**UNITED STATESSECURITIES  AND EXCHANGE COMMISSION****Washington,  D.C. 20549**

**FORM 10-K/A****(Amendment No. 2)**

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the fiscal year ended: **June 30,2010**

or

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

For the transition period from__________________ to __________________

Commission file number: **333-70836**

**BIOMASS SECURE POWER INC.******(Exact name of registrant as specified in itscharter) 

| **British Columbia, Canada**                                    | **N/A**                               |
|-----------------------------------------------------------------|---------------------------------------|
| State or other  jurisdiction of  incorporation or  organization | (I.R.S. Employer  Identification No.) |

**40218 Wellsline Road Abbotsford BC Canada V3G2K7**(Address of principal executive offices and Zip Code)

Registrant’s telephone number, includingarea code:  **605 807 4957**

**VIRTUAL MEDIA HOLDINGS INC.**(Former name or former address, if changed sincelast report)

Securities registered pursuant to Section 12(b)of the Act

| Title of each class |   | Name of Exchange on which registered |
|---------------------|--------|--------------------------------------|
|                |   |                                 |

Securities registered pursuant to Section 12(g)of the Act 

**Common Stock, no par value**(Title of Class) 

Indicate by check mark if the registrant is a well-known seasonedissuer, as defined in Rule 405 of the Securities Act.Yes  [  ]   No  [X] 

Indicate by check mark if the registrant is not required to filereports pursuant to Section 13 or Section 15(d) of the Act.Yes  [  ]   No  [X] 

**Note -**Checking the box above will not relieve any registrantrequired to file reports pursuant to Section 13 or 15 (d) of the Exchange Actfrom their obligations under those sections.

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Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.Yes  [X]   No  [  ] 

Indicate by check mark whether the registrant has submittedelectronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§ 232.405 of this chapter) during the preceding 12 months(or for such shorter period that the registrant was required to submit and postsuch files).  ** (Not Applicable)**Yes  [  ]   No   [  ]  

Indicate by check mark if disclosure ofdelinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 ofthis chapter) is not contained herein, and will not be contained, to the bestof registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K. [X]  

Indicate by check mark whether the registrant isa large accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company. See the definitions of “large acceleratedfiler,” “accelerated filer” and “smaller reportingcompany” in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether theregistrant is a shell company (as defined in Rule 12b-2 of the Act).Yes  [X]   No  [  ] 

State the aggregate market value of thevoting and non-voting common equity held by non-affiliates computed byreference to the price at which the common equity was last sold, or the averagebid and asked price of such common equity, as of the last business day of theregistrant’s most recently completed second fiscal quarter.

|   | As of December 31,2009, the last business day of the registrant’s most recently completedsecond fiscal quarter the aggregate market value of the voting and non-votingcommon stock held by non-affiliates of the registrant was approximately$328,838, based on 131,535,273 common shares held by non-affiliates and lastsale prior to December 31, 2009 being $0.0025. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Note.**—If a determination as to whether aparticular person or entity is an affiliate cannot be made without involvingunreasonable effort and expense, the aggregate market value of the common stockheld by non-affiliates may be calculated on the basis of assumptions reasonableunder the circumstances, provided that the assumptions are set forth in thisForm. 

APPLICABLEONLY TO REGISTRANTS INVOLVED IN BANKRUPTCYPROCEEDINGSDURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether theregistrant has filed all documents and reports required to be filed by Section12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to thedistribution of securities under a plan confirmed by a court.Yes  [  ]   No  [  ]  

APPLICABLEONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstandingof each of the registrant’s classes of common stock, as of the latestpracticable date. **235,099,866 shares of common stock as at December 13,2010.**

DOCUMENTSINCORPORATED BY REFERENCE

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**Amended – see Note 14**

**TABLE OF CONTENTS**

| Part I.     | 1                                                                                                                                 |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------|
|        | Item 1. Business.                                                                                                                 | 2 |
|        | Item 1A. Risk Factors.                                                                                                            | 5 |
|        | Item 1B. Unresolved    Staff Comments.                                                                                            | 10 |
|        | Item 2. Properties.                                                                                                               | 10 |
|        | Item 3. Legal    Proceedings.                                                                                                     | 10 |
|        | Item 4. (REMOVED AND    RESERVED)                                                                                                 | 11 |
| Part II.    | 11                                                                                                                                |
|        | Item 5. Market for    Registrant’s Common Equity, Related Stockholder Matters and Issuer    Purchases of Equity Securities. | 11 |
|        | Item 6. Selected    Financial Data.                                                                                               | 13 |
|        | Item 7.    Management’s Discussion and Analysis of Financial Condition and Results    of Operations.                        | 14 |
|        | Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.                                                           | 19 |
|        | Item 8. Financial    Statements and Supplementary Data.                                                                           | 20 |
|        | Item 9. Changes in    and Disagreements With Accountants on Accounting and Financial Disclosure.                                  | 21 |
|        | Item 9A. Control and    Procedures.                                                                                               | 21 |
|        | Item 9B Other    Information.                                                                                                     | 23 |
| PART III.   | 23                                                                                                                                |
|        | Item 10. Directors,    Executive Officers and Corporate Governance.                                                               | 23 |
|        | Item 11. Executive    Compensation.                                                                                               | 27 |
|        | Item 12. Security    Ownership of Certain Beneficial Owners and Management and Related Stockholder    Matters.                    | 29 |
|        | Item 13. Certain    Relationships and Related Transactions, and Director Independence.                                            | 30 |
|        | Item 14. Principal    accounting Fees and Services.                                                                               | 32 |
|        | Item 15. Exhibits,    Financial Statement Schedules.                                                                              | 32 |
| Signatures. | 33                                                                                                                                |

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**Amended – see Note 14**

**PART I**

This annual report on Form 10-K containsforward-looking statements.  Forward-looking statements are projections ofevents, revenues, income, future economic performance or management’splans and objectives for future operations.  In some cases, you canidentify forward-looking statements by the use of terminology such as“may”, “should”, “expects”,“plans”, “anticipates”, “believes”,“estimates”, “predicts”, “potential” or“continue” or the negative of these terms or other comparableterminology.  Examples of forward-looking statements made in this annualreport on Form 10-K include statements about:

- Our business plans,
- Our belief regarding the impact of various lawsuits,
- Our ability to raise additional finances,
- Our future customers,
- Our design of torrefied wood pellet plants, and
- Our future investments and allocation of capital resources.

These statements are only predictions andinvolve known and unknown risks, uncertainties and other factors, including: 

- Our inability to obtain an unqualified audit report for the 2006 and 2007 fiscal years,
- The impact of various lawsuits that have been filed against us,
- General economic and business conditions,
- Fluctuations in worldwide prices and demand for torrefied wood pellets,
- Our lack of operating history,
- Our limited experience manufacturing pellets,
- Our dependence on a limited number of customers, and 
- The risks in the section of this annual report entitled “Risk Factors”, 

any of which may cause our or ourindustry’s actual results, levels of activity, performance orachievements to be materially different from any future results, levels ofactivity, performance or achievements expressed or implied by theseforward-looking statements.

While these forward-looking statementsand any assumptions upon which they are based are made in good faith andreflect our current judgment regarding the direction of our business, actualresults will almost always vary, sometimes materially, from any estimates,predictions, projections, assumptions or other future performance suggestedherein. Except as required by applicable law, including the securities laws ofthe United States, we do not intend to update any of the forward-lookingstatements to conform these statements to actual results

As used in this report, the terms“we”, “us” and “our” mean Biomass SecurePower Inc. In this report, unless otherwise specified, all dollar amounts areexpressed in United States dollars and all references to “commonshares” refer to the common shares in our capital stock. 

1

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**Amended – see Note 14**

**ITEM 1.BUSINESS**

***Corporate History***

We were incorporated in the Province ofBritish Columbia on August 24, 1989 as Flamingos Beach Resort Inc. On August10, 1999, we changed our name to VMH Videomoviehouse.com Inc. On May 18, 2006,we changed our name to Virtual Media Holdings Inc. On February 9, 2009, wechanged our name to Biomass Secure Power Inc. On June 30, 2009, we legally have amalgamated with 0625920 BC Ltd., previous known as Biomass Secure PowerInc., as more particularly described under the heading“The Amalgamation”. As we have not issuedany shares to the 20 shareholders of 0625920 BC Ltd. to date, the accountingtreatment for the amalgamation has been deferred until such time as the shareshave been transferred to complete the transaction. 

***Corporate Developments***

From incorporation in August 1989 untilAugust 1999, our only operation consisted of developing an Internet web-site.The web-site was developed by our past president. In August 1999, we switchedour focus to the generation of revenues from the sale of video tapes, DVDs, andCDs and rental of DVDs over the internet. In October 2005, we were removed asan authorized seller at Amazon.com. Our sales through Amazon.com accounted forvirtually all of our revenues. 

We have ceased our movie selling businessand are focused on the development of our torrefied wood pellet plant businessbeginning July 1, 2007. 

*Previous Audits*

Our previous auditors, Dale MathesonCarr-Hilton Lebonte LLP (“DMCL”), had challenges in obtaining andmanagement had challenges in providing sufficient and appropriate informationrelating to the issuance of shares; transfers of funds between company bankaccounts; and payments to management. As such, we were unable to produceaccurate and complete financial statements and DMCL was unable to provide uswith an audit report for our 2006 and 2007 fiscal year ends. We may apply tothe Securities and Exchange Commission for relief from the requirement toproduce annual audited and interim non-audited financial statements as well asthe applicable annual reports on form 10-Ks and interim reports on Form 10-Qfor the 2006 and 2007 fiscal year. Until we file audited financial statementsfor the 2006 and 2007 fiscal year or obtain relief from the requirement to filethose financial statements, we will not be in compliance with our reportingobligations under the Securities and Exchange Act of 1934. 

*The Amalgamation*

On October 29, 2008, the Company entered into an AmalgamationAgreement (the “Agreement”) with 0625920 BC Ltd.(“0625920”) whereby the Company will be acquiring certainintellectual property of 0625920 by way of merger of the two Companies. At the time of the Agreement the Company and 0625920 had a common director andofficer, Mr. Jim Carroll, who is the President/CEO/CFO of the Company and wasthe President of 0625920, and had two common shareholders, Mr. Carroll and hisspouse. Pursuant to the terms of the Agreement fifteen common shares of theCompany will be issued in exchange for each 0625920 share outstanding at theAgreement date, resulting in the issuance of 225,269,250 common stock to0625920 shareholders.

On November 1, 2008 the Company issued 15,000,000 common stock, as adeposit on the Agreement, to Mr. George Pappas, a director of 0625920, who wasunrelated to the Company at that time.  The deposit forms part of thetotal share consideration to be issued pursuant to the Agreement. Therefore, a further 210,269,250 common stock are to be issued.

On June 30, 2009, the following eventsoccurred:

- each of the 20 shareholders of 0625920 BC Ltd.    requested that the board of directors of 0625920 BC    Ltd.  consent to and approve the  transfer all of the    issued and outstanding shares of 0625920 BC Ltd. to our company; 

2

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**Amended – see Note 14**

- all outstanding share certificates of 0625920 BC Ltd. were cancelled and one new share certificate was issued in the name of our company, representing all of the issued and outstanding shares of 0625920 BC Ltd.; and
- pursuant to section 273 of the British Columbia Business Corporations Act, Biomass Secure Power Inc. and 0625920 BC Ltd. amalgamated, with the resulting company adopting the name, articles, and notice of articles of Biomass Secure Power Inc.

At the time of the Agreement the Companyand 0625920 had a common director and officer, Mr. Jim Carroll, who is thePresident/CEO/CFO of the Company and was the President of 0625920, and had twocommon shareholders, Mr. Carroll and his spouse.  .A form of the Share Exchange Agreement is attached to our annual report on Form10-K for the fiscal year ended June 30, 2009. On November 19, 2009, the BritishColumbia Securities Commission issued a cease tradeorder against our company, which prohibits us from issuing the ConsiderationShares. As of April 4, 2011, we have not issued the Consideration Shares. Assuch, for accounting purposes the merger transaction has not been completed norreflected in the financial statements as we have not delivered anyconsideration for the shares of 0625920 BC Ltd. We anticipate that we willissue the Consideration Shares upon the revocation of the cease trade order.

***Our Current Business***

*Our Business Plan*

Our business plan is to build plants thatwill process low quality logs and fibre typically left in the field and turn itinto torrefied wood pellets. We believe that our plants will be the first oftheir kind in Canada. We have completed the design and basic engineering workfor the building of our torrefied wood pellet plants. We will sell thetorrefied wood pellets to power producers in Europe that want a cleaner fuelthan coal. We have held discussions with power producers regarding the purchaseof our torrefied wood pellets. We have not signed any definitive agreementswith any power producers and there are no assurances any definitive agreementswill be signed. 

We plan to produce one million tons oftorrefied wood pellets per year from up to four plants that we propose to buildin various locations in British Columbia, Canada. British Columbia has anextensive timber industry and we believe that the waste products from thisindustry will be sufficient to provide our operations with a steady supply of fuel. We have had discussions with potential purchasers to secure long term salescontracts but no definitive agreements have been signed and we cannot guaranteethat such agreements will be signed. We do not anticipate beginning theconstruction of our plants until we have a definitive agreement in place topurchase our torrefied wood pellets. 

*Torrefied wood pellets*

Torrefied wood pellets are primarily usedas a fuel for heating. Torrefied wood pellets are 30% denser than regular woodpellets and contain 16% more energy. While torrefied wood pellets have manyuses, such as a substitute for charcoal for barbeques, we anticipate ourtorrefied wood pellets will be sold as a substitute for coal as a boiler fuel.Torrefied wood pellets can be used in coal plants without altering the coalplant. Unlike normal wood pellets, torrefied wood pellets have approximatelythe same BTUs as coal, which allows coal to be completely replaced by torrefiedwood pellets.  Some coal producers may prefer to gradually add torrefiedwood pellets to their coal burners. We believe that the main advantage oftorrefied wood pellets over coal is torrefied wood pellets burn cleaner thancoal as they produce significantly less ash and sulphur emission. As demand forclean energy increases, we believe the demand for torrefied wood pellets willincrease.  

Torrefied wood pellets are not subject todeterioration during shipment or storage. This greatly reduces shipping costsfor torrefied wood pellets, compared to normal wood pellets. Also, torrefiedwood pellets are easier to grind, which reduces their processing costs whenthey are burned. 

*Our Customers*

We anticipate that we will sell ourtorrefied wood pellets to power producers in Europe. We have chosen this targetmarket because we believe European coal power producers will eliminate coalfrom their existing power plants in favour of our torrefied wood pellets.Currently, there is some demand for torrefied wood pellets in Europe. We haveheld discussions with power producers in Europe regarding the purchase of ourtorrefied wood pellets. We have not signed any definitive agreements with anypower producers and there are no assurances any definitive agreements will besigned. 

3

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**Amended – see Note 14**

*Layout of Plants*

The following is a description of theanticipated layout of our plants. 

Wood fibre will be supplied to the plantin the form of coarse wood chips. Trucks will be offloaded at 2 hydraulicstations and the material will be automatically conveyed to an undercoverstorage facility by way of a conveyor belt. As the material moves along theconveyor belt, it will pass though a de-lumper, magnetic separator,de-stoner/de-icer and classifier to remove foreign matter. Generally, themoisture content of the wood waste will vary; however, as the plant productionrate is based on the mass of bone dry fibre received, we anticipate usingincentives to encourage the shipment of dry material.

Covered storage is essential. We need areserve of material on hand to ensure that the equipment stays in continuousoperation. We also need to protect the material from moisture during storage asthis will negatively impact the plant production rate. We also need to ensurethat the material being processed is not frozen and that all ice and snow hasbeen removed for the material before it is processed.

The storage facility will be fitted witha double level walking floor that will discharge material to buffer silos viamagnetic separators and de-stoners. The buffer silos will discharge at acontrolled rate to a series of fine shredders. This material will then bescreened and fine shredded before transfer to a bio-fuel fired flash dryer.

The shredded material from the flashdryer will have a target moisture content of 8%. To control this moisturecontent it may be necessary to recycle a portion of the material. It is alsonecessary to produce 20% more dry product than will be required for productionin order to provide energy for the dryer. The extra material is then milled toa fine powder and stored for use by the flash dryer burner.

Material from the flash dryer is conveyedto a screen and a mill to reduce the particle size to the optimum size forpelletizing. The material is then conveyed to the pellet mill and afterpelletizing is cooled on a band cooler before the product is placed in bulkstorage prior to shipment to the port. Bulk storage would be in the form ofelevated silos that will be used to place the material on rail cars inpreparation for shipment to the port.

We intend to locate the torreficationunit between the dryer and the pelletizing mill. This will produce a syntheticfuel gas that we propose to use for the torrefication furnace and the dryer.There may be some residual gas that could be used to generate a small quantityof electrical power. 

*Technology*

We anticipate that the dryer will bedesigned to operate with a variety of fuels including bio-mass powder,synthetic gas, natural gas and fuel oil. In addition, the off gas of the dryermay be used for generating steam for use by a steam turbine for the purpose of generatingpower for the plant. There is a possibility of generating extra power, if thelocal resources permit. 

We anticipate that the torreficationfurnace will feature the latest in regenerative burner technology to maximizethe quantity of synthetic gas available to provide energy for the plant and tomaximize the energy available for generating power.

We plan to use a fine shredder and flashdryer upstream of the torrefication furnace to ensure that the collectedmaterial is free of ice, rocks and metallic components that could damage theequipment. The design of the storage facility is anticipated to  be twotiered to allow for the run off of any snow and ice prior to processing thematerial in the plant. We plan to use a sparse fluid bed destoner to pre-warmthe material to remove stones, snow and ice. Heat for this equipment isanticipated to be provided by waste heat from the process. We believe that thiscustom design will be a first of its kind in Canada.

4

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**Amended – see Note 14**

*Our Subsidiary*

On January 13, 2009, we incorporated asubsidiary in California under the name of Biomass Secure Power Inc. (USA)(“Biomass USA”). Mr. George Pappas is president and CEO of BiomassUSA. Biomass USA is currently in the early stages of development and weanticipate that it will bring co-generation projects to fruition in the USA. Asof December 13, 2010, Biomass USA has not conducted any operations and is notreflected in our financial statements. 

*Expertise*

Our business plan is based on ourmanagement team’s experience in the construction and the implementationof medium sized industrial projects.  In particular, our management teamhas implemented projects at a number of pellet plants, supplying burner and dryerequipment along with material handling systems. Our management team hasconstructed a multifuel burner system for a medium-density fibreboard plantthat used dried and processed wood waste for fuel. In addition, the projectmanagement team will be drawn from people with many years of experience in thewood processing industry. We have not yet hired the project management team.

*Staffing*

We anticipate that each plant willrequire approximately 30 fulltime employees to operate the plant which will run24 hours per day 7 days per week. We anticipate that each plant will have askilled engineer at the plant at all times to address any problems that mayoccur. We plan to have an assistant engineer, who would be able to fix anymachines that break down. The remaining employees would be general labours,such as fork lift operators. These employees would report to the engineer whois on duty at that time.  

***Research and Development Expenditures***

We did not incur any research and development expendituresover the last fiscal year.

***Employees***

At present, we have one full time employee and twopart-time employees. 

***Intellectual Property***

We do not own, either legally or beneficially, any patentsor trademarks. 

**ITEM 1A. RISKFACTORS.**

An investment in our common stock involves a number ofvery significant risks. You should carefully consider the following risks anduncertainties in addition to other information in this report in evaluating ourcompany and its business before purchasing shares of our company's commonstock. Our business, operating results and financial condition could beseriously harmed due to any of the following risks. You could lose all or partof your investment due to any of these risks. 

***Risks Related to our Failure to File our DisclosureDocuments***

*As at December 13, 2010, our stock has been cease tradedin British Columbia.*

Our common shares have been cease traded in BritishColumbia since November 19, 2009 for failure to file our audited annualfinancial statements for the year ended June 30, 2009. As a result, trading inour common shares is prohibited in British Columbia and by residence of BritishColumbia no matter where they trade. Until the cease trade order is revoked, weare prohibited from raising additional funds through the sale of our debt orequity. If we cannot revoke the cease trade order, we will be unable to raisethe funds required to commence our business plan.

5

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**Amended – see Note 14**

*As at December 13, 2010, we are non-compliant with FINRARule 6530 and, as a result, our company has been delisted from the OTC BulletinBoard.*

Companies trading on the OTC Bulletin Board generally mustbe reporting issuers under Section 12 of the Securities Exchange Act of 1934,as amended, and must be current in their reports under Section 13, in order tomaintain price quotation privileges on the OTC Bulletin Board.  Morespecifically, FINRA has enacted Rule 6530, which determines eligibility ofissuers quoted on the OTC Bulletin Board by requiring an issuer to be currentin its filings with the Securities and Exchange Commission, subject to a 30 daygrace period. While we have filed previous disclosure documents, we have notfiled audited financial statements for fiscal years after June 30, 2005. As aresult, we are non-compliant with FINRA Rule 6530 and the quotation of oursecurities on the OTC Bulletin Board is prohibited. Until we are compliant withFINRA Rule 6530, the market liquidity for our securities will be severelyadversely affected by limiting the ability of broker-dealers to sell oursecurities and the ability of stockholders to sell their securities in thesecondary market. Our securities will be ineligible for quotation on the OTCBulletin Board until one year after we have filed all outstanding disclosuredocuments or we obtain an exemption from the requirement to file alloutstanding disclosure documents. 

***Risks Related to our Financial Condition***

*We anticipate that we will be unable to prepare reliable andaccurate financial statements because of insufficient documents and availableinformation for our fiscal years ended 2006 and 2007.*

We have been unable to prepare reliable and accurate information toobtain an unqualified opinion regarding our financialstatements for our fiscal years 2006 and 2007. We anticipate that we will beunable to obtain an unqualified audit report on our financial statements forthose periods. This may adversely affect our ability to raise additional funds throughfinancing and our shareholders’ ability to sell their shares. If we areunable to raise additional funds, there is a substantial risk that our businesswill fail.

*The fact that we have not earned any operating revenuessince we switched the focus of our company to our current business plan raisessubstantial doubt about our ability to continue as a going concern.*

We incurred accumulated net loss of $5,253,808 from prioroperations and $824,768 from the start of our development stage on July 1, 2007to June 30, 2010. We anticipate that we will continue to incur operatingexpenses without revenues for the foreseeable future. Because we have incurredlosses from operations since inception, have not attained profitable operationsand are dependent upon obtaining adequate financing to commence our businessoperations, in their report on our financial statements for the fiscal yearended June 30, 2010, our independent auditors included an explanatory paragraphregarding the substantial doubt about our ability to continue as a goingconcern. 

As of June 30, 2010, we had no cash or cash equivalents anda working capital deficit of $345,782. We estimate our average monthlyoperating expenses over the next 12 months to be approximately $32,500 permonth, excluding any expenses incurred in the building of any plants. Inaddition, our budget could increase during the year in response to matters thatcannot be currently anticipated and we might find that we need to raise morecapital in order to properly address these items. As we cannot assure a lenderthat we will be able to successfully build our plants, we will probably beunable to raise debt financing from traditional lending sources. We havetraditionally raised our operating capital from sales of equity and debtsecurities, but there can be no assurance that we will continue to be able todo so. We are currently subject to a cease trade order imposed by the BritishColumbia Securities Commission and cannot raise any funds until it has beenrevoked. 

The recent economic uncertainty and market instability maymake it harder for us to raise capital as and when we need it and have made itdifficult for us to assess the impact of the crisis on our operations orliquidity and to determine if the prices we might receive on the sale of ourtorrefied wood pellets. If we cannot raise the money that we need to continuedevelopment of our torrefied wood pellet plant, we may be forced to delay,scale back, or cease our business plan. If any of these were to occur, there isa substantial risk that our business would fail. 

6

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**Amended – see Note 14**

***Risks Related to our Company***

*Various lawsuits have been filedagainst us.*

Various lawsuits have been filed againstus. For details on these lawsuits, see the information in the section entitled“Legal Proceedings”. While we do not believe that any of theselawsuits have merit and we intend to defend the lawsuits vigorously, we cannotpredict the outcome and we cannot predict the amount of time and expense thatmay be required to resolve them. Such litigation could also divert theattention of management and resources in general from day-to-day operations.Further, if any of the plaintiffs in these lawsuits are successful, we may berequired to issue additional common shares, which will dilute the holdings ofour existing shareholders or may be ordered to make cash payments, which due toour financial condition, we may be unable to make. If we are ordered to make asubstantial payment, there is a substantial risk that our business would fail. 

*We have no prior experience inmanufacturing and operating a large torrefied wood pellet plant.*

Our success will be dependent on ourmanagement’s ability to manufacture and operate a torrefied wood pelletplant. To our knowledge, our plants will be the first of their kind in Canada.As such, we have no experience building and operating a large torrefied woodpellet plant and limited experience manufacturing similar products at thevolume we anticipate will be required to sustain our operations.  As aresult, we may not be able to develop and implement efficient, low-costmanufacturing capabilities and processes that will enable us to manufacture ourtorrefied wood pellets in significant volumes, while meeting the legal,regulatory, quality, price, durability, engineering, design and productionstandards required to market our products successfully. Further, we have noexperience selling torrefied wood pellets to power producers. As a result, wemay not be able to enter into a contract for the purchase and sale of ourtorrefied wood pellets on favourable terms or at all.

*We have no operating history relatingto our current business plan.*

We have no operating history relating toour current business plan on which to base an evaluation of our business andprospects. Our prospects must be considered in light of the risks,uncertainties, expenses and difficulties frequently encountered by companiesseeking to establish a new business opportunity. Some of these risks anduncertainties relate to our ability to build our plants, secure long term salescontracts, and obtain an adequate supply for our plants.

We cannot be sure that we will besuccessful in addressing these risks and uncertainties and our failure to do socould have a materially adverse effect on our financial condition. In addition,our operating results are dependent to a large degree upon factors outside of ourcontrol. There are no assurances that we will be successful in addressing theserisks, and failure to do so may adversely affect our business.

It is unlikely that we will generate anyor significant revenues while we implement our business plan. In order for usto make a profit, we will need to successfully build our plants and secure longterm supply and sales contracts for our torrefied wood pellets. Even if webecome profitable, we may not sustain or increase our profits on a quarterly orannual basis in the future.

We will, in all likelihood, sustainoperating expenses without corresponding revenues and significant capitalexpense in the construction of our plants, for the foreseeable future.

*We anticipate that we will depend on a limited number ofcustomers for a high percentage of our revenue.*

We anticipate that we will sell our torrefiedwood pellets to power producers in Europe. We do not anticipate that wewill enter into agreements with a large number of producers and will have alimited number of customers. Once we begin operations, we anticipated that ourrevenues will be volatile because of the loss of sales to any one of ourcustomers would have a significant negative impact on our business. Due to ouranticipated dependence on a limited number of customers, any one of thefollowing events may cause material fluctuations or declines in our revenue andhave a material adverse effect on our financial condition and results ofoperations:

- reduction, delay or cancellation of orders from one or more of    our significant customers

7

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**Amended – see Note 14**

- selection by one or more of our significant customers of another    product;
- loss of one or more of our significant customers and our failure    to identify additional or replacement customers; and
- failure of any of our significant customers to make timely    payment for our products.

*We will be dependent on the price of torrefied woodpellets.*

Our business plan is based on certain assumptionsregarding the price of torrefied wood pellets. The price of torrefied woodpellets is dependent on many factors, including the cost for similar productssuch as coal.  If our assumptions are inaccurate and we cannot sell ourtorrefied wood pellets for more than the cost to produce them, our businesswill fail and you may lose your entire investment. 

*Economic conditions may adversely affect our business.*

Adverse worldwide economic conditions may have adverseimplications on our business. For example, our potential customers' ability toborrow money from their existing lenders or to obtain credit from other sourcesto fund operations may impair their ability to purchase our torrefied woodpellets, which would result in decreased in sales.

***Risks Relating to Our Common Stock***

*If we issue additional shares in the future, it willresult in the dilution of our existing shareholders.*

Our articles of incorporation authorizethe issuance of an unlimited amount of shares of common stock with no parvalue. Our board of directors may choose to issue some or all of such shares toacquire one or more products and to fund our overhead and general operatingrequirements. The issuance of any such shares will reduce the book value pershare and may contribute to a reduction in the market price of the outstandingshares of our common stock. If we issue any such additional shares, suchissuance will reduce the proportionate ownership and voting power of allcurrent shareholders. Further, such issuance may result in a change of controlof our corporation. 

We are currently prohibited from issuing any shares due to a cease trade order issued by the British Columbia SecuritiesCommission. Pursuant to our acquisition of 0625920 BCLtd., we agreed to issue 225,269,250 of our commonshares, of which none of been issued. Once this cease trade order has beenrevoked, we anticipate issuing these shares. The issuance of these shares willcause our book value per share to decrease, which may contribute to a reductionin the market price of the outstanding shares of our common stock. 

8

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**Amended – see Note 14**

*Trading of our stock is restricted by the SecuritiesExchange Commission's penny stock regulations, which may limit a stockholder'sability to buy and sell our common stock.*

The Securities and Exchange Commission has adoptedregulations which generally define "penny stock" to be any equitysecurity that has a market price (as defined) less than $5.00 per share or anexercise price of less than $5.00 per share, subject to certain exceptions. Oursecurities are covered by the penny stock rules, which impose additional salespractice requirements on broker-dealers who sell to persons other thanestablished customers and "accredited investors". The term"accredited investor" refers generally to institutions with assets inexcess of $5,000,000 or individuals with a net worth in excess of $1,000,000 orannual income exceeding $200,000 or $300,000 jointly with their spouse. Thepenny stock rules require a broker-dealer, prior to a transaction in a pennystock not otherwise exempt from the rules, to deliver a standardized riskdisclosure document in a form prepared by the Securities and ExchangeCommission, which provides information about penny stocks and the nature andlevel of risks in the penny stock market. The broker-dealer also must providethe customer with current bid and offer quotations for the penny stock, thecompensation of the broker-dealer and its salesperson in the transaction andmonthly account statements showing the market value of each penny stock held inthe customer's account. The bid and offer quotations, and the broker-dealer andsalesperson compensation information, must be given to the customer orally orin writing prior to effecting the transaction and must be given to the customerin writing before or with the customer's confirmation. In addition, the pennystock rules require that prior to a transaction in a penny stock not otherwiseexempt from these rules, the broker-dealer must make a special writtendetermination that the penny stock is a suitable investment for the purchaserand receive the purchaser's written agreement to the transaction. Thesedisclosure requirements may have the effect of reducing the level of tradingactivity in the secondary market for the stock that is subject to these pennystock rules. Consequently, these penny stock rules may affect the ability ofbroker-dealers to trade our securities. We believe that the penny stock rulesdiscourage investor interest in and limit the marketability of our commonstock.

*FINRA sales practice requirementsmay also limit a stockholder's ability to buy and sell our stock.*

In addition to the "penny stock" rules describedabove, the Financial Industry Regulatory Authority (known as "FINRA")has adopted rules that require that in recommending an investment to acustomer, a broker-dealer must have reasonable grounds for believing that theinvestment is suitable for that customer. Prior to recommending speculative lowpriced securities to their non-institutional customers, broker-dealers mustmake reasonable efforts to obtain information about the customer's financialstatus, tax status, investment objectives and other information. Underinterpretations of these rules, FINRA believes that there is a high probabilitythat speculative low priced securities will not be suitable for at least somecustomers. FINRA requirements make it more difficult for broker-dealers torecommend that their customers buy our common stock, which may limit yourability to buy and sell our stock and have an adverse effect on the market forour shares.

*Our common stock is illiquid and the price of our commonstock may be negatively impacted by factors which are unrelated to ouroperations.*

Although our common stock is currently listed forquotation on the Pink Sheets, trading through the Pink Sheets is frequentlythin and highly volatile. There is no assurance that a sufficient market willdevelop in our stock, in which case it could be difficult for shareholders tosell their stock. The market price of our common stock could fluctuatesubstantially due to a variety of factors, including market perception of ourability to achieve our planned growth, quarterly operating results of ourcompetitors, trading volume in our common stock, changes in general conditionsin the economy and the financial markets or other developments affecting ourcompetitors or us. In addition, the stock market is subject to extreme priceand volume fluctuations. This volatility has had a significant effect on themarket price of securities issued by many companies for reasons unrelated totheir operating performance and could have the same effect on our common stock.

*We do not intend to pay dividends on any investment inthe shares of stock of our company.*

We have never paid any cash dividends and do not currentlyintend to pay any dividends for the foreseeable future. Because we do notintend to declare dividends, any gain on an investment in our company will needto come through an increase in the stock's price. This may never happen andinvestors may lose all of their investment in our company.

9

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**Amended – see Note 14**

**ITEM 1B.UNRESOLVED STAFF COMMENTS**

Not Applicable

**ITEM 2.PROPERTIES.**

We do not own any properties. We have anoffice at 40218 Wellsline Road in Abbotsford BC that is provided free of chargeby one of our directors. We anticipate that this office will be suitable forour operations for the foreseeable future. Once our plants are operational, weanticipate we will require a larger office.

As of December 13, 2010, we haveconsidered various sites for our plants but have not signed any definitiveagreements. 

Our registered and records office islocated at 800-885 West Georgia Street, Vancouver, BC Canada V6C 3H1.

**ITEM 3. LEGALPROCEEDINGS.**

We are involved in lawsuits involvingprior management and individuals associated with them. 

On April 21, 2009, Calvin Kantonen fileda statement of claim with the Supreme Court of British Columbia, VancouverRegistry No. S092943 alleging that the defendants: our company and our transferagent, Computershare Trust Company of Canada, have improperly refused to removethe legend on 1,500,000 of our common shares held by Mr. Kantonen. On May 15,2009, the defendants filed a statement of defence whereby we denied theallegations of Mr. Kantonen and alleged that the shares were not validlyissued. No further proceedings have been undertaken in this lawsuit. TheCompany has been advised Mr. Kantonen is now deceased, however, the Company willcontinue its efforts to have the shares cancelled.  This action should not have a material adverse effect on our financialcondition, results of operations, or cash flows.

On July 19, 2007, we filed a petitionwith the Supreme Court of British Columbia, Vancouver Registry No. S107252alleging that 34,678,993 common shares held by the following parties: AIInternational Holdings, Joga Bassi, Canaccord Capital Corp ITF (Steve GasperControl Stock), Jim Carroll, Brian Dean, Steven Frye, Grant Galloway, SteveGaspar, Chris Gaspar, Christopher Gaspar, Brian Holden, Calvin Kantonen, GeorgeMatin, Peter Matousak, Novak Capital, Penson Financial Services Canada Inc ITF6/13/2006 Stephen Gaspar A/C 15ER95B, Sukhjit Purewal, Deanna Sherban, DebbySkipper, Clay Smith, Nick Smith, Viligant Trader Inc., Wide OpenTechnologies should be cancelled because we did not receive adequateconsideration for the issuance of these shares.  No further proceedingshave been undertaken in this lawsuit. 

On August 2, 2007, Steve Gaspar filed astatement of claim with the Supreme Court of British Columbia, VancouverRegistry No. S075257, alleging that the defendants: our company and our currentpresident Jim Carroll, issued a press release on July 27, 2007 which containedfalse and defamatory statements concerning Mr. Gaspar. On June 5, 2008, wefiled a statement of defence denying the claims in the statement of claim andalleging that the statements were in substance true and made without malice andthat Mr. Gaspar has not suffered any damages as a result of the press release.A default judgment was obtained on December 11, 2007 but was set aside byconsent on June 5, 2008 when we filed our statement of defence.

On June 25, 2007, Steve Gaspar, StephenGaspar, Christopher Gaspar, and Jonathan Gaspar (collectively,the “Gaspars”) filed a statement of claim with the SupremeCourt of British Columbia, Vancouver Registry No. S074362, alleging thatthe defendants: our company, our current president Jim Carroll, our currentdirector Len Klassen, and our current director Slawomir Kownacki, fordamages for breach of contract, inducing breach of contract and wrongfulinterference with economic relations of the Gaspars, and requesting followingorders:

- that the defendants purchase the shares of the Gaspars at fair value;
- that the Gaspars are not liable for any profits that accrued to them as a result of any employment contracts;
- for specific performance that we deliver 65,735,211 free trading shares;

10

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**Amended – see Note 14**

- a declaration that Steve Gaspar is entitled to exercise an option to purchase 12,000,000 of our common shares at a price of $0.01 per share; and
- a declaration that Christopher Gaspar is entitled to exercise an option to purchase 5,205,000 of our common shares at a price of $0.01 per share.

On July 23, 2007, we filed a statement ofdefence denying the allegations and alleging that none of the Gaspars are owedany money or shares. On December 4, 2009, a notice of motion was filedregarding the production of documents.  No further proceedings have beenundertaken in this lawsuit. We anticipate that even ifthe plaintiffs are successful, it should not have a material adverse effect onour financial condition, results of operations, or cash flows.

On September 11, 2007, the CanadianImperial Bank of Commerce (“CIBC”) filed a statement of claimagainst the defendants: Virtual Media Holdings Inc., Steve Gaspar, and DarleneGaspar alleging that the defendants owed CIBC $19,982.12 as of September 10,2007 with a daily interest rate of $5.22. On November 21, 2007, we filed astatement of defence denying each and every allegation. We anticipate that this lawsuit should not have a material adverse effect on our financialcondition, results of operations, or cash flows.

We have been in discussions with SteveGaspar regarding settling all outstanding actions with the Gaspars, includingfinal settlement of the lawsuit with CIBC. While we believe we do not have anyliability to any of the Gaspars, we believe it is in our best interest tosettle all outstanding matters with the Gaspars. If we cannot settle alloutstanding claims, we will vigorously defend all claims. 

On November 12, 2007, Brian Holden fileda statement of claim in Clark Country Nevada, Case No A550988, alleging thatthe defendant: our company, breached two employment contracts resulting inunjust enrichment and breach of implied covenant of good faith and fairdealing. Mr. Holden alleges that pursuant to two employment agreements we areobligated to issue him 2,400,000 of our common shares and options to purchase12,000,000 of our common shares at a price of $0.05 per common share. OnNovember 30, 2007, we filed a statement of defence denying all of Mr.Holden’s claims and a containing a counterclaiming alleging that Mr.Holden was improperly issued certain common shares. On August 10, 2010 weentered into a settlement agreement with Mr. Holden whereby Mr. Holden hasdeposited 2,770,000 of our common shares with our transfer agent, which will becancelled upon the cease trade order issued by the British Columbia SecuritiesCommission against our company being revoked, which settled all outstandingclaims with Mr. Holden. 

**ITEM 4.(REMOVED AND RESERVED)**

**PART II**

**ITEM 5. MARKETFOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES.**

***Markets***

Our shares are not traded on anyexchanges. Our shares are quoted on the OTC: Pink Sheets operated by theFinancial Industry Regulatory Authority (FINRA) under the symbol BMSPF.

Our common shares have been cease tradedby the British Columbia Securities Commission since November 19, 2009 forfailure to file our annual financial statements for the year ended June 30,2009. As a result, trading in our common shares is prohibited in BritishColumbia.

Companies trading on the OTC BulletinBoard generally must be reporting issuers under Section 12 of the SecuritiesExchange Act of 1934, as amended, and must be current in their reports underSection 13, in order to maintain price quotation privileges on the OTC BulletinBoard.  More specifically, FINRA has enacted Rule 6530, which determineseligibility of issuers quoted on the OTC Bulletin Board by requiring an issuerto be current in its filings with the Securities and Exchange Commission,subject to a 30 day grace period. While we have filed previous disclosuredocuments, we have not filed audited financial statements for fiscal yearsafter June 30, 2005. As a result, we are non-compliant with FINRA Rule 6530 andthe quotation of our securities on the OTC Bulletin Board is prohibited. Untilwe are compliant with FINRA Rule 6530, the market liquidity for our securitieswill be severely adversely affected by limiting the ability of broker-dealersto sell our securities and the ability of stockholders to sell their securitiesin the secondary market. Our securities will be ineligible for quotation on theOTC Bulletin Board until one year after we have filed all outstandingdisclosure documents or obtain an exemption from that requirement. 

11

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**Amended – see Note 14**

***Transfer Agent***

Our shares of common stock are issued inregistered form. The transfer agent for our common stock is Computershare TrustCompany of Canada.

***Holders***

As of December 13, 2010 we had approximately597 shareholders of record of our common shares, as of such date 235,099,866 ofour common shares were issued and outstanding.

***Share Capital***

*Common Stock*

Our authorized capital stock consists ofunlimited shares of no par value common stock. The holders of our common stock:

- Have equal rateable rights to dividends from funds legally available if and when as and if declared by our board of directors;
- Are entitled to share rateably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;
- Do not have pre-emptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and
- Are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.

***Cash dividends***

As of the date of this annual report, wehave not paid any cash dividends to stockholders. The declaration of any futurecash dividend will be at the discretion of our board of directors and willdepend upon earnings, if any, our capital requirements and financial position,our general economic conditions, and other pertinent conditions. It is ourpresent intention not to pay any cash dividends in the foreseeable future, butrather to reinvest earnings, if any, in our business operations.

***Recent Sales of UnregisteredSecurities; Use of Proceeds from Registered Securities***

|   | Subsequent to the date of the cease trade order theCompany entered into the following transactions, approved by the directors,requiring the issuance of stock upon the removal of the cease trade order.These transactions have not been recorded in the financial statements as thetransactions have not been completed: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a. | On February 24, 2010 theboard of directors, subject to the revocation of the cease trade order,approved the issuance of 81,864,686 common stock in settlement of $125,253 duerelated parties.  The amounts due to directors and officers arise from$15,253 advanced to or expended on behalf of the Company by directors and officersand $110,000 of unpaid management compensation.  The price per share ofthe settlement is subject to the approval of the British Columbia SecuritiesCommission and will be amended upon revocation of the cease trade order toreflect the trading price in effect after the cease trade is lifted. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | On March 1, 2010 theboard of directors, subject to the removal of the cease trade order, authorizedthe issuance of capital stock to raise a total of $100,000.  Pursuant tothat approval, between March 1, 2010 and June 30, 2010, the Company receivedthe benefit of $23,005 expended by Mr. Jim Carroll, the Company’sPresident/CEO/CFO, on behalf of the Company.  The funds expended wereadvanced to Mr. Carroll by family members and business associates of Mr. Carroll(the “Investors”) for the purpose of investing in stock of theCompany.  With respect to this transaction the Company acknowledges: |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

12

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**Amended – see Note 14**

|   |   | i.      | No share subscriptions were received fromMr. Carroll.  There was a verbal understanding between Mr. Carroll and theCompany that stock would be issued; |
|--------|--------|----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | ii.     | There was a benefit to the Company in theamount of the $23,005 expended on its behalf; and |
|--------|--------|-----------------------------|--------------------------------------------------------------------------------------------|

|   |   | iii.    | The expenditures have been recorded asoperating expenses of the Company for the year ended June 30 2010 and have beencredited to due to related parties. |
|--------|--------|------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Subsequent to June 30, 2010: |
|--------|------------------------------|

|   |   | i.      | The board of directors have agreed to adviseInvestors that they will have the opportunity to subscribe for Company stockupon the revocation of the cease trade order, at a share price to be determinedsubsequent to the revocation, and |
|--------|--------|----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | ii.     | Mr. Carroll has expended a further $67,000on behalf of the Company.  The funds expended were advanced to Mr. Carrollby family member and business associates of directors of the Company. |
|--------|--------|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

On June 28, 2009, we issued 33,578,512common shares to Jim Carroll at a fair market value of $0.0045 per common shareas settlement of his outstanding debt of $151,103 for outstanding salary andexpenses he has paid on behalf of our company. We issued the shares pursuant tosection 2.14 of Nation Instrument 45-106 *Prospectus and RegistrationExemptions*and pursuant to Regulation S promulgated under the SecuritiesAct of 1933 as Jim Carroll was not a US person. 

On June 28, 2009,we issued 1,169,767 common shares to George Pappas at a fair market value of$0.0045 per common share as settlement of his outstanding debt of $5,355 foroutstanding salary and expenses he has paid on behalf of our company. We issuedthe shares pursuant to section 2.14 of Nation Instrument 45-106 *Prospectusand Registration Exemptions*and pursuant to section 4(2) of the SecuritiesAct of 1933.

On May 23, 2009,we issued 3,000,000 common shares to Shaun Kohlmeier at a fair market value of$0.009 per common share as settlement of his outstanding debt of $27,000 forcompensation for assisting with the development of our company’s websiteand creating additional exposure for our company on the internet. We issued theshares pursuant to section 2.14 of Nation Instrument 45-106 *Prospectus andRegistration Exemptions*and pursuant section 4(2) of the Securities Act of1933. 

On November 20,2008, we issued 800,000 common shares to Len Klassen at a fair market value of$0.0041 per common share as settlement of his outstanding debt of $3,280 foroutstanding salary and expenses he has paid on behalf of our company. We issuedthe shares pursuant to section 2.14 of Nation Instrument 45-106 *Prospectusand Registration Exemptions*and pursuant to section 4(2) of the SecuritiesAct of 1933.

On November 20,2008, we issued 666,667 common shares to George Pappas at a fair market valueof $0.0041 per common share as settlement of his outstanding debt of $2,733 foroutstanding salary and expenses he has paid on behalf of our company. We issuedthe shares pursuant to section 2.14 of Nation Instrument 45-106 *Prospectusand Registration Exemptions*and pursuant to section 4(2) of the SecuritiesAct of 1933.

***Securities authorized for issuanceunder equity compensation plans.***

We do not have any stock compensation plans.

***Issuer Purchases of Equity Securities***

During the fiscal year ended June 30,2010, we did not purchase any of our equity securities. 

**ITEM 6.SELECTED FINANCIAL DATA.**

13

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**Amended – see Note 14**

Not applicable. 

**ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS.**

***Results of Operations***

*Revenue*

During the fiscal years ended June 30,2010 and June 30, 2009, we did not generate any revenues. Since 2007, wediscontinued our internet media sales operations and commenced focusing on ourcurrent business plan. 

*Expenses*

Our expenses for the fiscal year endedJune 30, 2010 were $257,332 compared to $229,637 for the fiscal year ended June30, 2009 or an increase of $27,695. This increase was primarily attributable toan increase in our professional fees of a recovery of $15,252 in the fiscalyear ended June 30, 2009 to an expense of $28,032 in the fiscal year ended June30, 2010 due to audit fees of $20,000 and accounting fees of $5,000. Ourexpenses relating to shareholder communications decreased from an expense of$27,000 in the fiscal year ended June 30, 2009 to $nil in the fiscal year endedJune 30, 2010. The change in shareholder communications was primarilyattributable to us discontinuing the services of our investor relationsconsultant. Our management fees increased from $183,049 in the fiscal yearended June 30, 2009 to $208,475 in the fiscal year ended June 30, 2009. Thischange in management fees was primarily attributable to an increase in salariesto our management due to an increased workload of two of our officers. Ourtravel expenses decreased from $12,002 in the fiscal year ended June 30, 2009to $2,973 in the fiscal year ended June 30, 2009. This change in travelexpenses was primarily attributable to a decrease in travel for conferences andmeetings with potential buyers of our future products. Our office and generaladministrative fees decreased from $13,297 in the fiscal year ended June 30,2009 to $8,184 in the fiscal year ended June 30, 2010. The change in office andgeneral administrative expenses was primarily attributable to our efforts toreduce our general and administrative expenses while we focus on developing ourcurrent business plan. 

***Plan of Operation***

*Financing*

Discussions have been held withconventional lenders and private funding sources regarding financing for ourprojects. There are no assurances that we will be successful in obtaining thenecessary capital. If we are unsuccessful in obtaining additional capital wemay have to cut back or suspend activities until such time that we can raisecapital by way of loans, private placements or public offerings. Currentmanagement has been lending us funds to pay our expenses on a monthly basis. 

There can be no assurance that additionalfinancing will be available to us when needed or, if available, that it can beobtained on commercially reasonable terms. If we are not able to obtainadditional financing on a timely basis, if and when it is needed, we will beforced to delay or scale down some or all of our operations or perhaps evencease the operation of our business. 

Since inception we have funded ouroperations primarily through equity and debt financings and we expect that wewill continue to fund our operations through equity and debt financing. If thecease trade order issued by the British Columbia Securities Commission isrevoked and we raise additional financing by issuing equity securities, ourexisting stockholders’ ownership will be diluted. Obtaining loans,assuming any loans would be available, will increase our liabilities and futurecash commitments.

*Cash Requirements*

Our plan of operation over the next12 months is to enter into a long term sales contract for the purchase of ourtorrefied wood pellets. Once we have secured a buyer, we will begin to work onsecuring the supply for our plant and to eventually begin construction of ourtorrefied wood pellet plant. Our cash requirements are dependent on whether ornot we begin construction of our torrefied wood pellet plant. The constructionprocess will require a substantial amount of capital, which will we have toraise by way of loans, private placements or public offerings. 

14

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**Amended – see Note 14**

Below, we have provided an estimate of our operatingexpenses and working capital requirements for the next 12 months providedwe do not begin construction of our torrefied wood pellet plant. Our capitalrequirements, if we begin construction, will be dependant on the final sitelocation and initial production of the plant. 

| **Expense**                              |   | **Amount** |   |
|------------------------------------------|--------|------------|--------|
| Management Fees                          |   | $240,000   |   |
| Professional Fees (accounting and legal) |   | $100,000   |   |
| Travel                                   |   | $50,000    |   |
| Total:                                   |   | $390,000   |   |

Even without beginning construction of our torrefied woodpellet plant, which we do not anticipate will occur within the next 12 months,we anticipate that we will require additional funds of $390,000. As of June 30,2010, we have a working capital deficit of $345,782. We have a shortfall of$735,782 between our working capital deficit and anticipated cash requirementsfor the next 12 months. If we begin construction of our torrefied wood pelletplant, this shortfall will greatly increase. There can be no assurance thatadditional financing will be available to us when needed or, if available, thatit can be obtained on commercially reasonable terms. If we are not able toobtain the additional financing on a timely basis, if and when it is needed, wewill not be able to commence our business plan. 

***Liquidity and Capital Resources***

We have suffered recurring losses since inception. Ourability to meet our financial liabilities and commitments is primarilydependent upon the continued financial support of our directors andshareholders, the continued issuance of equity to new or existing shareholders,and our ability to achieve and maintain profitable operations. 

*Working Capital*

|                          |   | **As at**         |   |   | **As at**         |   |
|-------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                          |   | **June 30, 2010** |   |   | **June 30, 2009** |   |
|                          |   |              |   |   |              |   |
| Current Assets                | $      | 63,000            |   | $      | 63,124            |   |
| Current Liabilities           |   | 408,782           |   |   | 150,930           |   |
| **Working Capital (deficit)** | **$**  | **(345,782)**     |   | **$**  | **(87,806)**      |   |

Our working capital deficit increased by $257,976 as aresult of us incurring debt to pay for our expenses instead of issuing equity.We have incurred recurring losses from inception. Our ability to meet ourfinancial obligations and commitments is primarily dependent upon continued financialsupport of our shareholders, directors and the continued issuance of equity tonew and existing shareholders. 

*Cash Flow*

|                                          |   | **12 Months Ended** |   |   | **12 Months Ended** |   |
|-----------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|
|                                          |   | **June 30, 2010**   |   |   | **June 30, 2009**   |   |
| Cash flow from (used by) operating activities | $      | (231,822            | )      |   | (56,722             | )      |
| Cash flow from (used by) investing activities |   | (894                | )      |   | nil                 |   |
| Cash flow from (used by) financing activities |   | 232,592             |   |   | 56,796              |   |
| Net increase (decrease) in cash               | $      | (124                | )      |   | 74                  |   |

Operating Activities 

Our cash used by operating activities increased by$175,100 primarily due to an increase in our expenses being paid by incurringdebt rather than through the issuance of stock.

Investing Activities

Our cash used by investing activities in the year endedJune 30, 2010 was for the acquisition of property and equipment.

15

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**Amended – see Note 14**

Cash Provided by Financing Activities 

Our cash provided by financing activities increased by$175,796 due largely to a loan from a related party used to pay our expenses. 

***Off-Balance Sheet Arrangements***

We have not entered into any transactions withunconsolidated entities whereby we have financial guarantees or othercontingent arrangements that expose us to material continuing risks, contingentliabilities or any other obligations that provide financing, liquidity, marketrisk or credit risk support to us

***Going Concern***

We have historically incurred losses and have incurred anet loss of $257,332 during the fiscal year ended June 30, 2010, andapproximately $824,768 from July 1, 2007, the date of entering into ourdevelopment stage, to June 30, 2010. Because of these historical losses, wewill require additional working capital to develop our business operations. Weintend to raise additional working capital through equity financing, bankfinancing and/or advances from related parties or stockholder loans. We arecurrently prohibited from raising funds through the sale of any securities dueto a cease trade order issued by the British Columbia Securities Commission. 

The continuation of our business is dependent uponobtaining further financing and achieving a break even or profitable level ofoperations. We will not achieve a break even or profitable level of operationsuntil the successful construction of our torrefied wood pellet plant, which wedo not anticipate will occur within the next 12 months. The issuance ofadditional equity securities by us could result in a significant dilution inthe equity interests of our current or future stockholders. Obtaining loans,assuming any loans would be available, will increase our liabilities and futurecash commitments.

There are no assurances that we will be able to either (i)achieve a level of revenues adequate to generate sufficient cash flow fromoperations; or (ii) obtain additional financing through either equity financingand/or bank financing necessary to support our working capital requirements. Tothe extent that funds generated from operations and any equity financing and/orbank financing are insufficient, we will have to raise additional workingcapital. No assurance can be given that additional financing will be available,or if available, will be on terms acceptable to us. If adequate working capitalis not available, we may not be able to begin our operations.

Our auditors have included an explanatory paragraph in theaudit report of the year ended June 30, 2010 financial statements that we havesustained losses since inception and have limited cash resources. 

These conditions raise substantial doubt about our abilityto continue as a going concern. Our financial statements do not include anyadjustments relating to the recoverability and classification of asset carryingamounts or the amount and classification of liabilities that might be necessaryshould we be unable to continue as a going concern.

***Application of Critical Accounting Policies***

*Management’s Estimates andAssumptions*

The preparation of our financialstatements in conformity with United States generally accepted accountingprinciples requires our management to make estimates and assumptions thataffect the reported amounts of assets and liabilities as of the balance sheetdate, and revenues and expenses for the period then ended.  Actualresults could differ significantly from those estimates 

*Equipment*

Equipment is stated at cost, net ofaccumulated depreciation. Depreciation is computed by using the straight-linemethod at rates based on the estimated useful lives of the various classes ofproperty, plant and equipment. Estimates of useful lives are based upon avariety of factors including durability of the asset, the amount of usage thatis expected from the asset, the rate of technological change and our businessplans for the asset. Should we change our plans with respect to the use andproductivity of the equipment, it may require a change in the useful life ofthe asset or incur a charge to reflect the difference between the carryingvalue of the asset and the proceeds expected to be realized upon theasset’s sale or abandonment. Expenditures for maintenance and repairs areexpensed as incurred and significant major improvements are capitalized anddepreciated over the estimated useful life of the asset. 

16

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**Amended – see Note 14**

*Income taxes*

We account for income taxes using theasset and liability method. Deferred tax liabilities and assets are determinedbased on temporary differences between the basis of assets and liabilities forincome tax and financial reporting purposes. The deferred tax assets andliabilities are classified according to the financial statement classificationof the assets and liabilities generating the differences. Valuation allowancesare established when necessary based upon the judgment of management to reducedeferred tax assets to the amount expected to be realized and could benecessary based upon estimates of future profitability and expenditure levelsover specific time horizons in particular tax jurisdictions. We recognize thetax benefit from an uncertain tax position when, based on technical merits, itis more likely than not the position will be sustained on examination by thetaxing authorities. 

*Fair value measurements*

Accounting standards require that fairvalue measurements be classified and disclosed in one of the followingcategories: 

Level 1 - Unadjusted quoted prices inactive markets that are accessible at the measurement date for identical,unrestricted assets or liabilities;

Level 2 – Quotedprices in markets that are not active, or inputs that are observable, eitherdirectly or indirectly, for substantially the full term of the asset orliability; and

Level 3 - Pricesor valuation techniques that require inputs that are both significant to thefair value measurement and unobservable (i.e., supported by little or no marketactivity).

Determining which category an asset orliability falls within the hierarchy requires significant judgment. We evaluateour hierarchy disclosures each quarter.

On July 1, 2009, we adopted a newlyissued accounting standard for fair value measurements of all nonfinancialassets and nonfinancial liabilities not recognized or disclosed at fair valuein the financial statements on a nonrecurring basis. This accounting standardhas not had a material impact on  our financial position, results ofoperations or liquidity. 

We use observable inputs when available.When observable inputs are not available, we use internally developed,unobservable inputs (Level 3 inputs in the fair value hierarchy of fair valueaccounting) to estimate cash flow projections used in its analysis to determinewhether its long-lived assets are impaired. 

*Foreign exchange translation*

Our functional currency is the UnitedStates (“US”) dollar, and reports its financial statements in USdollars. We translate our Canadian dollar balances to US dollars in thefollowing manner:  Assets and liabilities have been translated usingthe rate of exchange at the balance sheet date.  Our results ofoperations have been translated using average rates.  Exchangedifferences arising on translation and realized gains and losses from foreigncurrency transactions are reflected in our results from operations.

All amounts included in the accompanyingfinancial statements and footnotes are stated in U.S. dollars.

17

----

**Amended – see Note 14**

***Recent accountingpronouncements***

In December 2007, the Financial Accounting Standards Board(“FASB”) issued ASC 805-10-65 and revised the authoritativeguidance for business combinations which establishes principles andrequirements for how the acquirer in a business combination (1) recognizes andmeasures in its financial statements the identifiable assets acquired, theliabilities assumed and any non-controlling interest in the acquiree, (2)recognizes and measures the goodwill acquired in the business combination or again from a bargain purchase and (3) determines what information to disclose toenable users of the financial statements to evaluate the nature and financialeffects of the business combination. This guidance applies prospectively tobusiness combinations for which the acquisition date is on or after thebeginning of the first annual reporting period beginning on or after December15, 2008 Our adoption of this revised guidance on July 1, 2009 did not have anyimpact on its results of operations or financial condition as it did not haveany business combination activity during the year ended June 30, 2010. 

Additionally, the FASB amended the factors that should beconsidered in developing renewal or extension assumptions used to determine theuseful life of a recognized intangible asset to improve the consistency betweenthe useful life of a recognized intangible asset and the period of expectedcash flows used to measure the fair value of the asset under the currentguidance concerning business combinations and other U.S. generally acceptedaccounting principles.  This new guidance is effective for financialstatements issued for fiscal years beginning after December 15, 2008, andinterim periods within those fiscal years.  Our adoption of the newguidance on July 1, 2009 did not have a material impact on our financialposition, results of operations or cash flows. 

On July 1, 2009, we adopted FASB ASC 815- Derivatives andHedging (EITF 07-5, Determining Whether an Instrument (or embedded Feature) isIndexed to an Entity’s Own Stock.   The standard requiresembedded derivative instruments be bifurcated and assessed, along withfree-standing derivative instruments such as warrants and non-employeestock-options to determine whether they should be considered a derivativeliability and subject to re-measurement at their fair value. Warrants with suchprovisions will no longer be recorded to equity. The transition provisions ofASC 815-40-15 require cumulative effect adjustments as of July 1, 2009 toreflect the amounts that would have been recognized if derivative fair valueaccounting had been applied from the original issuance date of an equity-equity-linked financial instrument through the implementation date of therevised guidance. Our adoption of the new guidance on July 1, 2009 did not havea material impact on our financial position, results of operations or cashflows.

In May 2008, the FASB issued new authoritative guidancewhich establishes general standards of accounting and disclosure of events thatoccur after the balance sheet date but before the financial statements areissued.  ASC 855 guidance sets forth (1) the period after the balancesheet date during which management should evaluate events or transactions thatmay occur for potential recognition or disclosure in the financial statements,(2) the circumstances under which an entity should recognize events ortransactions occurring after the balance sheet date and (3) the disclosures anentity should make about such events or transactions.  Our adoption of thenew guidance on July 1, 2009 did not have a material impact on our financialposition, results of operations or cash flows.

In June 2009, the FASB issued the FASB AccountingStandards Codification (“Codification”). The Codification becamethe single source for all authoritative generally accepted accountingprinciples (“GAAP”) recognized by the FASB to be applied forfinancial statements issued for periods ending after September 15, 2009. TheCodification does not change GAAP and did not have an effect on our financialposition, results of operations or cash flows. We do not expect the adoption ofthe new guidance will have a material impact on our financial position, resultsof operations or cash flows.

In August 2009, FASB issued ASU No. 2009-5 “FairValue of Measurements and Disclosure (Topic 820) – Measuring Liabilitiesat Fair Value”.  The new guidance, which is now part of ASC 820,provides clarification that in certain circumstances in which a quoted price inan active market for the identical liability is not available, a company isrequired to measure fair value using one or more of the following valuationtechniques:  the quoted price of the identical liability when traded as anasset, the quoted prices for similar liabilities when traded as assets, oranother valuation technique that is consistent with the principles of fairvalue measurements.  The new guidance clarifies that a company is notrequired to include an adjustment for restrictions that prevent the transfer ofthe liability and if an adjustment is applied to the quoted price used in avaluation technique, the result is a Level 2 or 3 fair value measurement. The new guidance is effective for interim and annual periods beginning afterAugust 27, 2009.  The adoption of this standard is being reviewed by usand is not expected to materially impact our financial statements.

18

----

**Amended – see Note 14**

In September 2009, FASB issued ASU No. 2009-09,“Accounting for Investments – Equity Method and Joint Ventures andAccounting for Equity-Based Payments to Non-Employees.  This update is anamendment to ASC 323-10-S99 and 505-50-S99.  The amendment to ASC323-10-S99 provides guidance on the accounting by an investor for stock-basedcompensation based on the investor’s stock granted to employees of anequity method investee.  Investors that are SEC registrants shouldclassify any income or expense resulting from application of this guidance inthe same income statement caption as the equity in earnings (or losses) of theinvestee. The amendment to ASC 505-50-S99 clarifies the accounting by thegrantee or grantor in transactions involving equity instruments granted toother than employees if the accounting does not reflect the same commitmentdate or similar values.  The adoption of this standard did not have amaterial effect on our financial statements

In January 2010, the FASB issued ASU, on codification,fair value measurement and disclosures (Topic 820-10).  The amendmentrequires new disclosures related to transfers in and out of Levels 1 and 2 andactivity in Level 3 fair value measurements.  A reporting entity isrequired to disclose separately the amounts of significant transfers in and outof Level 1 and Level 2 fair value measurements and describe the reasons for thetransfers.  Additionally, in the reconciliation for fair valuemeasurements in Level 3, a reporting entity must present separately informationabout purchases, sales, issuances and settlements (on a gross basis rather thana net number).  The new disclosures are effective for interim and annualreporting periods beginning after December 15, 2009, except for the disclosuresabout purchases, sales, issuances and settlements in the roll forward ofactivity in Level 3 fair value measurements.  Those disclosures areeffective for fiscal years beginning after December 15, 2010 and for interimperiods within those fiscal years.  We do not anticipate the adoption ofthis amendment will have a material effect on our financial position, resultsof operations or cash flows. 

In April 2010, the FASB issued accounting guidance for themilestone method of revenue recognition. This guidance allows entities to makea policy election to use the milestone method of revenue recognition andprovides guidance on defining a milestone and the criteria that should be metfor applying the milestone method. The scope of this guidance is limited totransactions involving milestones relating to research and developmentdeliverables. The guidance includes enhanced disclosure requirements about eacharrangement, individual milestones and related contingent consideration,information about substantive milestones and factors considered in thedetermination. This guidance is effective prospectively to milestones achievedin fiscal years, and interim periods within those years, beginning after June15, 2010. Early application and retrospective application are permitted. We arecurrently evaluating the impact, if any, that this new guidance will have onthe determination or reporting of its financial results.

The FASB issued new guidance relating to revenuerecognition for contractual arrangements with multiple revenue-generatingactivities. The ASC Topic for revenue recognition includes identification of aunit of accounting and how arrangement consideration should be allocated toseparate the units of accounting, when applicable. The new guidance, includingexpanded disclosures, is applied on a prospective basis beginning on or afterJune 15, 2010.

**ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

Not applicable

19

----

**Amended – see Note 14**

**ITEM 8. FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA.**

***[Insert audited financialstatements]***

20

----

**BIOMASS SECURE POWER INC.****(formerly VirtualMedia Holdings Inc.****(A developmentStage Company)**

**JUNE 30, 2010 AND 2009****(Amended – See Note 14)**

----

| **REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** |
|------------------------------------------------------------------|

To  the Shareholders,  Biomass  Secure Power Inc. (formerly Virtual Media Holdings Inc.)  (A  development stage company):

We have  audited the accompanying balance sheets of Biomass Secure Power Inc. (formerly  Virtual Media Holdings Inc.) (A development stage company), a British Columbia  corporation, as of June 30, 2010 and 2009 and the related statements of  operations, cash flows, and stockholders' equity (deficit) for the years ended  June 30, 2010, 2009 and 2008 and from July 1, 2007, the date of entering into  the development stage, to June 30, 2010. These financial statements are the responsibility  of the Company's management. Our responsibility is to express an opinion on  these financial statements based on our audits.

We conducted  our audits in accordance with the standards of the Public Company Accounting  Oversight Board (United States). Those standards require that we plan and  perform the audits to obtain reasonable assurance about whether the financial  statements are free of material misstatement. An audit includes examining, on a  test basis, evidence supporting the amounts and disclosures in the financial  statements. An audit also includes assessing the accounting principles used and  significant estimates made by management, as well as evaluating the overall  financial statement presentation. We believe that our audits provide a  reasonable basis for our opinion.

In our  opinion, the financial statements referred to above present fairly, in all  material respects, the financial position of Biomass Secure Power Inc.  (formerly Virtual Media Holdings Inc.) (A development stage company) as of June  30, 2010 and 2009, and the results of its operations and its cash flows for the  years ended June 30, 2010, 2009 and 2008 and from July 1, 2007, the date of  entering into the development stage, to June 30, 2010 in conformity with  accounting principles generally accepted in the United States of America.

As discussed  in Note 2, the Company has sustained losses since inception and has limited  cash resources. These factors raise substantial doubt about the Company's  ability to continue as a going concern. Realization of a major portion of the  assets is dependent upon the Company's ability to meet its future financing  requirements and the success of future operations. Management's plans regarding  those matters are described in Note 2. The financial statements do not include  any adjustments that might result from the outcome of this uncertainty.

*signed***“BDO  CANADA LLP”**

Chartered  Accountants  Langley,  Canada  December 9,  2010, (except for Notes 5,7,9,13 and 14, as to which the date is April 1, 2011)

*The accompanying notes are an integral part of these  financial statements*

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  BALANCE SHEETS  AS AT JUNE 30**

|                                                                                                             |   | **2010**       |   |   | 2009       |   |
|------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|------------|--------|
|                                                                                                             |   |           |   |   |       |   |
| **ASSETS**                                                                                                       |   |           |   |   |       |   |
|                                                                                                             |   |           |   |   |       |   |
| **Current**                                                                                                      |   |           |   |   |       |   |
|        Cash                                                                             | **$**  | **-**          |   | $      | 124        |   |
|        Prepaid expenses and deposit      (Note 8)                                       |   | **63,000**     |   |   | 63,000     |   |
|                                                                                                             |   | **63,000**     |   |   | 63,124     |   |
| **Property and equipment**(Note 6)                                                                               |   | **644**        |   |   | -          |   |
|                                                                                                             | **$**  | **63,644**     |   | $      | 63,124     |   |
|                                                                                                             |   |           |   |   |       |   |
| **LIABILITIES**                                                                                                  |   |           |   |   |       |   |
|                                                                                                             |   |           |   |   |       |   |
| **Current**                                                                                                      |   |           |   |   |       |   |
|       Cheques in excess of cash on      hand                                            | **$**  | **26**         |   | $      | -          |   |
|       Accounts payable and accrued      liabilities                                     |   | **110,955**    |   |   | 85,695     |   |
|       Due to related parties (Notes 7      and 9)                                       |   | **297,801**    |   |   | 65,235     |   |
|                                                                                                             |   | **408,782**    |   |   | 150,930    |   |
|                                                                                                             |   |           |   |   |       |   |
| **STOCKHOLDERS’ EQUITY**                                                                                    |   |           |   |   |       |   |
|                                                                                                             |   |           |   |   |       |   |
| **Common stock      (**Note 8)                                                                                   |   |           |   |   |       |   |
|       Authorized                                                                        |   |           |   |   |       |   |
|             Unlimited number of no par value common stock      |   |           |   |   |       |   |
|       Issued                                                                            |   |           |   |   |       |   |
|             235,099,866 common stock (2009 – 235,099,866) |   | **5,680,217**  |   |   | 5,680,217  |   |
| **Contributed      surplus**                                                                                     |   | **53,221**     |   |   | 53,221     |   |
| **Accumulated      deficit from prior operations**                                                               |   | **(5,253,808** | **)**  |   | (5,253,808 | )      |
| **Accumulated      deficit during development stage**                                                            |   | **(824,768**   | **)**  |   | (567,436   | )      |
|                                                                                                             |   | **(345,138**   | **)**  |   | (87,806    | )      |
|                                                                                                             | **$**  | **63,644**     |   | $      | 63,124     |   |

Commitments  (Notes 9 and 12)

Approved  by the Board of Directors:

| “*James Carroll*” |   | “*George Pappas*” |
|-----------------------------|--------|-----------------------------|
| James Carroll, Director     |   | George Pappas, Director     |

*The accompanying notes are an integral part of these  financial statements*

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  STATEMENTS OF OPERATIONS  FOR THE YEARS ENDED JUNE 30**

|                                                                                                                                                         | **2010** |             |   | 2009   |        |   | 2008   |          |   | From July 1, 2007, the date of      entering into development stage, to June 30, 2010 |     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|------------------|--------|--------|-------------|--------|--------|---------------|--------|---------------------------------------------------------------------------------------|----------|
|                                                                                                                                                         |     |             |   |   |        |   |   |          |   |                                                                                  |     |   |
| **Expenses**                                                                                                                                                 |     |             |   |   |        |   |   |          |   |                                                                                  |     |   |
| Amortization                                                                                                                                                 | **$**    | **250**          |   | $      | -           |   | $      | -             |   |                                                                                  | 250      |   |
|        Management, director and consulting fees                  (Notes 8 and 10) |     | **208,475**      |   |   | 183,049     |   |   | 253,289  |   |                                                                                  | 644,813  |   |
|       Office and general administrative (Note 8)                                                                                    |     | **8,184**        |   |   | 13,297      |   |   | 20,837        |   |                                                                                  | 42,318   |   |
|       Professional fees (recovery)                                                                                                  |     | **28,032**       |   |   | (15,252     | )      |   | 45,000        |   |                                                                                  | 57,780   |   |
|       Shareholder communication (Note 8)                                                                                            |     | **-**            |   |   | 27,000      |   |   | -             |   |                                                                                  | 27,000   |   |
|       Transfer agent and filing fees (Note 8)                                                                                       |     | **9,418**        |   |   | 9,541       |   |   | 16,393        |   |                                                                                  | 35,352   |   |
|       Travel (Note 8)                                                                                                               |     | **2,973**        |   |   | 12,002      |   |   | 2,280         |   |                                                                                  | 17,255   |   |
| **Net loss for the      Year**                                                                                                                               | **$**    | **(257,332**     | **)**  | $      | (229,637    | )      | $      | (337,799      | )      | $                                                                                     | (824,768 | ) |
|                                                                                                                                                         |     |             |   |   |        |   |   |          |   |                                                                                  |     |   |
| **Basic and Diluted      Loss Per Share**                                                                                                                    | **$**    | **(0.001 ** | **)**  | $      | (0.001      | )      | $      | (0.003        | )      |                                                                                  |     |   |
|                                                                                                                                                         |     |             |   |   |        |   |   |          |   |                                                                                  |     |   |
| **Weighted Average Number of Stock      Outstanding**                                                                                                        |     | **235,099,866**  |   |   | 235,099,866 |   |   | 115,085,534   |   |                                                                                  |     |   |
|                                                                                                                                                         |     |             |   |   |        |   |   |          |   |                                                                                  |     |   |

*The accompanying notes are an integral part of these  financial statements*

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)  FOR THE YEARS ENDED JUNE 30**

|                                                                                                                                                               |   | **Share capital**                  |   | **Contributed surplus** |                      | **Deficit from prior operations** |   | **Deficit during develop stage** |   | **Total** |           |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|-------------------------|---------------------------|-----------------------------------|--------|----------------------------------|--------|-----------|----------------|
|                                                                                                                                                               |   | **Number**                         |   | **Amount**              |                      |                              |   |                             |   |
| **Balance,      June 30, 2007**                                                                                                                                    |   | **96,502,717**                     |   | $                       | **5,090,086**             |                              | $      | **53,221**                       |   | $         | **(5,253,808** | **)** | $ | - |   | $ | **(110,501** | **)** |
| Capital stock issued for debt on August 29, 2007 at      $0.0075 per share                                                                                         |   | 1,487,881                          |   |                    | 11,159                    |                              |   | -                                |   |      | -              |   |   | - |   |   | 11,159 |   |
| Capital stock issued for expenses incurred on behalf      of the Company on August 29, 2007 at $0.0075 per share                                                   |   |      1,356,444 |   |                    | 10,173                    |                              |   | -                                |   |      | -              |   |   | - |   |   | 10,173 |   |
| Capital stock returned to treasury on October 23,      2007                                                                                                        |   |     (3,000,000      | )      |                    | -                         |                              |   | -                                |   |      | -              |   |   | - |   |   | - |   |
| Capital stock issued for expenses incurred on behalf      of the Company on February 5, 2008 at $0.0031 per share                                                  |   |      5,780,463 |   |                    | 17,919                    |                              |   | -                                |   |      | -              |   |   | - |   |   | 17,919 |   |
| Capital stock issued for debt on February 5, 2008 at      $0.0031 per share                                                                                        |   |    20,000,000            |   |                    | 62,000                    |                              |   | -                                |   |      | -              |   |   | - |   |   | 62,000 |   |
| Capital stock issued for management fees on February      5, 2008 at $0.0031 per share                                                                             |   |    20,000,000            |   |                    | 62,000                    |                              |   | -                                |   |      | -              |   |   | - |   |   | 62,000 |   |
| Capital stock issued for directors fees on June 30,      2008 at $0.0045 per share                                                                                 |   |      3,750,000 |   |                    | 16,875                    |                              |   | -                                |   |      | -              |   |   | - |   |   | 16,875 |   |
| Capital stock issued for management fees on June 30,      2008 at $0.0045 per share                                                                                |   |    30,000,000            |   |                    | 135,000                   |                              |   | -                                |   |      | -              |   |   | - |   |   | 135,000 |   |
| Capital stock issued for expenses incurred on behalf      of the Company on June 30, 2008 at $0.0045 per share                                                     |   |      5,007,415 |   |                    | 22,534                    |                              |   | -                                |   |      | -              |   |   | - |   |   | 22,534 |   |
| Net loss for the year ended June 30, 2008                                                                                                                          |   | -                                  |   |                    | -                         |                              |   | -                                |   |      | -              |   |   | (337,799 | ) |   | (337,799 | ) |
| **Balance,      June 30, 2008**                                                                                                                                    |   | **180,884,920**                    |   | **$  **       | **5,427,746**             |                              | $      | **53,221**                       |   | $         | **(5,253,808** | **)** | $ | **(337,799** | **)** | $ | **(110,640** | **)** |
| Capital stock issued as deposit on agreement on      November 15, 2008 at $0.0042 per share                                                                        |   | 15,000,000                         |   |                    | 63,000                    |                              |   | -                                |   |      | -              |   |   | - |   |   | 63,000 |   |
| Capital stock issued for expenses incurred on behalf      of the Company on October 13, 2008 at $0.0041 per share                                                  |   | 666,667                            |   |                    | 2,733                     |                              |   | -                                |   |      | -              |   |   | - |   |   | 2,733 |   |
| Capital stock issued for expenses incurred on behalf      of the Company on November 20, 2008 at $0.0041 per share                                                 |   | 800,000                            |   |                    | 3,280                     |                              |   | -                                |   |      | -              |   |   | - |   |   | 3,280 |   |
| Capital stock issued for expenses on May 22, 2009 at      $0.009 per share                                                                                         |   | 3,000,000                          |   |                    | 27,000                    |                              |   | -                                |   |      | -              |   |   | - |   |   | 27,000 |   |
| Capital stock issued for expenses incurred on behalf      of the Company on June 30, 2009 at $0.0045 per share                                                     |   | 6,592,724                          |   |                    | 29,758                    |                              |   | -                                |   |      | -              |   |   | - |   |   | 29,758 |   |
| Capital stock issued for management fees on June 30,      2009 at $0.0045 per share                                                                                |   | 28,155,555                         |   |                    | 126,700                   |                              |   | -                                |   |      | -              |   |   | - |   |   | 126,700 |   |
| Net loss for the year ended June 30, 2009                                                                                                                          |   | -                                  |   |                    | -                         |                              |   | -                                |   |      | -              |   |   | (229,637 | ) |   | (229,637 | ) |
| **Balance,      June 30, 2009**                                                                                                                                    |   | **235,099,866**                    |   | **$**                   | **5,680,217  ** |                              | **$**  | **53,221**                       |   | **$**     | **(5,253,808** | **)** | **$** | **(567,436** | **)** | **$** | **(87,806** | **)** |
| Net loss for the year ended June 30, 2010                                                                                                                          |   | -                                  |   |                    | -                         |                              |   | -                                |   |      | -              |   |   | (257,332 | ) |   | (257,332 | ) |
| **Balance,      June 30, 2010**                                                                                                                                    |   | **235,099,866**                    |   | **$**                   | **5,680,217  ** |                              | **$**  | **53,221**                       |   | **$**     | **(5,253,808** | **)** | **$** | **(824,768** | **)** | **$** | **(345,138** | **)** |
| “Expenses”      above include office and general administrative, shareholder communication, transfer      agent and filing fees and travel expenses**.** |   |

*The accompanying notes are an integral part of these  financial statements*

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  STATEMENTS OF CASH FLOWS  FOR THE YEARS ENDED JUNE 30**

|                                                                                                               | **2010** |         | 2009   |   |     |               2008 |   | From July 1, 2007, the date of      entering into development stage, to June 30, 2010 |   |
|--------------------------------------------------------------------------------------------------------------------|----------|--------------|--------|--------|----------|------------------------------|--------|---------------------------------------------------------------------------------------|--------|
|                                                                                                               |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
| **Cash Flows From (Used By) Operating      Activities**                                                            |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
|       Net loss for the year                                                               | **$**    | **(257,332** | **)**  | $      | (229,637 | )                            | $      | (337,799                                                                              | )      | $ | (824,768 | ) |
|       Items not involving cash:                                                           |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
|             Amortization                                         |     | **250**      |   |   | -        |                         |   | -                                                                                     |   |   | 250 |   |
|             Stock issued for management, director and consulting |     | **-**        |   |   | 126,700  |                         |   | 213,875                                                                               |   |   | 340,575 |   |
|             Stock issued for expenses                            |     | **-**        |   |   | 62,771   |                         |   | 50,626                                                                                |   |   | 113,397 |   |
|                                                                                                               |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
|       Change in non-cash operating      working capital items:                            |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
|             Accounts payable and accrued liabilities             |     | **25,260**   |   |   | (16,556  | )                            |   | 72,377                                                                                |   |   | 81,081 |   |
|                                                                                                               |     | **(231,822** | **)**  |   | (56,722  | )                            |   | (921                                                                                  | )      |   | (289,465 | ) |
|                                                                                                               |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
| **Cash Flows From (Used By) Investing Activity**                                                                   |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
|       Acquisition of property and equipment                                               |     | **(894**     | **)**  |   | -        |                         |   | -                                                                                     |   |   | (894 | ) |
|                                                                                                               |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
|                                                                                                               |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
| **Cash Flows From (Used By) Financing      Activities**                                                            |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
|       Loan proceeds from related party                                                    |     | **232,566**  |   |   | 56,796   |                         |   | 971                                                                                   |   |   | 290,333 |   |
|       Increase in bank overdraft                                                          |     | **26**       |   |   | -        |                         |   | -                                                                                     |   |   | 26 |   |
|                                                                                                               |     | **232,592**  |   |   | 56,796   |                         |   | 971                                                                                   |   |   | 290,359 |   |
| **Increase (decrease) in Cash**                                                                                    |     | **(124**     | **)**  |   | 74       |                         |   | 50                                                                                    |   |   | - |   |
| **Cash, Beginning of      Year**                                                                                   |     | **124**      |   |   | 50       |                         |   | -                                                                                     |   |   | - |   |
| **Cash, End of Year**                                                                                              | **$**    | **-**        |   | $      | 124      |                         | $      | 50                                                                                    |   | $ | - |   |
|                                                                                                               |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
| **Supplemental Cash Flow Information**                                                                             |     |         |   |   |     |                         |   |                                                                                  |   |   |   |   |
|       Common stock issued on deposit incurred in the year                                 | **$**    | **-**        |   | $      | 63,000   |                         | $      | -                                                                                     |   | $ | 63,000 |   |
|       Common stock issued to settle debt                                                  | **$**    | **-**        |   | $      | -        |                         | $      | 73,159                                                                                |   | $ | 73,159 |   |
|       Interest Paid                                                                       | **$**    | **-**        |   | $      | -        |                         | $      | -                                                                                     |   | $ | - |   |
|       Income Taxes Paid                                                                   | **$**    | **-**        |   | $      | -        |                         | $      | -                                                                                     |   | $ | - |   |

*The accompanying notes are an integral part of these  financial statements*

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **1.  ** | **NATURE OF BUSINESS AND      OPERATIONS** |
|--------------------|--------------------------------------------|

|   | Biomass Secure Power Inc., formerly Virtual Media      Holdings Inc., (“Biomass” or the “Company”), became a development stage      enterprise July 1, 2007. Prior to July 1, 2007, the company was conducting      internet sales of videos, CDs, DVDs and books as Virtual Media Holdings Inc,      (formerly VMH VideoMovieHouse.com Inc.). As at June 30, 2007, the company      ceased all operations in connection with internet sales, wrote-off all related      assets and was seeking a new business.  The Company plans to build, own and      operate a cellulose pelletizing plants that utilizes proprietary technology.      The Company’s headquarters are located in Abbottsford, British Columbia, Canada. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company is presently a delinquent filer with the      Securities Exchange Commission and is filing for relief from filing audited      financial statements for the years ended June 30, 2007 and 2006. At this time,      it is not known if the relief will be granted. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **2.   ABILITY TO CONTINUE AS A GOING      CONCERN** |
|--------|----------------------------------------------------------------|

|   | The accompanying financial statements have been      prepared in US dollars and in accordance with accounting principles generally accepted      in the United States on a going concern basis, which contemplates the      realization of assets and the satisfaction of liabilities and commitments in      the normal course of business The Company commenced its evaluation and      development of a cellulose pelletizing plant in the first quarter of 2008.  Previously,      the Company had been actively operating an internet sales company. On June 30,      2007, the Company disposed of all of its assets in connection with the internet      sales activities.  During the year ended June 30, 2010, the Company      incurred a net loss of $257,332 (2009 - $229,637).  Since the Company      had re-entered the development stage, it has an accumulated deficit of $824,768      at June 30, 2010.  These conditions raise substantial doubt about the      Company's ability to continue as a going concern. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company's ability to continue as a going concern      is dependent on its ability to develop a cellulose pelletizing plant and      ultimately achieve profitable operations and to generate sufficient cash flow      from financing and operations to meet its obligations as they become payable.      The Company expects that it will need approximately $390,000 to fund its      operations during the next twelve months.  Management has plans to      seek additional capital through a private placement, public offering of its      common stock and joint arrangements.  Although there are no      assurances that management’s plans will be realized, management believes that      the Company will be able to continue operations in the future.  Accordingly,      no adjustment relating to the recoverability and classification of recorded      asset amounts and the classification of liabilities has been made to the      accompanying financial statements in anticipation of the Company not being able      to continue as a going concern. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **3.   SIGNIFICANT ACCOUNTING POLICIES** |
|--------|----------------------------------------------------|

|   | These financial statements include the accounts of the      Company. The Company has a wholly owned subsidiary Biomass Secure Power Inc.      (USA), which has no operations or activities and therefore not reflected in the      financial statements of the Company. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | These financial statements have in management’s      opinion, been properly prepared within reasonable limits of materiality and      within the framework of the significant accounting policies summarized below*: * |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *(a) Management’s Estimates and Assumptions* |
|--------|--------------------------------------------------------|

|   | The preparation of financial statements in conformity      with United States generally accepted accounting principles requires management      to make estimates and assumptions that affect the reported amounts of assets and      liabilities as of the balance sheet date, and revenues and expenses for the      period then ended.  Actual results could differ significantly from      those estimates |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *(b) Cash* |
|--------|-----------------|

|   | The Company considers all highly liquid investments      with original maturities of three months or less to be cash equivalents. Cash      equivalents are carried at cost, which approximates market value. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **3.  ** | **SIGNIFICANT ACCOUNTING POLICIES**- Continued |
|--------------------|------------------------------------------------|

|   | *(c) Equipment* |
|--------|----------------------|

|   | Equipment is stated at cost, net of accumulated      depreciation. Depreciation is computed by using the straight-line method at      rates based on the estimated useful lives of the various classes of property,      plant and equipment. Estimates of useful lives are based upon a variety of      factors including durability of the asset, the amount of usage that is expected      from the asset, the rate of technological change and the Company’s business      plans for the asset. Should the Company change its plans with respect to the      use and productivity of the equipment, it may require a change in the useful      life of the asset or incur a charge to reflect the difference between the      carrying value of the asset and the proceeds expected to be realized upon the      asset’s sale or abandonment. Expenditures for maintenance and repairs are      expensed as incurred and significant major improvements are capitalized and      depreciated over the estimated useful life of the asset. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Computer equipment is amortized over three years on      the straight-line basis. |
|--------|-----------------------------------------------------------------------------------|

|   | *(d) Intangible assets* |
|--------|------------------------------|

|   | The Company accounts for intangible assets in      accordance with ASC 350, “*Intangibles- Goodwill and Other.*” This      standard requires that goodwill and other intangible assets with indefinite      useful lives not be amortized but instead tested annually for impairment, or      immediately if conditions indicate that impairment could exist. Intangible      assets with definite useful lives are amortized over their estimated useful      lives and reviewed for impairment in accordance with ASC 360, “*Accounting        for Impairment or Disposal of Long-Lived Assets.*” Substantial judgment is      necessary in the determination as to whether an event or circumstance has      occurred that may trigger an impairment analysis and in the determination of      the related cash flows from the asset. Estimating cash flows related to      long-lived assets is a difficult and subjective process that applies historical      experience and future business expectations to revenues and related operating      costs of assets. Should impairment appear to be necessary, subjective judgment      must be applied to estimate the fair value of the asset, for which there may be      no ready market, which often times results in the use of discounted cash flow      analysis and judgmental selection of discount rates to be used in the discounting      process. If the Company determines an asset has been impaired based on the      projected undiscounted cash flows of the related asset or the business unit,      and if the cash flow analysis indicates that the carrying amount of an asset      exceeds related undiscounted cash flows, the carrying value is reduced to the      estimated fair value of the asset. There were no intangible assets for the      years ended June 30, 2010 and 2009. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *(e) Impairment of long-lived assets* |
|--------|--------------------------------------------|

|   | The Company evaluates its long-lived assets, such as      equipment, and specifically identified intangibles, when events or changes in      circumstances indicate that the carrying value of such assets may not be      recoverable. When the Company believes an impairment condition may have      occurred, it is required to estimate the undiscounted future cash flows      associated with a long-lived asset or group of long-lived assets at the lowest      level for which identifiable cash flows are largely independent of the cash      flows of other assets and liabilities for long-lived assets that are expected      to be held and used. If the Company determines that the undiscounted cash flows      from an asset to be held and used are less than the carrying amount of the      asset, or if the Company has classified an asset as held for sale, it estimates      fair value to determine the amount of any impairment charge. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *(f) Income taxes* |
|--------|-------------------------|

|   | The Company accounts for income taxes using the asset      and liability method. Deferred tax liabilities and assets are determined based      on temporary differences between the basis of assets and liabilities for income      tax and financial reporting purposes. The deferred tax assets and liabilities      are classified according to the financial statement classification of the      assets and liabilities generating the differences. Valuation allowances are      established when necessary based upon the judgment of management to reduce      deferred tax assets to the amount expected to be realized and could be      necessary based upon estimates of future profitability and expenditure levels      over specific time horizons in particular tax jurisdictions. The Company      recognizes the tax benefit from an uncertain tax position when, based on      technical merits, it is more likely than not the position will be sustained on      examination by the taxing authorities. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **3.  ** | **SIGNIFICANT ACCOUNTING POLICIES**- Continued |
|--------------------|------------------------------------------------|

|   | *(g) Stock-based compensation* |
|--------|-------------------------------------|

|   | The Company has a stock-based compensation plan under      which stock-based awards have been granted to employees and non-employees.      Stock-based compensation is accounted for in accordance with ASC 718, “*Compensation        – Stock Compensation.*” The Company establishes fair values for its equity      awards to determine its cost and recognizes the related expense over the      appropriate vesting period. The Company recognizes expense for stock options      and restricted stock awards. For stock-based awards vesting based on service      period, the value of the portion of the award that is ultimately expected to      vest is recognized as expense over the requisite service period on a      straight-line basis for each separately vesting portion of the award as if the      award was, in substance, multiple awards. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *(h) Fair value measurements* |
|--------|------------------------------------|

|   | Accounting standards require that fair value      measurements be classified and disclosed in one of the following categories: |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | Level 1 - Unadjusted quoted prices in active markets      that are accessible at the measurement date for identical, unrestricted assets      or liabilities; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 2 – Quoted      prices in markets that are not active, or inputs that are observable, either      directly or indirectly, for substantially the full term of the asset or      liability; and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 3 - Prices      or valuation techniques that require inputs that are both significant to the      fair value measurement and unobservable (i.e., supported by little or no market      activity). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Determining which category an asset or liability falls      within the hierarchy requires significant judgment. We evaluate our hierarchy      disclosures each quarter |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On July 1, 2009, the Company adopted a newly      issued accounting standard for fair value measurements of all nonfinancial      assets and nonfinancial liabilities not recognized or disclosed at fair value in      the financial statements on a nonrecurring basis. This accounting standard has      not had a material impact on the Company’s financial position, results of      operations or liquidity. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company uses observable inputs when available.      When observable inputs are not available, the Company uses internally      developed, unobservable inputs (Level 3 inputs in the fair value hierarchy of      fair value accounting) to estimate cash flow projections used in its analysis      to determine whether its long-lived assets are impaired. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *(i) Earnings (loss) per share of common stock* |
|--------|-------------------------------------------------|

|   | Basic earnings (loss) per share of common stock is      computed by dividing net income (loss) available to common shareholders by      the weighted-average number of common stock outstanding for the      period.  Diluted earnings per share of common stock reflect the      potential dilution that could occur if securities or other contracts to issue      common stock were exercised or converted into common stock or resulted in the      issuance of common stock that then shared in the earnings of the Company. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At June 30, 2010 and 2009, there were no stock options      and warrants which had an anti-dilutive effect on earnings per share. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | *(j)      Foreign exchange translation* |
|--------|-----------------------------------------|

|   | The Company's functional currency is the United States      (“US”) dollar, and reports its financial statements in US dollars. The Company      translates its Canadian dollar balances to US dollars in the following      manner:  Assets and liabilities have been translated using the rate      of exchange at the balance sheet date.  The Company’s results of      operations have been translated using average rates.  Exchange      differences arising on translation and realized gains and losses from foreign      currency transactions are reflected in the Company’s results from operations. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | All amounts included in the accompanying financial      statements and footnotes are stated in U.S. dollars. |
|--------|--------------------------------------------------------------------------------------------------------------|

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **4.  ** | **RECENTLY ISSUED ACCOUNTING      STANDARDS** |
|--------------------|-----------------------------------------------|

|   | In December 2007, the Financial Accounting      Standards Board (“FASB”) issued ASC 805-10-65 and revised the authoritative      guidance for business combinations which establishes principles and      requirements for how the acquirer in a business combination (1) recognizes      and measures in its financial statements the identifiable assets acquired, the liabilities      assumed and any non-controlling interest in the acquiree, (2) recognizes      and measures the goodwill acquired in the business combination or a gain from a      bargain purchase and (3) determines what information to disclose to enable      users of the financial statements to evaluate the nature and financial effects      of the business combination. This guidance applies prospectively to business      combinations for which the acquisition date is on or after the beginning of the      first annual reporting period beginning on or after December 15,      2008.  The Company’s adoption of this revised guidance on July 1,      2009 did not have any impact on its results of operations or financial      condition as it did not have any business combination activity during the year      ended June 30, 2010. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Additionally, the FASB amended the factors that should      be considered in developing renewal or extension assumptions used to determine      the useful life of a recognized intangible asset to improve the consistency      between the useful life of a recognized intangible asset and the period of      expected cash flows used to measure the fair value of the asset under the      current guidance concerning business combinations and other U.S. generally      accepted accounting principles.  This new guidance is effective for financial      statements issued for fiscal years beginning after December 15, 2008, and      interim periods within those fiscal years.  The Company’s adoption of the      new guidance on July 1, 2009 did not have a material impact on its      financial position, results of operations or cash flows. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On July 1, 2009, the Company adopted FASB ASC 815-      Derivatives and Hedging (*EITF 07-5, Determining Whether an Instrument (or        embedded Feature) is Indexed to an Entity’s Own Stock*.   The      standard requires embedded derivative      instruments be bifurcated and assessed, along with free-standing derivative      instruments such as warrants and non-employee stock-options to determine      whether they should be considered a derivative liability and subject to      re-measurement at their fair value. Warrants with such provisions will no      longer be recorded to equity. The      transition provisions of ASC 815-40-15 require cumulative effect adjustments as      of July 1, 2009 to reflect the amounts that would have been recognized if      derivative fair value accounting had been applied from the original issuance      date of an equity- equity-linked financial instrument through the      implementation date of the revised guidance. The      Company’s adoption of the new guidance on July 1, 2009 did not have a material      impact on its financial position, results of operations or cash flows. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In May 2008, the FASB issued new authoritative      guidance which establishes general standards of accounting and disclosure of      events that occur after the balance sheet date but before the financial      statements are issued.  ASC 855 guidance sets forth (1) the period      after the balance sheet date during which management should evaluate events or      transactions that may occur for potential recognition or disclosure in the      financial statements, (2) the circumstances under which an entity should      recognize events or transactions occurring after the balance sheet date and      (3) the disclosures an entity should make about such events or      transactions.  The Company’s adoption of the new guidance on July 1,      2009 did not have a material impact on its financial position, results of      operations or cash flows. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In June 2009, the FASB issued the FASB Accounting      Standards Codification (“Codification”). The Codification became the single      source for all authoritative generally accepted accounting principles (“GAAP”)      recognized by the FASB to be applied for financial statements issued for      periods ending after September 15, 2009. The Codification does not change      GAAP and did not have an effect on our financial position, results of operations      or cash flows.  The Company does not expect the adoption of the new guidance will      have a material impact on its financial position, results of operations or cash      flows. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **4.  ** | **RECENTLY ISSUED ACCOUNTING      STANDARDS** - Continued |
|--------------------|-----------------------------------------------------------|

|   | In August 2009, FASB issued ASU No. 2009-5 “Fair Value      of Measurements and Disclosure (Topic 820) – Measuring Liabilities at Fair      Value”.  The new guidance, which is now part of ASC 820, provides      clarification that in certain circumstances in which a quoted price in an      active market for the identical liability is not available, a company is      required to measure fair value using one or more of the following valuation      techniques:  the quoted price of the identical liability when traded      as an asset, the quoted prices for similar liabilities when traded as assets,      or another valuation technique that is consistent with the principles of fair      value measurements.  The new guidance clarifies that a company is not      required to include an adjustment for restrictions that prevent the transfer of      the liability and if an adjustment is applied to the quoted price used in a      valuation technique, the result is a Level 2 or 3 fair value      measurement.  The new guidance is effective for interim and annual      periods beginning after August 27, 2009.  The adoption of this      standard is being reviewed by the company and is not expected to materially      impact the Company’s financial statements. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In September 2009, FASB issued ASU No. 2009-09,      “Accounting for Investments – Equity Method and Joint Ventures and Accounting      for Equity-Based Payments to Non-Employees.  This update is an      amendment to ASC 323-10-S99 and 505-50-S99.  The amendment to ASC      323-10-S99 provides guidance on the accounting by an investor for stock-based      compensation based on the investor’s stock granted to employees of an equity      method investee.  Investors that are SEC registrants should classify      any income or expense resulting from application of this guidance in the same      income statement caption as the equity in earnings (or losses) of the investee.      The amendment to ASC 505-50-S99 clarifies      the accounting by the grantee or grantor in transactions involving equity      instruments granted to other than employees if the accounting does not reflect      the same commitment date or similar values.  The adoption of this standard      did not have a material effect on the Company’s financial statements |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In January 2010, the FASB issued ASU, on      codification, fair value measurement and disclosures (Topic 820-10).  The      amendment requires new disclosures related to transfers in and out of Levels 1      and 2 and activity in Level 3 fair value measurements.  A reporting entity      is required to disclose separately the amounts of significant transfers in and      out of Level 1 and Level 2 fair value measurements and describe the reasons for      the transfers.  Additionally, in the reconciliation for fair value      measurements in Level 3, a reporting entity must present separately information      about purchases, sales, issuances and settlements (on a gross basis rather than      a net number).  The new disclosures are effective for interim and annual      reporting periods beginning after December 15, 2009, except for the      disclosures about purchases, sales, issuances and settlements in the roll      forward of activity in Level 3 fair value measurements.  Those disclosures      are effective for fiscal years beginning after December 15, 2010 and for      interim periods within those fiscal years.  The Company does not      anticipate the adoption of this amendment will have a material effect on its      financial position, results of operations or cash flows. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In April 2010, the FASB issued accounting      guidance for the milestone method of revenue recognition. This guidance allows      entities to make a policy election to use the milestone method of revenue      recognition and provides guidance on defining a milestone and the criteria that      should be met for applying the milestone method. The scope of this guidance is      limited to transactions involving milestones relating to research and      development deliverables. The guidance includes enhanced disclosure requirements      about each arrangement, individual milestones and related contingent      consideration, information about substantive milestones and factors considered      in the determination. This guidance is effective prospectively to milestones      achieved in fiscal years, and interim periods within those years, beginning      after June 15, 2010. Early application and retrospective application are      permitted. The Company is currently evaluating the impact, if any, that this      new guidance will have on the determination or reporting of its financial      results. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The FASB issued new guidance relating to revenue      recognition for contractual arrangements with multiple revenue-generating      activities. The ASC Topic for revenue recognition includes identification of a      unit of accounting and how arrangement consideration should be allocated to      separate the units of accounting, when applicable. The new guidance, including      expanded disclosures, is applied on a prospective basis beginning on or after      June 15, 2010. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **5.  ** | **AMALGAMATION AGREEMENT** |
|--------------------|----------------------------|

|   | On October 29, 2008, the Company entered into an Amalgamation      Agreement (the “Agreement”) with 0625920 BC Ltd. (“0625920”) whereby the      Company will be acquiring certain intellectual property of 0625920 by way of      merger of the two Companies.  At the time of the Agreement the Company and 0625920      had a common director and officer, Mr. Jim Carroll, who is the      President/CEO/CFO of the Company and was the President of 0625920, and had two      common shareholders, Mr. Carroll and his spouse. Pursuant to the terms of the      Agreement fifteen common shares of the Company will be issued in exchange for      each 0625920 share outstanding at the Agreement date, resulting in the issuance      of 225,269,250 shares of common stock to the shareholders of 0625920. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On November 1, 2008 the Company issued 15,000,000      common stock, as a deposit on the Agreement, to Mr. George Pappas, a director      of 0625920, who was unrelated to the Company at that time.  The deposit forms      part of the total share consideration to be issued pursuant to the Agreement.       Therefore, a further 210,269,250 common stock are to be issued. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As a result of a cease-trade order issued by the British      Columbia Securities Commission on November 19, 2009 the remaining 210,269,250 common      stock has not been issued and therefore, the transaction has not been completed      nor reflected in the financial statements. The above agreement has been      deferred until the cease-trade order is revoked. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **6.  ** | **PROPERTY AND EQUIPMENT** |
|--------------------|----------------------------|

|                         |   | **June 30, 2010** |   |   | June 30, 2009                |   |
|------------------------------|--------|-------------------|--------|--------|------------------------------|--------|
|                         |   | **Cost**          |   |   | **Accumulated Amortization** |   |   | Cost |   |   | Accumulated Amortization |   |
| Computers                    | **$**  | **894**           |   | **$**  | **250**                      |   | $ | - |   | $ | - |   |
|          Net Book Value |   |              |   | **$**  | **644**                      |   |   |   |   | $ | - |   |

| **7.  ** | **DUE TO RELATED PARTIES** |
|--------------------|----------------------------|

|   | The Company is indebted to directors and officers of      the Company for operating expenses paid by those individuals on behalf of the      company, cash advances and accrued management fees.  The amounts are payable on      demand, unsecured and without interest. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                   | **June 30, 2010** |        |   | June 30, 2009 |   |
|----------------------------------------|-------------------|-------------|--------|---------------|--------|
|                                   |              |        |   |          |   |   |
| Balance, beginning                     | **$**             | **65,235**  |   | $             | 8,439  |   |
| Accrued management and director fees   |              | **170,000** |   |          | --     |   |
| Cash advances                          |              | **4,000**   |   |          | --     |   |
| Expenses paid on behalf of the company |              | **58,566**  |   |          | 56,796 |   |
| Balance, ending                        | **$**             | **297,801** |   | $             | 65,235 |   |

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **8.  ** | **CAPITAL STOCK** |
|--------------------|-------------------|

|   | *Share issuances in 2010*

There was no stock issued during the year ended June 30, 2010 due to a          cease trade order issued by the British Columbia Securities Commission on          November 19, 2009.

*Share issuances in 2009* |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On November 15, 2008 the Company issued 15,000,000 common      shares at $0.0042 per share for a total of $63,000 as a deposit in connection      with the acquisition agreement with 0625920 BC Ltd. (Note 5).  The stock was      recorded based upon the quoted market price of the Company’s common stock on      the date of director’s approval for the issuance. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On October 13, 2008 the Company issued 666,667 common      shares at $0.0041 per share for a total of $2,733 for expenses incurred on      behalf of the Company by a director.  The stock was recorded based upon the      quoted market price of the Company’s common stock on the date of director’s      approval for the issuance. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On November 20, 2008 the Company issued 800,000 common      shares at $0.0041 per share for a total of $3,280 for expenses incurred on      behalf of the Company by a director.  The stock was recorded based upon the quoted      market price of the Company’s common stock on the date of director’s approval      for the issuance. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On May 22, 2009 the Company issued 3,000,000 common      shares at $0.009 per share for a total of $27,000 for investor relations.  The stock      was recorded based upon the quoted market price of the Company’s common stock      on the date of director’s approval for the issuance. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On June 30, 2009 the Company issued 6,592,724 common      shares at $0.0045 per share for a total of $29,758 for expenses incurred on      behalf of the Company by directors.  The stock was recorded based upon the      quoted market price of the Company’s common stock on the date of director’s      approval for the issuance. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On June 30, 2009 the Company issued 28,155,555 common      shares at $0.0045 per share for a total of $126,700 for management fees paid to      a director and officer of the Company for services provided in the current      period.  The stock was recorded based upon the quoted market price of the      Company’s common stock on the date of director’s approval for the issuance. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *Share issuances in 2008* |
|--------|---------------------------|

|   | On August 29, 2007 the Company issued 2,844,325 common      shares at $0.0075 per share for a total of $21,332 for expenses incurred on      behalf of the Company by a director.  Of those amounts 1,487,881 common shares      for a total of $11,159 was for settlement of debt related to expenses incurred      in a prior year and 1,356,444 common shares for a total of $10,173 was for      expenses incurred in the current year.  The stock was recorded based upon the      quoted market price of the Company’s common stock on the date of director’s      approval for the issuance. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On October 23, 2007, 3,000,000 common shares were      returned for cancellation. As the expense related to the issuance of these      common shares was properly recorded, there is no accounting impact for the      returned shares. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On February 5, 2008 the Company issued 5,780,463 common      shares at $0.0031 per share for a total of $17,919 for expenses incurred on      behalf of the Company by directors.  The stock was recorded based upon the      quoted market price of the Company’s common stock on the date of director’s      approval for the issuance. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **8.  ** | **CAPITAL STOCK - Continued** |
|--------------------|-------------------------------|

|   | On February 5, 2008 the Company issued 40,000,000 common      shares at $0.0031 per share for a total of $124,000 for management fees paid to      a director and officer of the Company.  Of those shares, 20,000,000 shares,      valued at a total of $62,000, were issued for settlement of debt related to      management fees of a prior year and 20,000,000 shares, valued at a total of      $62,000, were issued for management fees incurred in the current year.  The stock      was recorded based upon the quoted market price of the Company’s common stock      on the date of director’s approval for the issuance. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On June 30, 2008 the Company issued 3,750,000 common      shares at $0.0045 per share for a total of $16,875 for directors’ fees.  The stock      was recorded based upon the quoted market price of the Company’s common stock      on the date of director’s approval for the issuance. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On June 30, 2008 the Company issued 30,000,000 common      shares at $0.0045 per share for a total of $135,000 for management fees paid to      a director and officer of the Company for services in the current year.  The stock      was recorded based upon the quoted market price of the Company’s common stock      on the date of director’s approval for the issuance. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On June 30, 2008 the Company issued 5,007,415 common      shares at $0.0045 per share for a total of $22,533 for expenses incurred on      behalf of the Company by directors.  The stock was recorded based upon the      quoted market price of the Company’s common stock on the date of director’s      approval for the issuance. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *Stock Options*

On March 24, 2004, the Company’s Board of Directors approved a          nonqualified stock option plan. This plan, subject to authorization of the          Company’s Board of Directors, allows the Company to distribute up to 5,000,000          options on common stock to officers, directors, employees and consultants at an          exercise price of up to $0.25 per share. On October 8, 2004, the Board of          Directors approved an increase in S-8 stock to 15,000,000 options on common          stock to officers, directors, employees and consultants at an exercise price of          up to $0.03 per share. 

During the years ended June 30, 2010 and 2009, there were no common        stock options granted. As of June 30, 2010 and 2009, there were no outstanding        exercisable or un-exercisable common stock options. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **9.  ** | **COMMITMENT TO ISSUE STOCK** |
|--------------------|-------------------------------|

|   | The Company’s stock are traded on the OTC Bulletin      Board in the United States and the Company is subject to the securities laws of      the United States and Canada.  On November 19, 2009, the British Columbia      Securities Commission issued a cease trade order against the Company thereby      preventing the Company from issuing or exchanging stock of the Company until      the cease trade order is removed.  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Subsequent to the date of the cease trade order the      Company entered into the following transactions approved by the directors      requiring the issuance of stock upon the removal of the cease trade order.      These transactions have not been recorded in the financial statements as the      transactions have not been completed: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a)     | Amalgamation Agreement |
|--------|----------------------------|------------------------|

|   |   | On      October 29, 2008 the Company entered into an Amalgamation Agreement with      0625920 BC Ltd whereby the Company will acquire certain intellectual property      of 0625920 by way of merger of the two companies.  Pursuant to the terms of the      Agreement fifteen common stock of the Company will be issued to the share      holders of 0625920 in exchange for each common share of 0625920 outstanding at      the Agreement date, resulting in the issue of 225,269,250 common stock of the      Company (See Note 5). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **9.  ** | **COMMITMENT TO ISSUE STOCK - Continued** |
|--------------------|-------------------------------------------|

|   | a) | Amalgamation Agreement - continued |
|--------|----|------------------------------------|

|   |   | On November 1, 2008 the Company issued 15,000,000      common stock, as a deposit on the Agreement.  The deposit forms part of the      total share consideration to be issued pursuant to the Agreement.  Therefore, a      further 210,269,250 common stock remain to be issued. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | On June 30, 2009 the Company was legally amalgamated      with 0625920 under the laws of the Province of British Columbia.  As a result      of a cease-trade order issued by the British Columbia Securities Commission the      common stock has not been issued and therefore, the transaction has not been      completed nor reflected in the Company’s June 30, 2010 financial statements.      The above agreement has been deferred until the cease-trade order is lifted and      has not been recorded in the balance sheet of the Company. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Settlement of Debt    |
|--------|----|---------------------------------|

|   |   | On      February 24, 2010 the board of directors, subject to the revocation of the cease      trade order, approved the issuance of 81,864,686 common stock in settlement of $125,253      due to related parties.  The amounts due to directors and officers arise from $15,253      advanced to or expended on behalf of the Company by directors and officers and $110,000      of unpaid management compensation.  The price per share of the settlement is      subject to the approval of the British Columbia Securities Commission and will      be amended upon revocation of the cease trade order to reflect the trading      price in effect after the cease trade order is revoked. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | Financing |
|--------|----|-----------|

|   |   | On      March 1, 2010 the board of directors, subject to the removal of the cease trade      order, authorized the issuance of capital stock to raise a total of $100,000.       Pursuant to that approval, between March 1, 2010 and June 30, 2010, the Company      received the benefit of $23,005 expended by Mr. Jim Carroll, the Company’s      President/CEO/CFO, on behalf of the Company.  The funds expended were advanced      to Mr. Carroll by family members and business associates of Mr. Carroll (the      “Investors”) for the purpose of investing in stock of the Company.  With      respect to this transaction the Company acknowledges: |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | i.      | No share subscriptions were      received from Mr. Carroll.  There was a verbal understanding between Mr.      Carroll and the Company that stock would be issued; |
|--------|--------|----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | ii.     | There was a benefit to the Company      in the amount of the $23,005 expended on its behalf; and |
|--------|--------|-----------------------------|--------------------------------------------------------------------------------------------------|

|   |   | iii.    | The expenditures have been recorded      as operating expenses of the Company for the year ended June 30 2010 and have      been credited to due to related parties. |
|--------|--------|------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Subsequent      to June 30, 2010: |
|--------|--------|-----------------------------------|

|   |   | i.      | The board of directors have      agreed to advise Investors that they will have the opportunity to subscribe for      Company stock, upon the revocation of the cease trade order, at a share price      to be determined subsequent to the revocation, and |
|--------|--------|----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | ii.     | Mr. Carroll has expended a further      $67,000 on behalf of the Company.  The funds expended were advanced to Mr.      Carroll by family members and business associates of directors of the Company. |
|--------|--------|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **10. ** | **RELATED PARTY TRANSACTIONS** |
|---------------|--------------------------------|

|   | During the year ended June 30, 2010 the Company was      charged management, consulting and director fees totaling $170,000 (2009 - $183,049)      (2008 - $236,306) by directors and officers of the Company. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The above-noted transactions were measured at the      exchange amount, which is the amount of consideration established and agreed to      by the related parties. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **11. ** | **INCOME TAXES** |
|---------------|------------------|

|   | No provision for Canadian federal or provincial income      taxes has been recorded. The Company is in arrears on filing its statutory      income tax returns and is therefore unable to practicably determine the amount      of its loss carry forwards at this time. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company expects to have net operating loss carry      forwards to offset any taxable income that may exist for the years ended June      30, 2010 and 2009. As at June 30, 2010, the Company expects to have significant      net operating loss carry forwards for income tax purposes available to offset      future taxable income. Future income tax assets as of June 30, 2010 and 2009      consist primarily of the tax effect of net operating loss carry forwards. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company has provided a full valuation allowance on      the future income tax assets as of June 30, 2010 and 2009 to reduce such future      income tax assets to zero, as it is management’s belief that realization of      such amounts is not considered more likely than not. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In the ordinary course of business the Company has transacted      in foreign jurisdictions and is subject to the tax regime to that foreign      jurisdiction. The Company records tax contingencies for specific transactions      when it determines that the likelihood of an unfavorable outcome is likely and      the loss is reasonably estimable. Management currently believes that the      Company is not exposed to tax contingencies that could have a material impact      on the liquidity results of operations or financial condition of the Company.      As at June 30, 2010, the Company has not recorded an accrual for any tax      contingencies. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In June 2006, the FASB issued ASC 740 Income      Taxes. ASC 740 clarifies the accounting for uncertainty in income taxes      recognized in an enterprise’s financial statements, and prescribes a      recognition threshold and measurement attribute for the financial statement      recognition and measurement of a tax position taken or expected to be taken in      a tax return. The Company has evaluated its tax positions for the years ended June 30,      2010 and 2009 and determined that it has no uncertain tax positions requiring      financial statement recognition. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Under ASC 740, the      impact of an uncertain income tax position on income tax expense must be      recognized at the largest amount that is more-likely-than-not to be sustained.      An uncertain income tax position will not be recognized if it has 50% or less      likelihood of being sustained. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company accrues interest      and penalties on our uncertain tax positions as a component of our provision      for income taxes.      There was no amount of interest and penalties accrued during 2010, 2009 or 2008. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company files one income tax return in      Canada. Our income tax returns are generally considered closed to examination      for years prior to 2004. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **12. ** | **COMMITMENTS AND CONTINGENCIES**

A statement of claim was issued against the Company for breach of          employment contract. The Company has filed a statement of defense disputing the          action. The claim is presently being disputed by the Company and the settlement          is undeterminable at this time. Any legal costs relating to this claim have          been recorded in the financial statements. The likelihood of loss is remote.

A second statement of claim was issued against the Company to remove        the trading restriction on the restricted stock. The Company has filed a        statement of defense disputing the action. Subsequent to year end, this claim        was settled with no financial impact to the Company. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Amended – see Note 14**

**BIOMASS SECURE POWER INC.  (Formerly Virtual Media Holdings Inc.)  (A development stage company)  NOTES TO THE FINANCIAL STATEMENTS  As At June 30, 2010**

| **12. ** | **COMMITMENTS AND CONTINGENCIES - Continued**

The Company establishes reserves for legal claims when payments          associated with the claims become probable and the costs can be reasonably          estimated. The actual costs of resolving legal claims may be higher or lower          than any amounts reserved for the claims. On the basis of information currently          available, advice of counsel, available insurance coverage, if applicable, and          established reserves, it is the opinion of management that the eventual outcome          of the actions against us are remote will not have a material adverse effect on          our financial condition, results of operations, or cash flows. However, in the          event of unexpected future developments, it is possible that the ultimate          resolution of legal matters, if unfavorable, may be material to our financial          condition, results of operations, or cash flow. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **13. ** | **SUBSEQUENT EVENTS** |
|---------------|-----------------------|

|   | Subsequent to June 30, 2010 the Company made application to the British      Columbia Securities Commission (“BCSC”) for revocation of the cease trade order      issued against the Company on November 9, 2009.  As a result of the application      for revocation: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a)   | Revision to financial statements – The BCSC has      required the Company to revise the financial statements to clarify and to      provide additional disclosure in Notes 5 and 9 to the financial statements; and |
|--------|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b)   | Review of pending share transactions – The BCSC is      currently reviewing pending share issuance transactions (Note 9 b) and c) and will      require restructuring of those transactions to reflect the trading price in      effect after the cease trade order is revoked.  Details of any restructuring      are not know at this time. |
|--------|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **14. ** | **DISCLOSURE AMENDMENTS**

In the year ended June 30, 2010, the Company has          amended its narrative disclosure in connection with the amalgamation agreement,          enhanced the disclosure in connection with related party transactions and          updated its subsequent event note in Notes 5, 7, 9 and 13. There were no          restatement of figures in the financial statements. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Amended – see Note 14**

**ITEM 9. CHANGESIN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.**

On January 9, 2009, our board of directors approved the appointment of BDOCanada LLP as our independent accountants to audit our June 30, 2009 and 2010financial statements and through the interim period and dismissed Dale MathesonCarr-Hilton Labonte LLP ("DMCL”), as ourindependent accountants. On October 8, 2009, we received a letter from DaleMatheson Carr-Hilton Labonte LLP ("DMCL") stating that it had notbeen engaged to perform auditing services for our company for the prior yearand that it was no longer the auditor of record for our company. 

Duringthe fiscal year ended June 30, 2006, and any subsequent interim periodspreceding the change in accountants, there were no disagreements with DMCL, onany matter of accounting principles or practices, financial statementdisclosure, or auditing scope procedure. Duringthe course of their audit, DMCL advised our company's new management that ithad not been provided with sufficient documentation to support certainissuances of shares.  In addition, during the course of their audit of ourfiscal year ended June 30, 2006, DMCL advised our new management that it wasunable to rely on management’s representations.  Since that date, wehave not provided DMCL with any additional documentation in respect of theunsupported issuances of shares and DMCL has not provided us with anunqualified audit report for our 2006 fiscal year.The decision to change independent accountants was based on the determinationby our board of directors that such a step was appropriate given the change indirection of our company and the related growth in our demands, and that suchexpertise required can be provided by a national accounting firm. 

During the years ended June 30, 2006 and2007, and any subsequent interim periods preceding the change in accountants,BDO Canada LLP was not consulted regarding (1) the application of accountingprinciples to specified transactions, (2) the type of audit opinion that mightbe rendered on our financial statements, (3) written or oral advice that wouldbe an important factor considered by us in reaching a decision as to anaccounting, auditing or financial reporting issues, or (4) any matter that wasthe subject of a disagreement between us and our predecessor auditor asdescribed in Item 304(a)(1)(iv) or a reportable event as described in Item304(a)(1)(v) of Regulation S-K. 

**ITEM 9A.CONTROL AND PROCEDURES**

***Disclosure Controls and Procedures***

We maintain “disclosure controls andprocedures”, as that term is defined in Rule 13a-15(e), promulgated bythe Securities and Exchange Commission pursuant to the *Securities ExchangeAct of 1934*, as amended. Disclosure controls and procedures includecontrols and procedures designed to ensure that information required to be disclosedin our company’s reports filed under the *Securities Exchange Act of1934* is recorded, processed, summarized and reported within the timeperiods specified in the Securities and Exchange Commission’s rules andforms, and that such information is accumulated and communicated to ourmanagement, including our principal executive officer and our principalfinancial officer, as appropriate, to allow timely decisions regarding requireddisclosure. 

As required by paragraph (b) of Rules 13a-15 under the *SecuritiesExchange Act of 1934*, our management, with the participation of ourprincipal executive officer and our principal financial officer, evaluated ourcompany’s disclosure controls and procedures as of the end of the periodcovered by this annual report on Form 10-K. Based on this evaluation, ourmanagement concluded that as of the end of the period covered by this annualreport on Form 10-K, our disclosure controls and procedures were not effective.

*Management’s Report on Internal Control overFinancial Reporting.*

Our management, including our principal executive officer,principal financial officer and our board of directors, is responsible forestablishing and maintaining a process to provide reasonable assuranceregarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generallyaccepted accounting principles. 

21

----

**Amended – see Note 14**

Our management, with the participation of our principalexecutive officer and our principal financial officer, evaluated theeffectiveness of our internal control over financial reporting(“ICFR”) as of June 30, 2010. Our management’s evaluation ofour internal control over financial reporting was based on the framework inInternal Control—Integrated Framework, issued by the Committee ofSponsoring Organizations of the Treadway Commission. Based on this evaluation,our management concluded that our internal control over financial reporting wasnot effective as of June 30, 2009 and that there were material weaknesses in ourinternal control over financial reporting as described below:

As defined by Auditing Standard No. 5,“An Audit of Internal Control Over Financial Reporting that is Integratedwith an Audit of Financial Statements and Related Independence Rule andConforming Amendments,” established by the Public Company AccountingOversight Board, a material weakness is a deficiency, or combination ofdeficiencies, in internal control over financial reporting, such that there isa reasonable possibility that a material misstatement of the Company’sannual or interim financial statements will not be prevented or detected on atimely basis.  In connection with the assessment described above,management identified the following control deficiencies that represent materialweaknesses as of June 30, 2010:

(1) Specifically, we have determined that our internalcontrols and procedures for timely filing of material events is insufficientdue to a lack of knowledge regarding U.S. generally accepted accountingprinciples and the rules of the Securities and Exchange Commission byresponsible people within our company. Moreover, due to our inability toprovide sufficient documentation to our former auditor, it was unable to issuean audit report for the financial years ended June 30, 2006 and June 30, 2007.We are significantly in arrears in respect to timely filing of our quarterlyand annual reports.

(2)We lack an independent audit committee, audit committeefinancial expert, and independent directors. Our audit committee is comprisedof our board of directors. Our audit committee does not have an audit committeefinancial expert. A majority of our board of directors and audit committee isnot independent, as three of our directors are also officers.  Thesefactors may be counter to corporate governance practices as defined by thevarious stock exchanges and may lead to less effective or conflictedsupervision over management;

(3) We have ineffective controls overperiod end financial disclosure and reporting processes.

(4) There are infrequent ongoingmonitoring and a lack of separate evaluations when an effective monitoring andevaluative system is deemed necessary for corporate integrity.

As of June 30,2010, management assessed the effectiveness of our ICFR and based on thatevaluation, they concluded that, as of June 30, 2010, the internal controls andprocedures were not effective due to deficiencies that existed in the design oroperation of our ICFR. During the course of their evaluation, management didnot discover any fraud involving management or any other personnel who play asignificant role in our disclosure controls and procedures or internal controlsover financial reporting.

Due to a lack offinancial and personnel resources, we are not able to, and do not intend to, immediatelytake any action to remediate these material weaknesses.  We will notbe able to do so until, if ever, we acquire sufficient financing and staff todo so.  We will implement further controls as circumstances, cashflow, and working capital permit.  Notwithstanding the assessmentthat our ICFR was not effective and that there were material weaknesses asidentified in this report, we believe that our financial statements containedin our Annual Report on Form 10-K for the fiscal year ended June 30, 2010,fairly presents our financial position, results of operations and cash flowsfor the years covered thereby in all material respects.

Our ChiefFinancial Officer is not a financial expert. This risk is mitigated by theactive involvement of the audit committee and the board of directors inreviewing the financial statements.  However, the lack of full timepersonnel who have technical experience and knowledge is an internal controlweakness and may result in the failure to timely report financial results.

It is unlikelythat the above noted internal control weakness can be properly addressed untilthe Company grows to a significant size to warrant the expense, such as thehiring of additional personnel, associated with implementing additional segregationof duties.  We are committed to improving our financial organizationand internal controls.  As part of this commitment, we intend to hirean additional person on a full time basis, when sufficient funds are availableto us, with technical experience and knowledge in accounting to bettersegregate duties consistent with control objectives and will increase ourpersonnel resources and technical accounting expertise within the accountingfunction.

22

----

**Amended – see Note 14**

Managementbelieves that the material weaknesses set forth above were the result of thescale of our operations and are intrinsic to our small size.

We are committedto improving our financial organization. As part of this commitment, weanticipate that, pending the availability of sufficient funds, we will (1) hirea qualified individual who is competent in preparing reliable and timelyinformation for internal and external audit purposes and who is alsoknowledgeable in US GAAP; (2) appoint one or more outside directors to ourboard of directors who shall be appointed to our audit committee resulting in afully functioning audit committee who will undertake the oversight in theestablishment and monitoring of required internal controls and procedures; (3)create formal processes and controls over financial disclosure and reportingand monitor its progress and (4) hire independent third parties to performexpert advice over monitoring and evaluating the control environment.  Wewill continue to monitor and evaluate the effectiveness of our internal controlsand procedures and our internal controls over financial reporting on an ongoingbasis and are committed to taking further action and implementing additionalenhancements or improvements, as necessary and as funds allow.

Our principal executive officer, who is also our principalfinancial officer, does not expect that our disclosure controls or our internalcontrol over financial reporting will prevent all errors and all fraud. Acontrol system, no matter how well conceived and operated, can provide only reasonable,not absolute, assurance that the objectives of the control system are met.Further, the design of a control system must reflect the fact that there areresource constraints, and the benefits of controls must be considered relativeto their costs. Because of the inherent limitations in all control systems, noevaluation of controls can provide absolute assurance that all control issuesand instances of fraud, if any, within our company have been detected. Theseinherent limitations include the realities that judgments in decision-makingcan be faulty, and that breakdowns can occur because of a simple error ormistake. Additional controls can be circumvented by the individual acts of somepersons, by collusion of two or more people, or by management override of thecontrols. The design of any system of controls is based in part upon certainassumptions about the likelihood of future events, and there can be noassurance that any design will succeed in achieving its stated goals under allpotential future conditions; over time, controls may become inadequate becauseof changes in conditions, or the degree of compliance with the policies orprocedures may deteriorate. Because of the inherent limitations in acost-effective control system, misstatements due to error or fraud may occurand not be detected.

***Changes in Internal Control overFinancial Reporting***

There have been no significant changes in our internal controls overfinancial reporting that occurred during fiscal year ended June 30, 2010 thathave materially or are reasonably likely to materially affect, our internalcontrols over financial reporting.

We plan to establish further internal controls andprocedures to ensure timely filing of material events. We also plan to furtherstrengthen our knowledge of U.S. generally accepted accounting principles andthe rules of the Securities and Exchange Commission through studying ofliterature and hiring of knowledgeable personnel. 

**ITEM 9B OTHER INFORMATION**

None

**PART III**

**ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.**

***Directors and Executive Officers,Promoters and Control Persons***

As at June 30, 2010, our Directors and Executive Officers,their age, positions held, and duration of such, are as follows: 

23

----

**Amended – see Note 14**

| **Name**           | **Position Held  with our Company**                    | **Age** | **Date First  Elected or Appointed** |
|--------------------|--------------------------------------------------------|---------|--------------------------------------|
| James Carroll      | President,  CEO, Chief Financial Officer, and Director | 60      | January 10, 2007                     |
| George  Pappas     | Vice-President,  Secretary and Director                | 73      | December 30, 2008                    |
| Andrew  H. Burns   | Vice-President  and Director                           | 55      | June 30, 2009                        |
| Len  Klassen       | Director                                               | 71      | January 10, 2007                     |
| Slawomir  Kownacki | Director                                               | 34      | January 10, 2007                     |

*Family relationships*

There are no family relationships betweenany Director or Executive Officer. 

*Business Experience*

The following is a brief account of theeducation and business experience of Directors and Executive Officers during atleast the past five years, indicating their principal occupation during theperiod, and the name and principal business of the organization by which theywere employed.

*JamesCarroll - President, Chief Executive Officer, Chief Financial Officer, andDirector*

Since January, 2007, Mr James Carroll hasbeen Chief Executive Officer, Chief Financial Officer, and a Director of ourcompany. Mr. Carroll also served as a director of our company from 2004 to2005. Mr. Carroll has been self employed since 1993 operating his own mortgagebrokerage business. From 1972 to 1992, Mr. Carroll worked in the banking andfinance industry.

We believe Mr. Carroll is qualified toserve on our board of directors because of his knowledge of our company’shistory and current operations, which he gained from working for our company asdescribed above, in addition to his business experience as described above.

*GeorgePappas - Vice-President, Secretary and Director*

Since 1993, Mr George Pappas has been theVice President of All-Trades Fabrication Inc. (“All-Trades”)Through All-Trades, he has been involved in building projects for companiessuch as Disney, University of Southern California, and Boeing. Mr. Pappas hasextensive management experience and has specialized in structural steelbuildings up to three storied high and all aspects of fabrication and steelerection. 

Mr. Pappas is a licensed steel erectorwith an active C-51 Structural Steel license. 

We believeMr. Pappas is qualified to serve on our board of directors because of hisknowledge of our company’s history and current operations, which hegained from working for our company as described above, in addition to hisbusiness experience as described above.

*AndrewH. Burns – Vice-President and Director*

Since 1990, Andrew Burns has been thePresident of Burns Energy Systems Ltd. (“Burns Energy”). ThroughBurns Energy, Mr. Burns has been involved with various industrial projects,such as the development of immersion burners with ceramic tubes, small borehigh velocity immersion burners, and submerged combustion equipment. Mr. Burnsis currently working on a large pelletizing project in Russia with EPS Inc. Mr.Burns is developing the furnace that will be used in the pelletizing process.Mr. Burns has published papers in various periodicals and books, and presentedtechnical papers at various conferences. 

Mr. Burns has a Bachelor of ScienceDegree in Metallurgy from University Leeds in the United Kingdom. 

We believe Mr. Burns is qualified toserve on our board of directors because of his knowledge of our company’shistory and current operations, which he gained from working for our company asdescribed above, in addition to his education and business experience asdescribed above.

24

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**Amended – see Note 14**

*LenKlassen - Director*

Mr. Klassen has been a successful selfemployed businessman since returning to Canada in 1986. He has been involved inreal estate development and the food brokerage business. Prior to returning toCanada he was Vice President Asia for Bank of America.

We believe Mr. Klassen is qualified toserve on our board of directors because of his knowledge of our company’shistory and current operations, which he gained from working for our company asdescribed above, in addition to his education and business experience asdescribed above.

*SlawomirKownacki - Director*

Mr. Kownacki has twelve years in thesoftware development industry ranging from small stand alone applications andwebsites to fully developed databases driven by windows and web applications.Mr. Kownacki has developed and implemented a security integration system for amajor Las Vegas hotel chain. 

We believe Mr. Kownacki is qualified toserve on our board of directors because of his knowledge of our company’shistory and current operations, which he gained from working for our company asdescribed above, in addition to his education and business experience asdescribed above.

***Involvement in Certain Legal Proceedings***

Our directors and executive officers have not beeninvolved in any of the following events during the past ten years: 

|   | 1. | anybankruptcy petition filed by or against any business of which such person was ageneral partner or executive officer either at the time of the bankruptcy orwithin two years prior to that time; |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.  | anyconviction in a criminal proceeding or being subject to a pending criminalproceeding (excluding traffic violations and other minor offences); |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.  | beingsubject to any order, judgment, or decree, not subsequently reversed, suspendedor vacated, of any court of competent jurisdiction, permanently or temporarilyenjoining, barring, suspending or otherwise limiting his involvement in anytype of business, securities or banking activities; |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.  | beingfound by a court of competent jurisdiction (in a civil action), the Securitiesand Exchange Commission or the Commodity Futures Trading Commission to haveviolated a federal or state securities or commodities law, and the judgment hasnot been reversed, suspended, or vacated; |
|--------|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.  | beingthe subject of, or a party to, any federal or state judicial or administrativeorder, judgment, decree, or finding, not subsequently reversed, suspended orvacated, relating to an alleged violation of: (i) any federal or statesecurities or commodities law or regulation; or (ii) any law or regulationrespecting financial institutions or insurance companies including, but notlimited to, a temporary or permanent injunction, order of disgorgement orrestitution, civil money penalty or temporary or permanent cease- and-desistorder, or removal or prohibition order; or (iii) any law or regulationprohibiting mail or wire fraud or fraud in connection with any business entity;or |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6. | beingthe subject of, or a party to, any sanction or order, not subsequentlyreversed, suspended or vacated, of any self-regulatory organization (as definedin Section 3(a)(26) of the Securities Exchange Act of 1934), any registeredentity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or anyequivalent exchange, association, entity or organization that has disciplinaryauthority over its members or persons associated with a member. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

25

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**Amended – see Note 14**

***Compliance with section 16(a) of the ExchangeAct***

Since our company is a“foreign private issuer”, pursuant to Rule 3a12-3 promulgated underthe Securities Exchange Act of 1934 our insiders are exempt from the reportingrequirements of Section 16(a) of the Securities Exchange Act of 1934. Among other things, Section 16(a) of the Securities Exchange Act of 1934requires certain “reporting persons” of any issuer with any classof equity securities registered under Section 12 of the Securities Exchange Actof 1934 to file with the United States Securities and Exchange Commissionreports of ownership and changes in ownership of securities of the registeredclass.  Reporting persons consist of directors, executive officers andbeneficial owners of more than 10% of the securities of the registered class.

***Code of Ethics***

We have adopted a corporate code ofethics, which is attached as an exhibit to our annual report on Form10-KSB filed on September 25, 2003. We believe our code ofethics is reasonably designed to deter wrongdoing and promote honest and ethicalconduct; provide full, fair, accurate, timely and understandable disclosure inpublic reports; comply with applicable laws; ensure prompt internal reportingof code violations; and provide accountability for adherence to the code.

***Corporate Governance***

*Term of Office*

Each director of our company is to serve for a term of oneyear ending on the date of subsequent annual meeting of stockholders followingthe annual meeting at which such director was elected. Notwithstanding theforegoing, each director is to serve until his successor is elected andqualified or until his death, resignation or removal. Our board of directors isto elect our officers and each officer is to serve until his successor iselected and qualified or until his death, resignation or removal.

*Committees of the Board*

Our board of directors held no formal meetings during theyear ended June 30, 2010. All proceedings of our board of directors wereconducted by resolutions consented to in writing by all the directors and filedwith the minutes of the proceedings of the directors. Such resolutionsconsented to in writing by the directors entitled to vote on that resolution ata meeting of the directors are, according to the corporate law of the Provinceof British Columbia, as valid and effective as if they had been passed at ameeting of our directors duly called and held. 

We currently do not have nominating or compensationcommittees or committees performing similar functions nor do we have a writtennominating or compensation committee charter. Our board of directors does notbelieve that it is necessary to have such committees because it believes thatthe functions of such committees can be adequately performed by our board ofdirectors. 

We do not have any defined policy or procedurerequirements for shareholders to submit recommendations or nominations fordirectors. We do not currently have any specific or minimum criteria for theelection of nominees to our board of directors and we do not have any specificprocess or procedure for evaluating such nominees. Our board of directorsassesses all candidates, whether submitted by management or shareholders, andmakes recommendations for election or appointment. 

A shareholder who wishes to communicate with our board ofdirectors may do so by directing a written request to the address appearing onthe first page of this annual report. 

Disclosure Committee and Charter

We have a disclosure committee anddisclosure committee charter. Our disclosure committee is comprised of all ofour officers and directors. The purpose of the committee is to provideassistance to the Chief Executive Officer, who is also our Chief FinancialOfficer, in fulfilling his responsibilities regarding the identification anddisclosure of material information about us and the accuracy, completeness andtimeliness of our financial reports.

26

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**Amended – see Note 14**

*Audit Committee and Audit Committee Financial Expert*

Our audit committee is comprised of our board of directors.Our board of directors has determined that we do not have a board member thatqualifies as an “audit committee financial expert” as defined inItem 401(h) of Regulation S-K. Len Klassen and Slawomir Kownacki qualify as“independent” as the term is used in Item 7(d)(3)(iv) of Schedule14A under the *Securities Exchange Act of 1934, as amended*and JamesCarroll, George Pappas, and Andrew H. Burns are not “independent”as they are also officers of our company*.*Webelieve that retaining an independent director who would qualify as an“audit committee financial expert” would be overly costly andburdensome and is not warranted in our circumstances given the early stages ofour development and the fact that we have not generated any revenues fromoperations to date.

**Indemnification**

Pursuant to our Articles ofIncorporation, we may indemnify an officer or director who is made a party toany proceeding, including a law suit, because of his position, if he acted ingood faith and in a manner he reasonably believed to be in our best interest.In certain cases, we may advance expenses incurred in defending any suchproceeding. To the extent that the officer or director is successful on themerits in any such proceeding as to which such person is to be indemnified, wemust indemnify him against all expenses incurred, including attorney’sfees. With respect to a derivative action, indemnity may be made only for theexpenses actually and reasonably incurred in defending the proceeding, and ifthe officer or director is judged liable, only by a court order. Theindemnification is intended to be to the fullest extent permitted by the lawsof British Columbia.

Regarding indemnification for liabilitiesarising under the Securities Act of 1933, as amended, which may be permitted todirectors or officers pursuant to the foregoing provisions, we are informedthat, in the opinion of the Securities and Exchange Commission, suchindemnification is against public policy, as expressed in the Act and is,therefore, unenforceable.

**Item 11.Executive Compensation.**

***Summary Compensation***

The particulars of compensation paid to the followingpersons:

|   | (a)    | our principal executive officer;                                                                                                                                                                                                  |   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   |                                                                                                                                                                                                                              |   |
|   | (b)    | each of our two most highly compensated executive officers  who were serving as executive officers at the end of the year ended June 30,  2010; and                                                                               |   |
|   |   |                                                                                                                                                                                                                              |   |
|   | (c)    | up to two additional individuals for whom disclosure would  have been provided under (b but for the fact that the individual was not  serving as our executive officer at the end of the most recently completed  financial year, | )      |

who we will collectively refer to as the named executiveofficers, for our years ended June 30, 2010 and 2009, are set out in thefollowing summary compensation table: 

27

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**Amended – see Note 14**

| **Name and principal position**                            | **Year**         | **Salary****($)**  | **Bonus****($)** | **Stock awards****($)** | **Option awards****($)** | **Non-equity incentive plan      compensation      ($)** | **Change in pension value and      nonqualified deferred compensation earnings****($)** | **All other compensation****($)** | **Total****($)**   |
|------------------------------------------------------------|------------------|--------------------|------------------|-------------------------|--------------------------|----------------------------------------------------------|-----------------------------------------------------------------------------------------|-----------------------------------|--------------------|
| **(a)**                                                    | **(b)**          | **(c)**            | **(d)**          | **(e)**                 | **(f)**                  | **(g)**                                                  | **(h)**                                                                                 | **(i)**                           | **(j)**            |
| **James Carroll**  President,  CEO, CFO & Director     | 2010  2009       | $120,000  $120,000 | Nil        Nil   | Nil  Nil                | Nil  Nil                 | Nil        Nil                                           | Nil  Nil                                                                                | Nil        Nil                    | $120,000  $120,000 |
| **George Pappas**  Vice-President,  Secretary and Director | 2010        2009 | $30,000  Nil       | Nil Nil          | Nil Nil                 | Nil Nil                  | Nil Nil                                                  | Nil        Nil                                                                          | Nil  Nil                          | $30,000        Nil |
| **Andrew H. Burns**  Vice-President  and Director          | 2010        2009 | $30,000  Nil       | Nil Nil          | Nil Nil                 | Nil Nil                  | Nil Nil                                                  | Nil        Nil                                                                          | Nil  Nil                          | $30,000  Nil       |

*Employment Agreements*

We have not entered into any employmentagreement or consulting agreement with our directors and executive officers. 

*Outstanding Equity Awards at Fiscal Year-End*

The following table sets forth for each named executiveofficer certain information concerning the outstanding equity awards as of June30, 2010.

| **Name**                                                               | **Option awards**                                                           | **Stock awards**                                                                                   |
|------------------------------------------------------------------------|-----------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|
| **Number of securities underlying unexercised options(#) exercisable** | **Number of securities underlying unexercised options(#)****unexercisable** | **Equity incentive plan awards: Number of securities  underlying unexercised unearned options(#)** | **Option exercise price****($)** | **Option expiration date** | **Number of shares or units of stock that have not  vested****(#)** | **Market value of shares of units of stock that have  not vested****($)** | **Equity incentive plan awards: Number of unearned  shares, units or other rights that have not vested(#)** | **Equity incentive plan awards: Market or payout value  of unearned shares, units or other rights that have not vested****($)** |
| **(a)**                                                                | **(b)**                                                                     | **(c)**                                                                                            | **(d)** | **(e)** | **(f)** | **(g)** | **(h)** | **(i)** | **(j)** |
| James  Carroll                                                         | Nil                                                                         | Nil                                                                                                | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
| George  Pappas                                                         | Nil                                                                         | Nil                                                                                                | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
| Andrew  H. Burns                                                       | Nil                                                                         | Nil                                                                                                | Nil | Nil | Nil | Nil | Nil | Nil | Nil |

***Compensation of Directors***

Our board of directors has received no compensation todate and there are no plans to compensate them in the near future, unless anduntil we begin to realize revenues and become profitable in our businessoperations. 

The table below shows the compensation of our directorsfor our last completed fiscal year ended June 30, 2010:

28

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**Amended – see Note 14**

| **Name**           | **Fees earned or paid in cash  ($)** | **Stock awards  ($)** | **Option awards  ($)** | **Non-equity incentive plan compensation  ($)** | **Nonqualified deferred compensation earnings  ($)** | **All other compensation  ($)** | **Total  ($)** |
|--------------------|--------------------------------------|-----------------------|------------------------|-------------------------------------------------|------------------------------------------------------|---------------------------------|----------------|
| **(a)**            | **(b)**                              | **(c)**               | **(d)**                | **(e)**                                         | **(f)**                                              | **(g)**                         | **(h)**        |
| Len  Klassen       | Nil                                  | Nil                   | Nil                    | Nil                                             | Nil                                                  | Nil                             | Nil            |
| Slawomir  Kownacki | Nil                                  | Nil                   | Nil                    | Nil                                             | Nil                                                  | Nil                             | Nil            |

*Long-Term Incentive Plans*

There are no arrangements or plans in which we providepension, retirement or similar benefits for directors or executive officers,except that our directors and executive officers may receive stock options atthe discretion of our board of directors. We do not have any material bonus orprofit sharing plans pursuant to which cash or non-cash compensation is or maybe paid to our directors or executive officers, except that stock options maybe granted at the discretion of our board of directors. 

We have no plans or arrangements inrespect of remuneration received or that may be received by our executiveofficers to compensate such officers in the event of termination of employment(as a result of resignation, retirement, change of control) or a change of responsibilitiesfollowing a change of control.

**ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS.**

***Security ownership of management***

In the following table, as of December13, 2010 we have determined the number and percentage of shares beneficiallyowned in accordance with Rule 13d-3 of the Exchange Act based on informationprovided to us by our controlling shareholders, executive officers anddirectors, and this information does not necessarily indicate beneficialownership for any other purpose. In determining the number of shares of ourcommon stock beneficially owned by a person and the percentage ownership ofthat person, we include any shares as to which the person has sole or sharedvoting power or investment power, as well as any shares subject to warrants oroptions held by that person that are currently exercisable or exercisablewithin 60 days.

| **(1) Title of   class** | **(2) Name and   address of****beneficial   owner**                                  | **(3) Amount and   nature of****beneficial   ownership** | **(4) Percent of****class****(1)** |
|--------------------------|--------------------------------------------------------------------------------------|----------------------------------------------------------|------------------------------------|
| common stock             | James Carroll  40218 Wellsline Road    Abbotsford BC  V3G 2K7                   | 78,037,517                                               |   Direct                 | 33.2**(2****)**  |
| common stock             | George  Pappas  6152  Nappa Circle    Huntington  Beach, CA    92647            | 4,197,076                                                |   Direct                 | 1.8%**(3)** |
| common stock             | Andrew  H. Burns  52  Main Street East    Hamilton,  ON  L8M 1J2                | nil                                                      |   Direct                 | 0%**(4)** |
| common stock             | Len  Klassen        1755  Ocean Park Road  Surrey,  BC  V4A 3M1                 | 6,000,000                                                |   Direct                 | 2.6% |
| common stock             | Slawomir  Kownacki  1210  London Street    New  Westminster, BC    V3M 5Z6 | 15,330,000                                               |   Direct                 | 6.5% |
| **common stock**         |                                                                                 | **103,564,593**                                          |                               | 44.1%**(5)** |

29

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**Amended – see Note 14**

| (1)       | Percentage of ownership is based on 235,099,866 common shares issuedand outstanding as of December 13, 2010. Except as otherwise indicated, webelieve that the beneficial owners of the common stock listed above, based oninformation furnished by such owners, have sole investment and voting powerwith respect to such shares, subject to community property laws whereapplicable. Beneficial ownership is determined in accordance with the rules ofthe SEC and generally includes voting or investment power with respect tosecurities. Shares of common stock subject to options or warrants currentlyexercisable, or exercisable within 60 days, are deemed outstanding for purposesof computing the percentage ownership of the person holding such option orwarrants, but are not deemed outstanding for purposes of computing thepercentage ownership of any other person |
|-----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)     | Pursuantto pending Share Exchange Agreements, as described under the heading“Business — Corporate Developments — The Amalgamation”,Mr. Carroll is to be issued 90,000,000 additional commonshares. Assuming 225,269,250 common shares are issued under the Share ExchangeAgreements, Mr. Carroll will have 36.5% of our issued and outstandingcommon shares. |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)     | Pursuantto pending Share Exchange Agreements, as described under the heading“Business — Corporate Developments — The Amalgamation”,Mr. Pappas is to be issued 90,000,000 additional commonshares. Assuming 225,269,250 common shares are issued under the Share ExchangeAgreements, Mr. Pappas will have 20.5% of our issued and outstandingcommon shares. |
|-----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)     | Pursuantto pending Share Exchange Agreements, as described under the heading“Business — Corporate Developments — The Amalgamation”, Mr. Burns is to be issued 30,000,000 additional common shares.Assuming 225,269,250 common shares are issued under the Share ExchangeAgreements, Mr. Burns will have 6.5% of our issued and outstanding commonshares. |
|-----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)     | Assuming225,269,250 common shares are issued under all the Share ExchangeAgreements, our management will hold 68.1% of our issued andoutstanding common shares. The pending issuance of the shares under the ShareExchange Agreements has been deferred until the cease trade order is lifted. |
|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Changes in Control***

We are unaware of any arrangement, theoperation of which may at a subsequent date result in a change in control ofour company

**ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.**

***Director Independence***

Under NASDAQ Marketplace Rule 5605(a)(2), a director is notconsidered to be independent if he is also an executive officer or employee ofthe company. Len Klassen and Slawomir Kownacki are “independentdirectors” as that term is defined by NASDAQ Marketplace Rule 5605(a)(2).

***Transactions with related persons***

There has been no transactions, or currently proposedtransaction, in which we were or are to be a participant and the amountinvolved exceeds the lesser of $120,000 or one percent of the average of ourtotal assets at year end for the last two completed fiscal years, and in whichany of the following persons had or will have a direct or indirect materialinterest:

|   | (i)   | Any of our directors or officers;                                                                                                                                     |   |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   | (ii)  | Any person who beneficially owns, directly or  indirectly, shares carrying more than 5% of the voting rights attached to our  outstanding shares of common stock; and |   |
|   | (iii) | Any member of the immediate family (including spouse,  parents, children, siblings and in-laws of any of the foregoing persons.                                       | )      |

30

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**Amended – see Note 14**

As discussed under the heading “Business —Corporate Developments — The Amalgamation”, we entered into ShareExchange Agreements with the shareholders of 0625920 BC Ltd. Pursuant to theShare Exchange Agreements, Mr. Carroll is to be issued 90,000,000 additionalcommon shares. Assuming 225,269,250 common shares are issued under the ShareExchange Agreements, Mr. Carroll will have 36.5% of our issued and outstandingcommon shares. These shares have not been issued. Due to a cease trade orderissued by the British Columbia Securities Commission, we are now prohibitedfrom issuing those shares. We anticipate the issuance of these shares shortlyafter the cease trade order is revoked. 

Pursuant to the Share Exchange Agreements, Mr. Pappas is tobe issued 90,000,000 additional common shares. Assuming 225,269,250 commonshares are issued under the Share Exchange Agreements, Mr. Pappas will have20.5% of our issued and outstanding common shares. These shares have not beenissued. Due to a cease trade order issued by the British Columbia SecuritiesCommission, we are now prohibited from issuing those shares.. We anticipate theissuance of these shares shortly after the cease trade order is revoked. 

Pursuant to the Share Exchange Agreements, Mr. Burns is tobe issued 30,000,000 additional common shares. Assuming 225,269,250 commonshares are issued under the Share Purchase Agreements, Mr. Burns will have 6.5%of our issued and outstanding common shares. These shares have not been issued.Due to a cease trade order issued by the British Columbia SecuritiesCommission, we are now prohibited from issuing those shares.. We anticipate theissuance of these shares shortly after the cease trade order is revoked. 

During the year ended June 30, 2010 we were charged by andrecorded management, consulting and directors fees totaling $208,475 (2009 -$183,049).

Subsequent to the date of the cease trade order the Company enteredinto the following transactions, approved by the directors, requiring theissuance of stock upon the removal of the cease trade order. These transactionshave not been recorded in the financial statements as the transactions have notbeen completed:

| c.        | On February 24, 2010 the board of directors,subject to the revocation of the cease trade order, approved the issuance of 81,864,686common stock in settlement of $125,253 due related parties.  The amountsdue to directors and officers arise from $15,253 advanced to or expended onbehalf of the Company by directors and officers and $110,000 of unpaidmanagement compensation.  The price per share of the settlement is subjectto the approval of the British Columbia Securities Commission and will beamended upon revocation of the cease trade order to reflect the trading pricein effect after the cease trade is lifted. |
|----------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.       | On March 1, 2010 the board of directors, subjectto the removal of the cease trade order, authorized the issuance of capitalstock to raise a total of $100,000.  Pursuant to that approval, betweenMarch 1, 2010 and June 30, 2010, the Company received the benefit of $23,005expended by Mr. Jim Carroll, the Company’s President/CEO/CFO, on behalfof the Company.  The funds expended were advanced to Mr. Carroll by familymembers and business associates of Mr. Carroll (the “Investors”)for the purpose of investing in stock of the Company.  With respect tothis transaction the Company acknowledges: |
|----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iv.    | No share subscriptions were received from Mr. Carroll.  Therewas a verbal understanding between Mr. Carroll and the Company that stock wouldbe issued; |
|--------|-----------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | v.     | There was a benefit to the Company in the amount of the $23,005expended on its behalf; and |
|--------|----------------------------|--------------------------------------------------------------------------------------------|

|   | vi.    | The expenditures have been recorded as operating expenses of theCompany for the year ended June 30 2010 and have been credited to due torelated parties. |
|--------|-----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Subsequent toJune 30, 2010: |
|--------|-----------------------------|

|   | iii.    | The board of directors have agreed to advise Investors that theywill have the opportunity to subscribe for Company stock upon the revocation ofthe cease trade order, at a share price to be determined subsequent to therevocation, and |
|--------|------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iv.    | Mr. Carroll has expended a further $67,000 on behalf of theCompany.  The funds expended were advanced to Mr. Carroll by family memberand business associates of directors of the Company. |
|--------|-----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

31

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**Amended – see Note 14**

 

**ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES.**

***Audit Fees***

The following table sets forth the fees billed to ourcompany for professional services rendered by BDO Canada LLP(“BDO”), our independent registered public accounting firm, for theyears ended June 30, 2010 and 2009: 

| **Fees**           |   | 2010   |   |   | 2009   |   |
|--------------------|--------|--------|--------|--------|--------|--------|
| Audit Fees         | $      | 10,000 |   |   | 10,000 |   |
| Audit Related Fees |   | 0      |   |   | 0      |   |
| Tax Fees           |   | 0      |   |   | 0      |   |
| Other Fees         |   | 0      |   |   | 0      |   |
| **Total Fees**     | **$**  | 10,000 |   |   | 10,000 |   |

*Policy on Pre-Approval by Audit Committee of ServicesPerformed by Independent Auditors*

We do not use BDO, for financial information system designand implementation. These services, which include designing or implementing asystem that aggregates source data underlying the financial statements orgenerates information that is significant to our financial statements, areprovided internally or by other service providers. We do not engage BDO toprovide compliance outsourcing services. 

Effective May 6, 2003, the Securities and ExchangeCommission adopted rules that require that before an external auditor is engagedby us to render any auditing or permitted non-audit related service, theengagement be:

- approved by our audit committee (the functions of which are    performed by our entire board of directors); or 
- entered into pursuant to pre-approval policies and procedures    established by the board of directors, provided the policies and procedures are    detailed as to the particular service, the board of directors is informed of    each service, and such policies and procedures do not include delegation of the    board of directors' responsibilities to management. 

Our entire board of directors pre-approves all servicesprovided by our independent auditors. All of the above services and fees werereviewed and approved by our directors before the respective services were rendered.

Our board of directors have considered the nature andamount of fees billed by BDO and believe that the provision of services foractivities unrelated to the audit is compatible with maintaining BDO’sindependence. 

**ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES.**

Exhibits required by Item 601 ofRegulation S-K:

| **Exhibit** | **Document Description**                                                                                                                |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------------|
| 3.1*        | Articles of Biomass Secure Power Inc.                                                                                                   |
| 3.2(1)      | Certificate Of Change Of Name, Notice Of  Articles                                                                                      |
| 3.3(1)      | Notice Of Alteration, Notice Of Articles                                                                                                |
| 10.1(2)     | A form of the share exchange agreement  entered into between our company and the 20 shareholders of 0625920 B.C. Ltd.  on June 30, 2009 |
| 10.2(2)     | Settlement Agreement with Brian Holden  dated August 10, 2010                                                                           |
| 14.1(3)     | Code of Ethics                                                                                                                          |
| 21.1        | Subsidiaries: Biomass Secure Power Inc.,  a company governed by the laws of California                                                  |
| 31.1*       | Section 302 Certification under Sarbanes-Oxley Act of 2002                                                                              |
| 32.1*       | Section 906 Certification under Sarbanes-Oxley Act of 2002                                                                              |
| 99.1(3)     | Audit Committee Charter                                                                                                                 |
| 99.2(3)     | Disclosure Committee Charter                                                                                                            |

(1)           Attached as an exhibit to our current report on Form 6-K filed on May15, 2009.

32

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**Amended – see Note 14**

(2)           Attachedas an exhibit to our annual report on Form 10-K for the fiscal year ended June30, 2009 filed on                  December15, 2010

(3)           Attachedas an exhibit to our annual report on Form 10-KSB filed on September 25, 2003

* Filed herewith

33

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**Amended – see Note 14**

**SIGNATURES**

Pursuant to the requirements of Section 13or 15(d) of the Securities Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereto duly authorized.

**BIOMASS SECURE POWER INC.**

By/s/ *James Carroll*          James CarrollPresident,Chief Executive Officer, Chief Financial Officer, and DirectorPrincipleExecutive Officer, Principal Financial Officer and Principal Accounting OfficerApril 7, 2011

Pursuant to the requirements of theSecurities Exchange Act of 1934, this report has been signed below by thefollowing persons on behalf of the registrant and in the capacities and on thedates indicated.

By/s/ *James Carroll*          James Carroll President,Chief Executive Officer, Chief Financial Officer, and DirectorPrincipleExecutive Officer, Principal Financial Officer and Principal Accounting OfficerApril 7, 2011

By/s/ *GeorgePappas*           GeorgePappasVice-President,Secretary and DirectorApril 7, 2011

By/s/ *AndrewH. Burns*          AndrewH. BurnsVice-Presidentand DirectorApril 7, 2011

By/s/ *LenKlassen*                   LenKlassenDirectorApril 7, 2011

By/s/ *SlawomirKownacki*          SlawomirKownackiDirectorApril 7, 2011

----