           |                                                                                  |                                                                                  |          8,219                           |                                                                                  |                                                                                  |        50,000                                      |                                                                                  |                                                                                  |               50 |   |   |       141,731 |   |   |                  - |   |   |       150,000 |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                     |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |     (2,135,444) |   |   |   (2,135,444) |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at January 31, 2009                  | *                                                                                                 |                                                                                              |  132,000,007                                                                                 |                                                                                              |  $                                                                               |       132,000                                           |                                                                                  |                                                                                  |       181,800                                           |                                                                                  |  $                                                                               |             182           |   |   |    1,655,618 |   |  $ |     (2,159,989) |   |  $ |      (372,189) |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| February through May 2009,                   |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |
|                                         | sale of common stock (Notes 1 & 9)                                                            | *                                                                                                 |                                                                                              |    11,506,850                                                                      |                                                                                  |                                                                                  |        11,507                                      |                                                                                  |                                                                                  |        58,300                                      |                                                                                  |                                                                                  |               58 |   |   |       186,735 |   |   |                  - |   |   |       198,300 |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March 2009, issuance of common               |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |
|                                         | stock for debt (Notes 1 & 9)                                                                  | *                                                                                                 |                                                                                              |    27,616,440                                                                      |                                                                                  |                                                                                  |        27,616                                      |                                                                                  |                                                                                  |       178,400                                           |                                                                                  |                                                                                  |             179 |   |   |       486,605 |   |   |                  - |   |   |       514,400 |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| May 2009, reverse acquisition of HPI         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |
|                                         | Partners, LLC and subsidiary (Notes 1 & 9)                                                    |    22,825,993                                                                      |                                                                                              |                                                                                              |        22,826                                      |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |                                                                                  |   |      (1,859,739) |   |   |     (1,377,193) |   |   |      (798,152) |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| May 2009, issuance of warrants in            |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |
|                                         | HPI Partners LLC acquisition (Note 9)                                                             |                 - |                                                                                              |                                                                                              |               - |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |                                                                                  |   |    1,513,683 |   |   |                  - |   |   |    1,513,683 |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| May 2009, issuance of common stock upon      |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |
|                                         | exercise of warrants (Note 9)                                                                     |                                                                                              |                                                                                              |        265,000                                                 |                                                                                  |                                                                                  |             265           |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |   |   |          2,385 |   |   |                  - |   |   |           2,650 |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| May 2009, issuance of common stock for       |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |
|                                         | debt (Notes 4 & 9)                                                                            |                                                                                              |                                                                                              |      4,171,940                                                           |                                                                                  |                                                                                  |          4,172                           |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |   |   |       204,425 |   |   |                  - |   |   |       208,597 |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| May 2009, issuance of warrants to subsidiary |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |
|                                         | officers and consultants (Note 9)                                                                 |                                                                                              |                                                                                              |                 - |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |   |   |    1,719,641 |   |   |                  - |   |   |    1,719,641 |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| May 2009, conversion of Series A preferred   |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |
|                                         | stock to common stock (Notes 1 & 9)                                                           |    34,397,261                                                                      |                                                                                              |                                                                                              |        34,397                                      |                                                                                  |                                                                                  |      (418,500)                                               |                                                                                  |                                                                                  |            (419)               |                                                                                  |   |       (33,978) |   |   |                  - |   |   |                - |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| May through July 2009, issuance of common    |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |
|                                         | stock in private placements (Note 9)                                                              |                                                                                              |    40,087,506                                                                      |                                                                                              |                                                                                  |        40,088                                      |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |   |   |       495,133 |   |   |                  - |   |   |       535,221 |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                     |                                                                                              |                                                                                              |                                                                                              |                 - |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |                                                                                  |                                                                                  |               - |   |   |               - |   |   |     (4,289,258) |   |   |   (4,289,258) |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at July 31, 2009                     |                                                                                              |                                                                                              |  272,870,997                                                                                 |                                                                                              |  $                                                                               |       272,871                                           |                                                                                  |                                                                                  |               - |                                                                                  |  $                                                                               |               - |   |   |    6,786,462 |   |  $ |    (7,826,440) |   |  $ |      (767,107) |
|                                         |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| * Restated, see Note 1                       |                                                                                              |                                                                                              |                                                                                              |                                                                                              |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |                                                                                  |   |   |   |   |   |   |   |   |   |

----

|                                                        |   | 2009   |            |   | 2008   |   |
|-------------------------------------------------------------|--------|--------|-----------------|--------|--------|--------|
|                                                        |   |   |            |   |   |   |
| Cash flows from operating activities:                       |   |   |            |   |   |   |
| Net loss                                                    |   | $      | (4,289,258      | )      |   | $      | (404,503 | ) |
| Adjustments to reconcile net loss to net cash               |   |   |            |   |   |   |   |   |
| used by operating activities:                               |   |   |            |   |   |   |   |   |
| Stock based compensation (Note 9)                           |   |   | 3,350,324  |   |   |   | — |   |
| Allowance for bad debt (Note 5)                             |   |   | 197,545         |   |   |   | — |   |
| Depreciation and amortization                               |   |   | 354             |   |   |   | — |   |
| Increase in value of securities available for sale (Note 1) |   |   | (35,000         | )      |   |   |   |   |
| (Decrease) increase in derivative liability (Note 4)        |   |   | (6,049          | )      |   |   | — |   |
| Amortization of discount on debentures payable (Note 4)     |   |   | 8,202           |   |   |   | — |   |
| Changes in operating assets and liabilities:                |   |   |            |   |   |   |   |   |
| Accounts and other receivebles                              |   |   | 13,660          |   |   |   | (1,830 | ) |
| Prepaid expenses                                            |   |   | 4,548           |   |   |   | — |   |
| Accounts payable and accrued expenses                       |   |   | 137,456         |   |   |   | 13,903 |   |
| Related party payables (Note 3)                             |   |   | (60,050         | )      |   |   | — |   |
| Interest payable                                            |   |   | 8,913           |   |   |   | 11,142 |   |
| Net cash used in operating activities                       |   |   |            |   |   |   |   |   |
|                                                        |   |   | (669,355        | )      |   |   | (381,288 | ) |
|                                                        |   |   |            |   |   |   |   |   |
| Cash flows from investing activities:                       |   |   |            |   |   |   |   |   |
| Purchase of equipment                                       |   |   | (5,745          | )      |   |   | (2,300 | ) |
| Purchase of debt securities                                 |   |   | —         |   |   |   | (781,824 | ) |
| Issuance of notes receivable (Note 5)                       |   |   | (52,527         | )      |   |   | (80,200 | ) |
| Payments received on notes receivable (Note 5)              |   |   | 633             |   |   |   | — |   |
| Cash acquired in reverse acquisition (Note 1)               |   |   | 655             |   |   |   | — |   |
| Net cash used in investing activities                       |   |   | (56,984         | )      |   |   | (864,324 | ) |
|                                                        |   |   |            |   |   |   |   |   |
| Cash flows from financing activities:                       |   |   |            |   |   |   |   |   |
| Proceeds from notes payable, related (Note 3)               |   |   | 31,500          |   |   |   | 45,100 |   |
| Payments on notes payable, related (Note 3)                 |   |   | (89,327         | )      |   |   | (51,346 | ) |
| Proceeds from notes payable, other (Note 4)                 |   |   | —         |   |   |   | 50,000 |   |
| Proceeds from convertible promissory note (Note 4)          |   |   | —         |   |   |   | 100,000 |   |
| Proceeds from sales of common stock (Note 9)                |   |   | 760,453         |   |   |   | 1,083,000 |   |
| Proceeds from exercise of warrants to                       |   |   |            |   |   |   |   |   |
| purchase common stock (Note 9)                              |   |   | 2,650           |   |   |   | - |   |
| Net cash provided by financing activities                   |   |   | 705,276         |   |   |   | 1,226,754 |   |
|                                                        |   |   |            |   |   |   |   |   |
| Net change in cash and cash equivalents                     |   |   | (21,063         | )      |   |   | (18,858 | ) |
|                                                        |   |   |            |   |   |   |   |   |
| Cash and cash equivalents:                                  |   |   |            |   |   |   |   |   |
| Beginning of period                                         |   |   | 45,454          |   |   |   | 14,933 |   |
|                                                        |   |   |            |   |   |   |   |   |
| End of period                                               |   | $      | 24,391          |   |   | $      | (3,925 | ) |
|                                                        |   |   |            |   |   |   |   |   |
| Supplemental disclosure of cash flow information:           |   |   |            |   |   |   |   |   |
| Cash paid during the period for:                            |   |   |            |   |   |   |   |   |
| Income taxes                                                |   | $      | —         |   |   | $      | — |   |
| Interest                                                    |   | $      | 14,159          |   |   | $      | 6,183 |   |
|                                                        |   |   |            |   |   |   |   |   |
| Noncash financing transactions:                             |   |   |            |   |   |   |   |   |
| Accounts payable converted to stock                         |   | $      | 153,500         |   |   | $      | — |   |
| Notes and interest payable converted to stock, other        |   | $      | 20,473          |   |   | $      | — |   |
| Notes and interest payable converted to stock, related      |   | $      | 549,024         |   |   | $      | — |   |
| Stock issued in exchange for related party accounts payable |   | $      | 22,500          |   |   | $      | — |   |

----

----

| Assets                                                                    |   |
|---------------------------------------------------------------------------|--------|
| Cash                                                                      |   | $ | 44,454 |   |
| Accounts receivable                                                       |   |   | 20,000 |   |
| Deposits                                                                  |   |   | 3,750 |   |
| Prepaid expenses                                                          |   |   | 7,287 |   |
| Notes receivable                                                          |   |   | 134,225 |   |
| Investment securities – marked to market                            |   |   | 105,000 |   |
| Equipment, less accumulated depreciation of $306                          |   |   | 1,994 |   |
| Other assets                                                              |   |   | 5,815 |   |
|                                                                      |   | $ | 325,525 |   |
| Liabilities and Members’ Deficit                                    |   |
| Current liabilities:                                                      |   |   |   |   |
| Accounts and notes payable:                                               |   |   |   |   |
| Accounts payable, including related parties                               |   |   | 271,759 |   |
| Notes payable, including related parties                                  |   |   | 114,416 |   |
| Convertible notes payable, including related parties                      |   |   | 225,000 |   |
| Payroll liabilities                                                       |   |   | 52,576 |   |
| Accrued expenses                                                          |   |   | 5,962 |   |
| Accrued interest payable, including related parties                       |   |   | 4,575 |   |
| Total current liabilities                                                 |   |   | 21,426 |   |
|                                                                      |   |   |   |   |
| Shareholders’ deficit (restated):                                   |   |   |   |   |
| Preferred stock, $.001 par value, 181,800 shares issued & outstanding |   |   | 182 |   |
| Common stock, $.001 par value ,132,000,007 shares issued and outstanding  |   |   | 132,000 |   |
| Additional paid in capital                                                |   |   | 1,655,618 |   |
| Accumulated deficit                                                       |   |   | (2,159,989 | ) |
| Total members’ deficit                                              |   |   | (372,189 | ) |
| Total liabilities and members’ equity                               |   | $ | 325,525 |   |

----

----

157-2, “Effective Date of FASB Statement No. 157,” which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities,except those that are recognized or disclosed at fair value in the financial statements on at least an annual basis, until January 1, 2009 for calendar year-end entities. Upon adoption, the provisions of SFAS No. 157 are to be applied prospectively with limited exceptions.  The adoption of SFAS No. 157 is not expected to have a material impact on our consolidated financial statements. 

----

| Management fees payable to officers              |   | $      | 61,549 |   |
|--------------------------------------------------|--------|--------|--------|--------|
|                                             |   |   |   |   |
| Accrued expenses payable to subsidiary officer   |   |   | 10,224 |   |
|                                             |   |   |   |   |
| Rent payable to company affiliated with officers |   |   | 2,850  |   |
|                                             |   |   |   |   |
| Total accounts payable, related party            |   | $      | 74,623 |   |

----

----

| Notes payable to officers; interest at 8% and due on demand                       |   | $      | 35      |   |
|-----------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                              |   |   |    |   |
| Notes payable to affiliates of Company officers; interest at 8% and due on demand |   |   | 166,048 |   |
|                                                                              |   |   |    |   |
| Notes payable, related party                                                      |   |   | 166,084 |   |
|                                                                              |   |   |    |   |
| Interest payable related party                                                    |   |   | 34,366  |   |
|                                                                              |   |   |    |   |
| Total principal and interest payable, related party                               |   | $      | 200,450 |   |

----

| Issuance Date | Fair Value | Term   | Conversion Price | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|--------|------------------|---------------------------|-----------------------|---------------|
| May 2, 2008   | $16,333    | 1 year | $0.09            | $0.12                     | 101%                  | 2.1%          |
| May 21, 2008  | $13,704    | 1 year | $0.068           | $0.09                     | 101%                  | 2.1%          |

| Issuance Date | Fair Value | Term    | Conversion Price | Market Price onJuly 31, 2009 | Volatility Percentage | Interest Rate |
|---------------|------------|---------|------------------|------------------------------|-----------------------|---------------|
| May 2, 2008   | $9,333     | 1 Month | $0.075           | $0.10                        | 112%                  | 0.1%          |
| May 21, 2008  | $11,200    | 1 Month | $0.075           | $0.10                        | 112%                  | 0.1%          |

----

----

|                           |   | Three months ended July 31, 2009 |    |   | Three months ended July 31, 2008 |   |    | Six months ended July 31, 2009 |   |   | Six months endedJuly 31, 2008 |   |
|--------------------------------|--------|----------------------------------|---------|--------|----------------------------------|--------|---------|--------------------------------|--------|--------|-------------------------------|--------|
| General and administrative     |   | $                                | 40,991  |   |                             | $      | 26,712  |                           |   | $      | 72,441                        |   |   | $ | 55,098 |   |
| Salaries and employee benefits |   |                             | 85,296  |   |                             |   | 89,130  |                           |   |   | 183,491                       |   |   |   | 89,130 |   |
| Legal and accounting           |   |                             | 51,798  |   |                             |   | 26,112  |                           |   |   | 128,620                       |   |   |   | 38,044 |   |
| Professional services          |   |                             | 104,500 |   |                             |   | 68,900  |                           |   |   | 178,028                       |   |   |   | 103,900 |   |
|                           |   | $                                | 282,585 |   |                             | $      | 210,854 |                           |   | $      | 562,580                       |   |   | $ | 286,172 |   |

----

| Issuance Date | Fair Value | Term   | Conversion Price | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|--------|------------------|---------------------------|-----------------------|---------------|
| April 2009    | $23,850    | 1 Year | $0.01            | $0.10                     | 122%                  | 0.5%          |

----

| Issuance Date | Fair Value | Term    | Conversion Price | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|---------|------------------|---------------------------|-----------------------|---------------|
| March 4, 2009 | $886,743   | 3 years | $0.12            | $0.07                     | 195%                  | 1.4%          |

| Issuance Date | Fair Value | Term    | Conversion Price | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|---------|------------------|---------------------------|-----------------------|---------------|
| March 4, 2009 | $216,619   | 3 years | $0.10            | $0.07                     | 195%                  | 1.4%          |
| March 4, 2009 | $206,857   | 3 years | $0.15            | $0.07                     | 195%                  | 1.4%          |
| March 4, 2009 | $203,465   | 3 years | $0.18            | $0.07                     | 195%                  | 1.4%          |

----

| Issuance Date | Fair Value | Term    | Conversion Price | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|---------|------------------|---------------------------|-----------------------|---------------|
| May 5, 2009   | $1,374,647 | 5 years | $0.13            | $0.12                     | 225%                  | 1.9%          |
| May 5, 2009   | $1,374,646 | 6 years | $0.13            | $0.12                     | 225%                  | 2.3%          |
| May 5, 2009   | $1,385,302 | 7 years | $0.13            | $0.12                     | 225%                  | 2.6%          |

|                                            |   | Warrants   |   | Weighted-average exercise price                                   |   | Weighted-average grant date fair value          |
|-------------------------------------------------|--------|------------|--------|-------------------------------------------------------------------|--------|-------------------------------------------------|
| Outstanding and exercisable at January 31, 2009 |   | 4,213,719  |   | $          0.39 |   | $       0.10 |
|                                            |   |       |   |                                                              |   |                                            |
| Granted                                         |   | 56,812,044 |   | 0.13                                                              |   | 0.10                                            |
| Exercised                                       |   | 265,000    |   | -                                                                 |   | -                                               |
|                                            |   |       |   |                                                              |   |                                            |
| Outstanding and exercisable at July 31, 2009    |   | 60,760,763 |   | $          0.15 |   | $       0.10 |

| Exercise price range |   | Number of options outstanding |   | Weighted-average exercise price                 |   | Weighted-average remaining life |
|----------------------|--------|-------------------------------|--------|-------------------------------------------------|--------|---------------------------------|
|                 |   |                          |   |                                            |   |                            |
| $0.50                |   | 3,186,219                     |   | $       0.50 |   | 1.2 years                       |
|                 |   |                          |   |                                            |   |                            |
| $0.25                |   | 27,500                        |   |        0.25  |   | 1.8 years                       |
|                 |   |                          |   |                                            |   |                            |
| $0.10 to $0.18       |   | 56,547,044                    |   | 0.13                                            |   | 4.7 years                       |
|                 |   |                          |   |                                            |   |                            |
| $0.06                |   | 1,000,000                     |   |       0.06        |   | 2.4 years                       |
|                 |   |                          |   |                                            |   |                            |
|                 |   | 60,760,763                    |   | $       0.15 |   | 2.8 years                       |

----

| Issuance Date | Fair Value | Term    | Exercise Price | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|---------|----------------|---------------------------|-----------------------|---------------|
| March 2009    | $93,150    | 5 years | $0.07          | $0.07                     | 213%                  | 1.94%         |

|                            | Options |   | Weighted-average exercise price |   | Weighted-average remaining contractual life (years) |   | Aggregate intrinsic value |
|---------------------------------|---------|--------|---------------------------------|--------|-----------------------------------------------------|--------|---------------------------|
| Outstanding at January 31, 2009 | 425,000 |   | $0.35                           |   | 3,4                                                 |   | $0                        |
|                            |    |   |                            |   |                                                |   |                      |
| Options granted                 | -       |   | -                               |   | -                                                   |   | -                         |
|                            |    |   |                            |   |                                                |   |                      |
| Outstanding atJuly 31, 2009     | 425,000 |   | $0.35                           |   | 3.4                                                 |   | $0                        |

|                            | Options   |   | Weighted-average exercise price |   | Weighted-average remaining contractual life (years) |   | Aggregate intrinsic value |
|---------------------------------|-----------|--------|---------------------------------|--------|-----------------------------------------------------|--------|---------------------------|
| Outstanding at January 31, 2009 | 0         |   | $0.00                           |   | 0                                                   |   | $0                        |
|                            |      |   |                            |   |                                                |   |                      |
| Options granted                 | 1,350,000 |   | $0.07                           |   | 4.6                                                 |   | 40,500                    |
|                            |      |   |                            |   |                                                |   |                      |
| Outstanding atJuly 31, 2009     | 1,350,000 |   | $0.07                           |   | 4.6                                                 |   | $40,500                   |

----

----

----

----

----

----

|                           |   | Six months endedJuly 31, 2009 |    |   | Six months endedJuly 31, 2008 |   |
|--------------------------------|--------|-------------------------------|---------|--------|-------------------------------|--------|
| General and administrative     |   | $                             | 72,441  |   |                          | $      | 55,098 |   |
| Salaries and employee benefits |   |                          | 183,491 |   |                          |   | 89,130 |   |
| Legal and accounting           |   |                          | 128,620 |   |                          |   | 38,044 |   |
| Professional services          |   |                          | 178,028 |   |                          |   | 103,900 |   |
|                           |   | $                             | 562,580 |   |                          | $      | 286,172 |   |

|                           |   | Three months endedJuly 31, 2009 |    |   | Three months endedJuly 31, 2008 |   |
|--------------------------------|--------|---------------------------------|---------|--------|---------------------------------|--------|
| General and administrative     |   | $                               | 40,991  |   |                            | $      | 26,712 |   |
| Salaries and employee benefits |   |                            | 85,296  |   |                            |   | 89,130 |   |
| Legal and accounting           |   |                            | 51,798  |   |                            |   | 26,112 |   |
| Professional services          |   |                            | 104,500 |   |                            |   | 68,900 |   |
|                           |   | $                               | 282,585 |   |                            | $      | 210,854 |   |

----

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

| •   | Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Exhibits: |                                                                                                                                                                                                 |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.1       | Form of Securities Purchase Agreement by and among AlumiFuel Power Corporation and the Buyers of up to $700,000 of Convertible debentures dated September 15, 2009.  Filed herewith.  |
| 31.1      | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  Filed herewith.                                                                                             |
| 32.1      | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  Filed herewith.                                                                                                  |

----

|   | ALUMIFUEL POWER CORPORATION |
|--------|-----------------------------|
|   | (Registrant)                |

| Date: September 21, 2009 | By: /s/ Henry Fong                                         |
|--------------------------|------------------------------------------------------------|
|                     | Henry Fong                                                 |
|                     | Principal Executive Officer andPrincipal Financial Officer |
|                     |                                                       |