UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-K



S  ANNUAL REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the year ended July 31, 2012



£ 
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from _________
to _________



Commission file number 333-145898



ZURVITA HOLDINGS, INC.

(Exact name of registrant as specified in
its charter)



|Delaware                        |  | 26-0531863         
|------------------------------- |  | -------------------
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)



|800 Gessner, Suite 110                             
|---------------------------------------------------
|Houston, Texas 77024                               
|(Address of principal executive offices) (zip code)



|(713) 464-5002                                      
|----------------------------------------------------
|(Registrant’s telephone number, including area code)



Securities Registered Under Section 12(b) of the Exchange Act:
None



Securities Registered Pursuant to Section 12(g) of the Exchange
Act: Common Stock, par value $0.0001 per share.



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes  £    Nox



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes  £    Nox



Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.    YesxNo  £



Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation 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 post such files). Yes£Nox



Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and
will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  £



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See definition of
“large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):

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



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of
1934). Yes  £    Nox



The aggregate market value of the common equity held by non-affiliates
as of the Company’s most recently completed second fiscal quarter computed at $0.01, the price at which the Company’s
common stock was last sold on January 31, 2012, was $0.01 * 4,864,188 = $49,584.



The numberof
shares outstanding of each of the issuer’s classes of common stock as of October 29, 2012:

12,750,954 shares of common stock,
par value $0.0001.



DOCUMENTS INCORPORATED BY REFERENCE

None.
















ZURVITA HOLDINGS HOLDINGS, INC.



FORM 10-K

For the Year Ended July 31, 2012



TABLE OF CONTENTS





|PART I   |                                                                                                                   | PAGE NO.
|-------- | ----------------------------------------------------------------------------------------------------------------- | --------
|         |                                                                                                                   |         
|ITEM 1.  | DESCRIPTION OF BUSINESS.                                                                                          | 1       
|ITEM 1A. | RISK FACTORS.                                                                                                     | 5       
|ITEM 1B. | UNRESOLVED STAFF COMMENTS.                                                                                        | 10      
|ITEM 2.  | PROPERTIES.                                                                                                       | 10      
|ITEM 3.  | LEGAL PROCEEDINGS.                                                                                                | 10      
|ITEM 4.  | RESERVED.                                                                                                         | 10      
|         |                                                                                                                   |         
|PART II  |                                                                                                                   |         
|         |                                                                                                                   |         
|ITEM 5.  | MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. | 11      
|ITEM 6.  | SELECTED FINANCIAL DATA.                                                                                          | 12      
|ITEM 7.  | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.                            | 12      
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                                                       | 20      
|ITEM 8.  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                                                                      | 20      
|ITEM 9.  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.                             | 47      
|ITEM 9A. | CONTROLS AND PROCEDURES.                                                                                          | 47      
|ITEM 9B. | OTHER INFORMATION.                                                                                                | 48      
|         |                                                                                                                   |         
|PART III |                                                                                                                   |         
|         |                                                                                                                   |         
|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.                                                           | 49      
|ITEM 11. | EXECUTIVE COMPENSATION.                                                                                           | 52      
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.                   | 54      
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.                                        | 56      
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES.                                                                           | 58      
|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.                                                                       | 59      
|         | SIGNATURES                                                                                                        | 61      















PART I



Forward-Looking Statements



This Annual Report on Form 10-K may contain
statements which constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, words such as “may,”
“will,” “should,” “could,” “would,” “anticipate,” “expect,”
“believe,” “goal,” “plan,” “intend,” “estimate,” “continue”
or the negative of or other variation on theseand similar other
expressions and variations thereof, if used, are intended to specifically identify forward-looking statements. Those statements
appear in a number of places in this Form 10-K and in other places, and include statements regarding the intent, belief or current
expectations of the Company, its directors or its officers with respect to, among other things, our future performance and operating
results, our future operating plans, our liquidity and capital resources and our legal proceedings. We
do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.



Forward-looking statements are based on
current expectations and involve risks and uncertainties and our future results could differ significantly from those expressed
or implied by our forward-looking statements. Many factors, including those listed in “Item 1A. - Risk Factors” below,
could cause our actual consolidated results to differ materially from those expressed in any of our forward-looking statements.



ITEM 1. DESCRIPTION OF BUSINESS



Overview



Our consolidated financial statements include
the accounts of Zurvita Holdings, Inc. (referred to herein as the “Company,” “Zurvita Holdings,” “we,”
“us” or “our”) and our wholly-owned subsidiary Zurvita, Inc. (Zurvita). Material intercompany transactions
and balances have been eliminated upon consolidation. Zurvita Holdings is a national network marketing company offering high-quality
health and wellness products targeting individuals and families with a foothold in small town America and expanding rapidly to
urban centers. Products are sold through Zurvita’s network of independent sales consultants.



Business History



Red Sun was incorporated in the State of
Delaware on June 28, 2007, as a development stage company to engage in the acquisition and exploration of mineral properties. Red
Sun was a shell company.



Zurvita was incorporated in the State of
Delaware on January 25, 2008. Prior to the consummation of a Share Exchange agreement, Zurvita was a wholly-owned subsidiary of
The Amacore Group, Inc. (“Amacore”).



On July 30, 2009 (the “Closing Date”),
Red Sun entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Zurvita and the holders of all
of the issued and outstanding securities of Zurvita prior to the Closing Date (the “Zurvita Securities Holders”), pursuant
to which, among other things, the Zurvita Securities Holders contributed all of their securities of Zurvita to Red Sun in exchange
for Red Sun’s issuance of 9.3 million shares of common stock of Red Sun (the “Share Exchange”).



Prior to the consummation of the Share
Exchange, Matthew Taylor was Red Sun’s President, Secretary, Treasurer, Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer and sole Director.  Mr. Taylor owned 66.7 percent of its issued and outstanding securities.



Pursuant to the terms of the repurchase
agreement (the “Repurchase Agreement”), Red Sun repurchased all of Mr. Taylor’s shares of common stock for a
total repurchase price of $210 thousand. Immediately after the repurchase of these shares: (1) the former shareholders of Zurvita
received shares of common stock of Red Sun in exchange for all of their shares of Zurvita, (2) Mr. Taylor appointed the following
individuals as directors and officers of the Company: Jay Shafer, Chief Executive Officer and Director; Jason Post, Chief Financial
Officer; Richard Diamond, Director; Paul Morrison, Director; Christopher D. Phillips, Director; and Guy Norberg, Director and (3)
Mr. Taylor resigned from his Red Sun officer positions and from the Red Sun board of directors.



1







Concurrent with the closing of the Share
Exchange Transaction, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited
investor and closed a private placement offering pursuant to which it raised gross proceeds of $1.75 million and, among other things,
issued and sold convertible preferred stock (the “Preferred Stock”) convertible into shares of the Company’s
common stock (“Conversion Shares”) at an initial conversion price of $0.0625, subject to adjustment (the “Private
Placement”). The Company completed the Private Placement pursuant to which it raised gross proceeds of $1.75 million.



As a result of the Share Exchange Transaction
and the consummation of the transactions pursuant to the Repurchase Agreement, Red Sun experienced a change in control and ceased
to be a shell company. Zurvita became the Company’s wholly-owned subsidiary and the former shareholders of Zurvita became
the owners of approximately 66 percent of the Company’s issued and outstanding shares of common stock and 44 percent of the
voting rights of total equity securities outstanding (after giving effect to subsequent issuances of common stock). The combined
entity elected to change its name from Red Sun Mining, Inc. to Zurvita Holdings, Inc. while maintaining Red Sun’s status
as a SEC registrant and we are continuing the business plan of Zurvita only.



Business Strategy



Zurvita’s business model embraces
a direct sales approach that utilizes the power of network marketing.  The business strategy relies on a marketing sales
force that compensates independent business owners (“Consultants”) not only for sales of Company health and wellness
products they personally generate, but also for the sales of other Consultants whom they introduced to the business, creating a
sales organization of Consultants and a hierarchy of multiple levels of compensation.  The products, services and business
opportunities are typically marketed directly to potential business partners and consumers by means of referrals, video promotions,
conferences, the Internet, and word-of-mouth marketing.



Consultants become associated with the
Company through an independent contractor relationship and receive remuneration for selling products and services and for expanding
their network of people doing the same by promoting Zurvita’s business opportunity. This model provides each independent
sales Consultant an opportunity to earn money on a part-time basis or make a living on a full-time basis and to obtain long-term
financial security through the creation of long-term residual income.



In February of 2011, Zurvita entered into
the growing Health & Wellness industry with its launch of “Zeal”, a nutritional drink, and entered the weight management
market with the launch of Zurvita’s Zeal for Life Weight Management Program in late October 2011. Simultaneously, the Company
decided to exit the local ad market and the discount fee for service because of the Company’s focus on health and wellness
products. To continue to provide support these exited businesses required a separate sales force, customer service and ad support
department, continued enhancements to the ad technology, required arrangements with third party companies to support and service
the discount fee for service business, required the company to be dependent on other vendors to service its consumers, and required
a separate administrative platform to support the discount fee for service business. The commitment to be successful in these markets
required substantial resources and the return on those resources when compared to the return on health and wellness resources substantiated
the decision to solely focus on health and wellness.



Zurvita has developed business processes
to dramatically increase performance success:



Strengthen Brand Recognition



National and regional marketing efforts
are administrated to support corporate and “personal” branding initiatives.  Inherent to the network marketing
industry is the axiom that people do not follow products or features, but rather the people with whom they relate to on a personal
level.  Zurvita not only invests resources to promote its corporate brand, but has developed a technological platform
allowing Consultants to build web-based personal branded sites enhancing their position as affiliate marketers of Zurvita programs
and services.



2







Increase Product and Service Offerings



Zurvita continues to explore the marketplace
for new health and wellness consumable products that are anticipated by consumers. These are essential consumer and business solutions
in large and growing markets. The network marketing industry mandates a state of continuous improvement by offering its Consultants
and customers products and services that offer time, value and conveniences at cost competitive prices. Zurvita added to its Zeal
for Life program by partnering with renowned fitness expert and motivational speaker, Peter Neilson, whose partnership with Zurvita
is focused on training and consulting on wellness and fitness programs. Mr. Neilson’s dedication to health, fitness and lifestyle
have propelled him to the top of the world of body building, earning Nielsen titles like Mr. International Universe, Mr. World
and well over 50 other titles.



Marketing



Zurvita’s marketing strategies open
new, innovative marketing and sales avenues for Consultants to build income through expansion of their sales organization and the
residual benefits offered through the sale of health and wellness products. The marketing strategy features unique components beyond
the traditional approach indicative of most network marketing companies.



Technology



Zurvita recognizes the Internet is a powerful
platform for the network marketer. The highly social aspect of the Internet lends itself as a natural marketing vehicle and continuously
opens a new population of prospects. Zurvita offers Consultants robust “back office” support complimented with sales
and marketing tools.



Training and Support



The success of an external marketing program
is only as effective as the internal marketing strategies to keep Consultants informed and engaged. Zurvita is committed to a variety
of communication initiatives that promote leadership and business effectiveness. Weekly telephone/webinar meetings as well as informational
seminars create opportunities to develop leaders and to promote Zurvita’s business opportunity. National conferences and
regional events further support Zurvita’s efforts to train and develop its national sales force.



Products and Services



Our products consist of consumable health
and wellness products. Our products are sold directly to consumers through our network of independent sales Consultants.



Our principal products include the following:



3







PART I

TABLE 1 - PRODUCTS and SERVICES





|Product                              | Description                                                                                                                                                                                                                                                                                                                                                                                       
|------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Zeal                                 | All-in-one natural nutritional drink. 
        Synergistic blend of whole food concentrates providing an excellent source of nutrients, antioxidants & vitamins.  Zeal
        is a proprietary wellness formula that promotes long-term health and wellness.                                                                                                                                     
|Zeal Advanced Formula Protein Shakes | Zeal Advanced Formula Protein Shakes are
        packed with natural carb blocking nutrients designed to block carbohydrate absorption.  These shakes are an excellent source
        of dietary fiber leaving you with a satisfied, full feeling.                                                                                                                                                
|Zeal Cleanse                         | An herbal and probiotic cleanse that will
        help detoxify your body and restore your digestive system to a healthy state.                                                                                                                                                                                                                                                                   
|Zeal Burn                            | An effective blend of thermogenic fat burners, a natural carb blocker and appetite suppressant.  Taken before each meal these powerful ingredients will accelerate your metabolism to burn more calories, reduce your hunger and block the absorption of the carbohydrates that you do eat; all without making you jittery as many weight loss products do.                                       
|Zeal Weight Management Program       | Using Zeal as the foundation for long term
        health, Zeal Weight Management Program combines Zeal Protein Shakes, Zeal Burn and Zeal Cleanse to effectively assist the consumer
        in their efforts to lose weight or maintain a "healthier" weight.                                                                                                                                   
|Services                             | Zurvita Protection protects members against common legal issues.  Zurvita Health provides members with discount medical benefits. Zurvita Care Saver provides members concierge service and retail discounts. Zurvita Commercial Energy provides members the option to purchase deregulated electric.                                                                                             
|Zlinked                              | ZLinked provides turn-key advertising solutions for small- and medium-sized businesses to connect with consumers on the Internet, including professionally managed pay-per-click (PPC), search engine optimization (SEO), and organic search result ranking. Its online search directory actively pushes ads to an internal local advertising network as well as popular 3rd party search engines.





Employees



As of July 31, 2012, Zurvita Holdings had 21 full-time employees.



Customers



Zurvita’s customers can either be
consultants who purchase products, third party consultants or consumers who have purchased directly from a consultant.



4







Competition



The Company operates in the highly competitive
business-to-business segment that consists of many different companies ranging from the small sole proprietors to large multi-national
domestic and foreign corporations who sell competing products or who are vying for our membership’s consumer spending dollars.  We
expect our competition to continually change with the advent of new products and services that contend for our current membership’s
discretionary spending dollars or diminish the perceived value of our products and services. There are many competitors who are
more established than we are and have greater financial and non-financial resources than we do.



Government Regulation



We are subject to federal, state and local
laws, regulations, guidelines and determinations, common laws, codes of conduct and other similar parameters that directly and
indirectly impact our business and methods of operation.



Product Claims and Advertising Regulations
-The Federal Trade Commission (FTC) and certain states regulate advertising, product claims, and other consumer matters.  The
FTC and state regulators may institute enforcement actions against companies for false and misleading advertising of consumer products.  In
addition, the FTC has increased its scrutiny of the use of testimonials, similar to those used by us and representatives marketing
our membership programs. While we have not been the target of any FTC or state regulatory enforcement actions, we can provide
no assurance that:



| | · | the FTC or state regulators will not question our advertising or other operations in the future;                             
| | - | -----------------------------------------------------------------------------------------------------------------------------
| | · | a state will not interpret product claims presumptively valid under federal law as illegal under that state’s regulations; or
| | · | future FTC or state regulations or decisions will not restrict the permissible scope of such claims.                         



We are also subject to the risk of claims
by consultants and their respective customers who may file actions on their own behalf, as a class or otherwise, and may file complaints
with the FTC or state or local consumer affairs offices.  These agencies may take action on their own initiative against
us for alleged advertising or product claim violations, or on a referral from brokers, agents, customers or others.  Remedies
sought in these actions may include consent decrees and the refund of amounts paid by the complaining brokers, agents or consumer,
refunds to an entire class of brokers, agents or customers, client refunds, or other damages, as well as changes in our methods
of doing business.  A complaint based on the practice of one broker or agent, whether or not we authorized the practice,
could result in an order affecting some or all of the brokers and agents that we use in a particular state.  Also, an
order in one state could influence courts or government agencies in other states considering similar matters.  Proceedings
resulting from these complaints could result in significant defense costs, settlement payments or judgments and could have a material
adverse effect on us.



Corporate Information



Zurvita Holdings is a Delaware corporation
formed on June 28, 2007. Zurvita Holdings principal executive offices are located at 800 Gessner Suite 110, Houston, Texas 77024.



ITEM 1A. RISK FACTORS



Our business faces risks and uncertainties,
including those discussed below and elsewhere in this report. These factors represent risks and uncertainties that could have a
material adverse effect on our business, results of operations and financial condition. Additional risks and uncertainties not
presently known to us or that we do not presently consider significant also may impair our business or the trading price of our
securities. Whenever the terms “our,” “we” and the “Company” are used in this Risk Factors
section, they refer to Zurvita Holdings or any of its subsidiaries.



Risks Related to Our Business



We have a history of significant
losses and may not be profitable in the future and likely needs significant additional outside funding to continue operating.



We have a history of net losses and have
an accumulated deficit of approximately $20.2 million, from inception through July 31, 2012.  We have historically generated
significant net operating losses and negative operating cash flows.    You should not rely solely on the public
market valuation of the Company and the views of securities analysts and investors for assessing the operational, business and
financial success of the Company. Fluctuations in our quarterly operating results or our inability to achieve profitability may
cause volatility in the price of our common stock in the public market. Since launching the Zeal for Life line of products we have
experienced growth month over month for the previous 7 months ending July 31, 2012 and have since moved into a phase of sustaining
ourselves, we are operating within a positive cash flow environment. However, if the Zeal for Life line of products is unable to
sustain positive cash flows in the future, we may need outside funding to continue our operations. Additional capital may not be
available to us on acceptable terms or may not be available at all.



5







Our business is difficult to evaluate
because we have had a limited operating history and have experienced significant changes.



We have a limited operating history, and
the Company’s business has undergone significant transformation during the past several years as a result of changes in the
Company’s ownership, the services and products offered, changes in market conditions, changes in our targeted membership,
and are expected to continue to change for similar reasons. We cannot assure you that our current business strategy will be successful
in the long term.  We have experienced significant losses since inception and, even if demand from members exists, we
cannot assure you that our business will be successful.



The Company is majority owned by
shareholders who are considered related parties and who will be able to make important decisions about our business and capital
structure.



Related parties own approximately
62% of our outstanding common stock and approximately 94% of the voting power of all equity securities. Of the related parties,
a significant percentage of the Company’s outstanding securities are controlled by Mark Jarvis who owns approximately 56%
of our outstanding common stock and 9% of the voting power of all equity securities.   As a result, Mr. Jarvis’s
interests will be significantly represented in certain corporate matters such as the election of the members of our board of directors,
appointment of new management and approval of any action requiring stockholder approval.  Mr. Jarvis’s interest
in exercising control over us and our business may conflict with the interests of our other stockholders.  Mr. Jarvis’s
control may also discourage others from acquiring us or from making a significant investment in us. Related parties collective interest
in exercising control over us and our business may conflict with the interests of our other non-related party stockholders.  The
significant related party control may also discourage others from acquiring us or from making a significant investment in
us.



General economic, financial market
and political conditions may materially adversely affect our results of operations and financial conditions.



General economic, financial market and
political conditions may have an adverse effect on demand for our services and programs and on our results of operations and financial
condition.  Concerns over a double-dip recession, the availability and cost of credit, the declining global mortgage
and real estate market, the loss of consumer confidence and reduction in consumer spending, inflation, and other macroeconomic
factors could influence demand for our services and programs.  There could be a number of follow-on effects from the
credit crisis on our business, including insolvency of key partners, inability of customers to obtain credit to finance purchases
of our health and wellness products, and/or customer insolvencies each of which could adversely affect our results of operations
and financial condition.



We currently generate significant
revenue through our independent sales consultants.



We derive our revenue through product sales
of our independent sales consultants.  In the event we are unable to attract, motivate and retain our independent sales
consultants base our business, financial condition and results of operations could be materially and adversely affected as the
Company’s revenue is directly tied to the activity levels of its sales consultant base.



We may be unable to fund future growth.



Our business strategy calls for expansion
through an increase in our independent sales consultant base and entry into the health and wellness and weight management markets.
We will require significant funding for additional personnel, capital expenditures as well as for working capital purposes. Financing
may not be available to us on favorable terms, if at all. If adequate funds are not available on acceptable terms, then we may
not be able to meet our business objectives for expansion and profitability which could consequently harm our business, results
of operations and financial condition.



In addition, if we raise additional funds
through the issuance of equity or convertible debt securities, or a combination of both, then the stockholders will suffer dilution,
and any new securities may have rights, preferences and privileges senior to those of our common stockholders and other series
of preferred stockholders. Furthermore, if we raise capital or acquire businesses by incurring indebtedness, we will become subject
to the risks associated with indebtedness, including interest rate fluctuations and any financial or other covenants that our lender
may require. Moreover, if our strategy to increase its sales and marketing resources in order to grow revenues does not produce
the desired result, then the Company may incur significant, unrecoverable expenses.



Our growth may be limited if it is
unable to attract and retain qualified personnel.



Our business is largely dependent on the
skills, experience and performance of key members of our senior management team. We plan to increase the Company’s operations
and finance personnel. We believe that our success depends largely on its ability to attract and retain highly-skilled and qualified
technical and managerial personnel. The market for highly skilled sales, marketing and support personnel is highly competitive
as a result of the limited availability of technically-qualified personnel with the requisite understanding of the industry in
which we operate. The inability to hire or retain qualified personnel may hinder our ability to implement its business strategy
and may harm our business.



6







Our future growth could strain our
personnel and infrastructure resources, and if we are unable to implement appropriate controls and procedures to manage our growth,
we may not be able to successfully implement our business plan.



Our future success will depend in part
upon the ability of our management to manage growth effectively. This may require us to hire and train additional personnel to
manage our expanding operations. In addition, we will be required to continue to improve our operational, financial and management
controls and our reporting systems and procedures. If we fail to successfully manage our growth, we may be unable to execute upon
our business plan and our business and operations may be adversely impacted.



Our ability to anticipate and respond
to market trends and changes in consumer preferences could affect our financial results.



Our success depends on our ability to anticipate,
gauge and react in a timely and effective manner to changes in consumer spending patterns and preferences for products and services.
We must continually work to develop new products, maintain and enhance the recognition of our branded products. Furthermore, material
shifts or decreases in market demand for our products, including as a result of changes in consumer spending patterns and preferences,
could result in lower revenue.



Any future acquisition may expose
us to additional risks



Our business plan does not preclude growth
through the acquisitions of qualified companies who complement our current product offerings or enhance our product distribution.
The financing for any future acquisition could dilute the interests of our stockholders or result in an increase in our indebtedness
or both. Acquisitions may entail numerous risks, including:

| | · | difficulties in assimilating acquired
operations or products, including the loss of key employees from acquired businesses and disruption to our direct selling channel;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | diversion of management’s attention
from our core business
| | - | ----------------------------------------------------------

| | · | adverse effects on existing business relationships
with suppliers and customers; and
| | - | ------------------------------------------------------------------------------------

| | · | risks of entering markets in which we
have limited or no prior experience.
| | - | --------------------------------------------------------------------------



Our failure to successfully complete the
integration of any acquired business could have a material adverse effect on our business, financial condition and operating results.
In addition, there can be no assurance that we will be able to identify suitable acquisition candidates or consummate acquisitions
on favorable terms.



We face significant competition
for our products and services.



While our products are relatively new,
the direct-to-consumer industry is intensely competitive, continually evolving and, in some cases, subject to rapid change. We
expect the intensity of competition and the pace of change to be increased or at least be maintained in the future. Many of our
potential competitors have greater financial, technical, product development, marketing and other resources than us. These organizations
may be better known than we are and may have more customers or members than us. We cannot provide assurance that we will be able
to compete successfully against these organizations or any alliances they have formed or may form.  Therefore, there
can be no assurance that our competitors will not:



| | · | increase their emphasis on products similar
to those we offer;
| | - | --------------------------------------------------------------

| | · | provide products comparable or superior
to those we provide at lower consumer cost; and
| | - | ---------------------------------------------------------------------------------------

| | · | adapt more quickly than we do to evolving
industry trends or changing market requirements;
| | - | ------------------------------------------------------------------------------------------



We must replace the customers lost
in the ordinary course of business and if we fail to do so our revenue may decline and our customer base will decline.



We lose a substantial number of our customers
each year in the ordinary course of business.  The loss of customers may occur due to numerous factors, including:



| | · | changing customer preferences;
| | - | ------------------------------

| | · | competitive price pressures;
| | - | ----------------------------

| | · | customer dissatisfaction;
| | - | -------------------------

| | · | discontinuance of third-party products
and services
| | - | ---------------------------------------------------



7





We depend on third-party vendors to supply certain of
our products and services that we market. The failure of these vendors to provide these products or services could result in customer
dissatisfaction and harm our business and financial condition.



We depend on third-party vendors to
manufacture and formulate our health and wellness products that we market. As a result, the quality of service they provide
is not entirely within our control. If any third-party vendor were to cease operations, or terminate, breach or
not renew its contract with us, or suffer interruptions, delays or quality problems, we may not be able to substitute a
comparable third-party vendor on a timely basis or on terms favorable to us. As we are generally
obligated to continue providing our health and wellness products to our customers even if we lose a third-party vendor, any
disruption in our product offerings could harm our reputation and result in customer dissatisfaction and liability
claims. Replacing existing third-party vendors with more expensive or less quality third-party vendors could
decrease our profitability and harm our reputation.



We may incur material product liability
claims, which could increase our costs and harm our financial condition and operating results.



Our health and wellness and weight management
products consist of vitamins, minerals, proteins and other ingredients that are classified as foods or dietary supplements and
are not subject to food and drug pre-market regulation approval in the United States. As a marketer of nutritional and dietary
supplements that are ingested by consumers, we may be subjected to various product liability claims, including that the products
contain contaminants, the products include inadequate instructions to their uses, or the products include inadequate warnings concerning
side effects and interactions with other substances. Any such product liability claim could adversely affect our revenues and expenses
and ability to secure adequate insurance coverage.



We are dependent on a single credit
card processing and payment collection company.

In the event our credit card processor
ceases operations or terminates its agreement with us, there can be no assurance the Company could find and retain a replacement
credit card processor on a timely basis, if at all. This would severely restrict our ability to generate and collect
sales. Any service interruptions, delays or quality problems could result in delays in collecting payments, which could adversely
affect our revenue and profitability.



We must comply with Federal and State
telephone consumer protection laws.



Federal and State telephone consumer
protection laws prohibit deceptive, unfair or abusive practices in telemarketing sales. Any new legislation
further regulating telemarketing practices could adversely affect or limit our operations.



Our network marketing program could
be found to be not in compliance with current or newly adopted laws or regulations in one or more markets, which could prevent
us from conducting our business in these markets and harm our financial condition and operating results.



Our network marketing program is subject
to a number of federal and state regulations administered by the FTC and various state agencies in the United States. We are subject
to the risk that, in one or more markets, our network marketing program could be found not to be in compliance with applicable
law or regulations. Regulations applicable to network marketing organizations generally are directed at preventing fraudulent or
deceptive schemes, often referred to as “pyramid” or “chain sales” schemes, by ensuring that product sales
ultimately are made to consumers and that advancement within an organization is based on sales of the organization’s products
rather than investments in the organization or other non-retail sales-related criteria. The regulatory requirements concerning
network marketing programs do not include “bright line” rules and are inherently fact-based, and thus, we are subject
to the risk that these laws or regulations or the enforcement or interpretation of these laws and regulations by governmental agencies
or courts can change. The failure of our network marketing program to comply with current or newly adopted regulations could negatively
impact our business in a particular market or in general.



We face potential liability related
to the privacy and security of personal information it collects from consumers through its website and marketing operations.



Internet user privacy has become a
major issue both in the United States and abroad. We have privacy policies posted on its website that we believe comply with
applicable laws requiring notice to users about our information collection, use and disclosure practices. However, whether
and how existing privacy and consumer protection laws in various jurisdictions apply to the Internet is still uncertain and
may take years to resolve. Any legislation or regulation in the area of privacy of personal information could affect the way
we operate our website and could harm our business. Further, we cannot assure you that the privacy policies and other
statements on our website or our practices will be found sufficient to protect us from liability or adverse publicity
relating to the privacy and security of personal information. Any unauthorized release or failure to adequately protect
private information could cast a negative public perception of us which in turn could adversely affect our ability to attract
and retain customers.



8







We may become involved in the future,
in legal proceedings that, if adversely adjudicated or settled, could adversely affect our financial results.



We have in the past been a party to litigation
and have incurred significant legal costs and settlement expense. In general, litigation claims can be expensive and time consuming
to bring or defend against and could result in settlements or damages that could significantly affect our financial results.



Risks Related to Our Stock



We do not intend to pay dividends
on our capital stock.



We have never declared or paid any cash
dividend on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the
foreseeable future, except as required by the terms of the preferred stock we have issued.



The Company may raise additional
funds in the future through issuances of securities and such additional funding may be dilutive to stockholders or impose operational
restrictions



We may raise additional capital in the
future to help fund acquisitions and our operations through sales of shares of our common stock or securities convertible into
shares of our common stock, as well as issuances of debt.  Such additional financing may be dilutive to our stockholders,
and debt financing, if available, may involve restrictive covenants which may limit our operating flexibility.  If additional
capital is raised through the issuances of shares of our common stock or securities convertible into shares of our common stock,
the percentage ownership of existing stockholders will be reduced.  These stockholders may experience additional dilution
in net book value per share and any additional equity securities may have rights, preferences and privileges senior to those of
the holders of our common stock.



We are not subject to certain of
the corporate governance provisions of the Sarbanes-Oxley Act of 2002 and, without voluntary compliance with such provisions, neither
you nor the Company will receive the benefits and protections they were enacted to provide.



Since our common stock is not listed for
trading on a national securities exchange, we are not subject to certain of the corporate governance rules established by the national
securities exchanges pursuant to the Sarbanes-Oxley Act of 2002.  These rules relate to independent director standards,
director nomination procedures, audit and compensation committees standards, the presence of an audit committee financial expert
and the adoption of a code of ethics.



While we intend to file an application
to have our securities listed for trading on a national securities exchange in the future which would require us to fully comply
with those obligations, we cannot assure you that we will file such an application, that we will be able to satisfy applicable
listing standards, or, if we do satisfy such standards, that we will be successful in receiving approval of our application by
the governing body of the applicable national securities exchange.



Applicable SEC rules governing the
trading of “penny stocks” may limit the trading and liquidity of our common stock which may affect the trading price
of our common stock.



Our common stock is a “penny stock”
as defined under Rule 3a51-1 of the Exchange Act, and is accordingly subject to SEC rules and regulations that impose limitations
upon the manner in which our common stock may be publicly traded.  These regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks.  Under
these regulations, certain brokers who recommend such securities to persons other than established customers or certain accredited
investors must make a special written suitability determination regarding such a purchaser and receive such purchaser’s written
agreement to a transaction prior to sale.  These regulations may have the effect of limiting the trading activity of
our common stock and reducing the liquidity of an investment in our common stock.



Our common share price may subject
us to securities litigation.



The market for our common stock is expected
to be characterized by significant price volatility when compared to seasoned issuers, and we expect that our future share price
will be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities
class action litigation against a company following periods of volatility in the market price of its securities. We may, in the
future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could
divert management's attention and resources.



9







Our stock price may be volatile,
which may result in losses to our stockholders.



The stock markets have experienced significant
price and trading volume fluctuations, and the market prices of companies listed on the OTC Markets Group (OTCQX) and the OTC Bulletin
Board® (OTCBB) have been volatile in the past and have experienced sharp share price and trading volume changes. The trading
price of our common stock is likely to be volatile and could fluctuate widely in response to many of the following factors, some
of which are beyond our control:



| | · | variations in our operating results;
| | - | ------------------------------------

| | · | changes in expectations of our future
financial performance, including financial estimates by securities analysts and investors;
| | - | --------------------------------------------------------------------------------------------------------------------------------

| | · | changes in operating and stock price performance
of other companies in our industry;
| | - | ------------------------------------------------------------------------------------

| | · | additions or departures of key personnel;
and
| | - | ---------------------------------------------

| | · | future sales of our common stock.
| | - | ---------------------------------



Domestic and international stock markets
often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions
unrelated to our performance, may adversely affect the price of our common stock.



We became public by means of a reverse
merger, and, as a result, we are subject to the risks associated with the prior activities of the public company.



Additional risks may exist because Zurvita
became public through a reverse merger with Red Sun, which did not have significant operations or assets prior to the time of the
transaction. Red Sun was a development stage company from the time of its inception until the time of the Share Exchange. Prior
to the Share Exchange, Red Sun had no significant business operations and generated no revenues. We may require the cooperation
or assistance of persons or organizations, such as auditors, previously associated with Red Sun in connection with future matters
that could be costly or difficult to secure. Although we performed a due diligence review of Red Sun, we still may be exposed to
undisclosed liabilities resulting from its prior operations and we could incur losses, damages or other costs as a result. In connection
with the Share Exchange, claims may not be brought against such shareholders after six months from the closing of the Share Exchange.
Therefore, any liabilities associated with the prior operations, capitalization or ownership of securities of our company by the
shareholders of Red Sun may be borne by the holders of securities issued in the Share Exchange or the Private Placement.



Our common stock may be affected
by limited trading volume and price fluctuations, each of which could adversely impact the value of our common stock.



We believe that factors such as quarterly
fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause
the price of our Common stock to fluctuate substantially. These fluctuations also may cause short sellers to enter the market from
time to time in the belief that we will have poor results in the future. We cannot predict the actions of market participants and,
therefore, can offer no assurances that the market for our stock will be stable or appreciate over time.



ITEM 1B. UNRESOLVED STAFF COMMENTS



None.



ITEM 2. PROPERTIES



Zurvita Holdings’s management offices
are located at 800 Gessner Suite 110, Houston, TX 77024.  These facilities are leased and consist of approximately 4 thousand
square feet.  The lease expires on July 31, 2015. In addition, Zurvita Holdings leases warehouse space located at 1260 Security
Drive, Dallas, Texas 75247. These facilities are leased and consist of approximately 4,800 square feet.



ITEM 3. LEGAL PROCEEDINGS



From time to time, the Company may become
involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in
any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding
to which we are a party, which would reasonably be likely to have a material adverse effect on the Company.



ITEM 4. RESERVED



10







PART II



ITEM 5.MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.



Market Information



The common stock of the Company is quoted
for trading on the OTC Markets Group (the “OTCQX”) under the symbol “ZRVT.PK” for the year ended July 31,
2012 and was quoted for trading on the OTC Bulletin Board (“OTCBB”) under the symbol “ZRVT.OB” for the
year ended July 31, 2011. Set forth below are the quarterly high and low bid prices for our common stock for the years ended July
31, 2012 and 2011.





|2012 |                  |  | High |  |      | Low | 
|---- | ---------------- |  | ---- |  | ---- | --- | 
|     | October 31, 2011 |  |      |  | 0.02 |     | 
|     | January 31, 2012 |  |      |  | 0.01 |     | 
|     | April 30, 2012   |  |      |  | 0.05 |     | 
|     | July 31, 2012    |  |      |  | 0.04 |     | 
|     |                  |  |      |  |      |     | 
|     | 2011             |  |      |  | High |     | 
|     | October 31, 2010 |  |      |  | 0.40 |     | 
|     | January 31, 2011 |  |      |  | 0.19 |     | 
|     | April 30, 2011   |  |      |  | 0.08 |     | 
|     | July 31, 2011    |  |      |  | 0.05 |     | 





Holders



As of
July 31, 2012, 61,498,713 shares of our common stock are issued and outstanding and there were 96 stockholders of record.



Dividends



The Company has never paid any cash dividends
on the common stock and does not anticipate paying cash dividends in the foreseeable future. Our current policy is to retain earnings,
if any, to fund operations, and the development and growth of our business. Any future determination to pay cash dividends will
be at the discretion of the Board of Directors and will be dependent upon the Company’s financial condition, results from
operations, capital requirements, applicable contractual restrictions, restrictions in the organizational documents and any other
factors that the Board of Directors deems relevant.





Shares Authorized for Issuance Under
Equity Compensation Plans



During 2009, Zurvita’s Board of Directors
adopted the 2009 Incentive Stock Plan (the 2009 Plan), pursuant to which we reserved for issuance 6 million shares of Zurvita common
stock to be used as awards to employees, directors, consultants, and other service providers. The purpose of the 2009 Plan is to
provide an incentive to attract and retain officers, consultants, advisors and employees whose services are considered valuable,
to encourage a sense of proprietorship and to stimulate an active interest of such persons into Zurvita’s development and
financial success. Under the 2009 Plan, Zurvita is authorized to issue incentive stock options intended to qualify under Section
422 of the Internal Revenue Code (“Code”), non-qualified stock options, stock appreciation rights, performance shares,
restricted stock and long term incentive awards. The 2009 Plan is administered by the Board designated Compensation Committee.



11







|Plan Category                                              |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |           |  | Weighted-average exercise price of outstanding options, warrants and rights (b) |   |      | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | 
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- | --------- |  | ------------------------------------------------------------------------------- | - | ---- | ------------------------------------------------------------------------------------------------------------------------------------------- | 
|Equity compensation plans approved by security holders     |  |                                                                                                 | 5,608,000 |  |                                                                                 | $ | 0.22 |                                                                                                                                             | 
|Equity compensation plans not approved by security holders |  |                                                                                                 | –         |  |                                                                                 |   | –    |                                                                                                                                             | 
|Total                                                      |  |                                                                                                 | 5,608,000 |  |                                                                                 | $ | 0.22 |                                                                                                                                             | 





ITEM 6. SELECT FINANCIAL DATA



Not applicable.



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



Introduction



Management’s discussion and analysis
of results of operations and financial condition (“MD&A”) is provided as a supplement to and should be read in
conjunction with our audited consolidated financial statements and the related notes thereto included elsewhere herein to help
provide an understanding of our financial condition and results of our operations. The MD&A is organized as follows:



| | · | Overview– This section provides
a general description of our business and operating segments.
| | - | ---------------------------------------------------------------------------------------------



| | · | Results of operations –This
section provides an analysis of our results of operations comparing the year ended July 31, 2012 to 2011.
| | - | -------------------------------------------------------------------------------------------------------------------------------------



| | · | Liquidity and capital resources–
This section provides an analysis of our cash flows for the year ended July 31, 2012 and 2011, as well as a discussion of our liquidity
and capital resources.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Critical accounting policies –
This section discusses certain significant accounting policies considered to be important to our financial condition and results
of operations and which require significant judgment and estimates on the part of management in their application. In addition,
all of our significant accounting policies, including our critical accounting policies, are summarized in Note 2 to our audited
consolidated financial statements included within Item 8 of Part II of this 2012Annual Report on Form 10K.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Overview



Description of Business



Zurvita Holdings is a national network
marketing company offering high-quality health and wellness products targeting individuals and families with a strong foothold
in small town America and currently expanding into national urban centers. The Company’s consumable health and wellness consumer
products are offered through a growing network of independent sales consultants. Zurvita Holdings offers a unique business-to-business
strategy with turnkey solutions for the growing health and wellness market including its Zeal for Life Challenge weight loss program.



12





Results of Operations



|                                            |  | For the Year Ended July 31, 2012 |            |   | For the Year Ended July 31, 2011 |   |            | Increase (Decrease) | 
|------------------------------------------- |  | -------------------------------- | ---------- | - | -------------------------------- | - | ---------- | ------------------- | 
|                                            |  |                                  |            |   |                                  |   |            |                     | 
|Revenues                                    |  | $                                | 7,893,793  |   |                                  | $ | 4,628,534  |                     | 
|Cost of Sales                               |  |                                  | 6,513,978  |   |                                  |   | 3,207,153  |                     | 
|                                            |  |                                  |            |   |                                  |   |            |                     | 
|Gross Profit                                |  |                                  | 1,379,815  |   |                                  |   | 1,421,381  |                     | 
|                                            |  |                                  |            |   |                                  |   |            |                     | 
|Operating Expenses                          |  |                                  | 4,172,351  |   |                                  |   | 5,568,091  |                     | 
|Operating Loss                              |  |                                  | (2,792,536 | ) |                                  |   | (4,146,710 | )                   | 
|                                            |  |                                  |            |   |                                  |   |            |                     | 
|Other Income (Loss)                         |  |                                  | 2,360,126  |   |                                  |   | 5,769,775  |                     | 
|                                            |  |                                  |            |   |                                  |   |            |                     | 
|Income (Loss) Before Income Taxes           |  |                                  | (432,410   | ) |                                  |   | 1,623,065  |                     | 
|                                            |  |                                  |            |   |                                  |   |            |                     | 
|Income Taxes                                |  |                                  | 2,822      |   |                                  |   | 4,486      |                     | 
|                                            |  |                                  |            |   |                                  |   |            |                     | 
|Net Income (Loss )                          |  | $                                | (435,232   | ) |                                  | $ | 1,618,579  |                     | 
|                                            |  |                                  |            |   |                                  |   |            |                     | 
|Basic and Diluted Earnings (Loss) Per Share |  | $                                | (0.03      | ) |                                  | $ | 0.03       |                     | 



Revenue:



For the year ended July 31, 2012, revenue
was approximately $7.9 million, as compared to approximately $4.6 million for the year ended July 31, 2011, an increase of approximately
$3.26 million. Significant increases in Zeal product sales have contributed to the increase in overall revenue. The various components
of total revenue are discussed below.



Administrative Websites

Administrative website sales were approximately
$608 thousand for the year ended July 31, 2012, as compared to approximately $1.2 million for the year ended July 31, 2011. The
approximate $625 thousand decrease in administrative website sales was result of a reduction in sales consultants joining the Company.
However, this downward trend has been turned around and the addition of consultants has increased month over month for the previous
7 months ending July 31, 2012.



Advertising Sales

The Company’s advertising sales were
approximately $158 thousand for the year ended July 31, 2012, as compared to approximately $703 thousand for the year ended July
31, 2011. The approximate $545 thousand decrease is due to the advertising sales technology platform having technical shortcomings
that led to adverse refund and persistency rates that made selling the product difficult.



Commissions

The Company’s commission revenue
for the year ended July 31, 2012, was approximately $260 thousand as compared to approximately $450 thousand for the year ended
July 31, 2011. The approximate $190 thousand decrease is due to run off of the Company’s residential energy block of business.
The Company did not market residential energy during the year ended July 31, 2012.



Consumable Products

The Company’s consumable product
sales for the year ended July 31, 2012, were approximately $6.47 million as compared to approximately $958 thousand for the year
ended July 31, 2011. The approximate $5.5 million increase is due to the shift of the focus to the sales of health and wellness
products.



Marketing Fees and Materials

The Company’s marketing fees and
materials revenue for the year ended July 31, 2012, was approximately $270 thousand as compared to approximately $837 thousand
for the year ended July 31, 2011. The approximate $567 thousand decrease is due to the change in how sales consultants join the
business by eliminating the marketing fee. The current revenue represents marketing materials sold to the consultants as well as
conference and event fees.



13





Membership Fees

The Company’s membership fees were
approximately $125 thousand for the year ended July 31, 2012, as compared to $446 thousand for the year ended July 31, 2011. The
decrease in membership revenue is a result of the Company’s efforts to focus on the sale of consumable products as they are
higher margin products.



Cost
of Sales:



Total
cost of sales for the year ended July 31, 2012, was approximately $6.5 million as compared to approximately $3.2 million for the
year ended July 31, 2011. The increase in overall revenue resulted in more commissions paid to sales consultants as well as product
and service cost. The various components of cost of sales are discussed below.



Benefit
and Service Cost

Benefit
and service cost represents the direct cost of the membership and subscription products sold such as administrative websites,
advertising sales, marketing materials and membership fees. Benefit and service cost was approximately $599 thousand as compared
to approximately $1.1 million. The decrease is due to less advertising sales and membership fees.

Consumable
Products Manufacturing Cost



Consumable
products manufacturing cost represents Zeal’s manufactured cost and the cost of shipping the product to customers. For the
year ended July 31, 2012, this cost of sales component was $1.8 million compared to $200 thousand for year ended July 31, 2011.
This increase is a direct response to the increase in consumable product sales.

Sales
Commissions



The
Company pays its independent sales agents on a commission basis. Sales commissions for the year ended July 31, 2012, were approximately
$4.2 million as compared to approximately $1.9 million for the year ended July 31, 2011. The increase of $2.3 million is a result
of the increase in consumable product sales.



Gross
Profit Percentage:



For
the year ended July 31, 2012, gross profit was approximately $1.4 million or 17%, as compared to approximately $1.4 million or
30% for the year ended July 31, 2011. Although revenues for the year ended July 31, 2012, increased, the Company was not able
to achieve an increase in gross profit percentage. The company started the year with a very aggressive compensation plan on the
consumable products that was later scaled back to increase margins and increase gross profit.



Operating
Expenses:



Our
operating expenses for the year ended July 31, 2012 and for the year ended July 31, 2011, were approximately $4.2 million and
$5.6 million, respectively.



The
table below sets forth components of our operating expenses for year ended July 31, 2012, compared to the corresponding prior
year period:



|                         |  | For the Year Ended
July 31, 2012 |           |  | For the Year Ended
July 31, 2011 |   |           | Increase (Decrease) | 
|------------------------ |  | -------------------------------- | --------- |  | -------------------------------- | - | --------- | ------------------- | 
|                         |  |                                  |           |  |                                  |   |           |                     | 
|Depreciation             |  |                                  | 32,914    |  |                                  |   | 37,254    |                     | 
|Office related expenses  |  |                                  | 537,960   |  |                                  |   | 543,713   |                     | 
|Payroll and benefits     |  |                                  | 1,854,733 |  |                                  |   | 2,231,322 |                     | 
|Professional fees        |  |                                  | 679,027   |  |                                  |   | 880,835   |                     | 
|Selling and marketing    |  |                                  | 941,289   |  |                                  |   | 1,668,545 |                     | 
|Travel                   |  |                                  | 126,428   |  |                                  |   | 206,422   |                     | 
|                         |  |                                  |           |  |                                  |   |           |                     | 
|Total operating expenses |  | $                                | 4,172,351 |  |                                  | $ | 5,568,091 |                     | 



14





Depreciation
expense for the year ended July 31, 2012, was approximately $32 thousand as compared to approximately $37 thousand
for the year ended July 31, 2011, a decrease of approximately $4 thousand over the same prior year period. The decrease is related
to the continued increase in fully depreciated assets.



Office
related costs include rent, insurance, utilities and office maintenance. For the year ended July 31, 2012 these costs were
approximately $538 thousand compared to $544 thousand for the year ended July 31, 2011. There were no significant changes in operations
for these costs.



Payroll
and related expenses for the year ended July 31, 2012 was approximately $1.9 million as compared to approximately $2.2 million
for the year ended July 31, 2011, a decrease of approximately $200 thousand over the same prior year period. The decrease is attributable
to transitioning certain ZLinked employees off payroll.



Professional
fees consist of consulting, accounting fees, contract labor and legal costs. For the year ended July 31, 2012, these costs were
approximately $198 thousand, $238 thousand, $107 thousand and $135 thousand, respectively, as compared to $204 thousand, $279
thousand, $231 thousand, and $167 thousand for the year ended July 31, 2011.   The contract labor costs decreased as a result
of contracting fewer services to maintain and support the ZLinked technology.



Selling
and marketing expenses for the year ended July 31, 2012, were $941 thousand as compared to $1.7 million for the year ended July
31, 2011, a decrease of approximately $727 thousand over the prior reporting period. The significant decrease is due to less amortization
of deferred costs such as agent advanced compensation and other prepaid marketing costs between the periods.



Business
travel expenses for the year ended July 31, 2012, were approximately $126 thousand, as compared to the $206 thousand for the year
ended July 31, 2011, a decrease of approximately $80 thousand. Travel expenses decreased because the Company focused its growth
prospects to three key markets, requiring our management to travel less throughout the entire United States, and the Company passed
certain travel expenses on to independent consultants that wanted to join the Company, instead of the Company paying for such
consultants to travel to the Houston area.



Other
Income (Expense):



Gain on change in fair value of embedded
share conversion feature



An embedded share conversion feature exists
within the Company’s convertible note payable. The Company determined the conversion feature to be a derivative instrument
and estimated its fair value at the time of issuance and at each subsequent reporting period. We recorded an unrealized gain on
the conversion feature for the year ended July 31, 2011of approximately $462 thousand. See Note 12 – Assets and Liabilities
Measured at Fair Value, to financial statements contained within Item 8 of Part II of this Form 10-K for additional information
with respect to the estimation of the fair value of this conversion feature. On May 8, 2012, the Company entered into an agreement
with Infusion Brands International, Inc. to purchase 15.2 million outstanding shares for $100,000. The prior existing note payable
and the derivative instrument were extinguished.



Gain (loss) on change in fair value
of warrants



The Company’s
liability warrants are recorded at fair value. Their fair value is subject to remeasurement on a recurring basis. For the year
ended July 31, 2012, the change in fair value of these warrants was approximately a gain of $38 thousand, as compared to a gain
of approximately $6.1 million for the year ended July 31, 2011.The gain in fair value for the year ended July 31, 2011was
a result of the significant decline in share price from $0.34 to $0.04 which is used as an input in fair valuing the warrants.
The loss in fair value for the year ended July 31, 2010 was (1) a result of the 4-to-1 forward share split that occurred on August
11, 2009 that had the effect of increasing the number of outstanding warrants by 21.42 million and (2) using a comparatively higher
share price as an input in fair valuing the warrants. These gains and losses are a non-cash item not
impacting operating cash flows or results of operations before other income and expenses. See Note 12 – Assets and
Liabilities Measured at Fair Valueto financial statements contained within Item 8 of Part II of this Form 10-K, for
additional information with respect to the estimation of the fair value of these warrants.





Interest expense



Interest expense for the year ended July
31, 2012, was approximately $319 thousand, as compared to $362 thousand for the year ended July 31, 2011.  The interest
expense is a result of accreting the discount recognized on the Company’s $2 million interest bearing convertible note issued
on October 9, 2009. Accretion of $263 thousand is included within interest expense for the year ended July 31, 2012, as compared
to $323 thousand of accretion included within interest expense for the year ended July 31, 2011. On May 8, 2012, the Company entered
into an agreement with Infusion Brands International, Inc. to purchase 15.2 million outstanding shares for $100,000. The prior
existing note payable and the derivative instrument were extinguished. Accretion of $819 thousand was written off to gain on extinguishment
of debt for the year ended July 31, 2012. This included $263 thousand from 2012 and $556 thousand from prior periods.



15





Loss on change in fair value of marketable securities



The Company’s marketable securities
consist of non-registered common stock. The Company fair values these securities on a recurring basis. The
Company recorded an unrealized loss of $37 thousand for the year ended July 31, 2012 as compared to the unrealized loss of $443
thousand recorded for the year ended July 31, 2011. These losses are a non-cash item not impacting operating cash flows or results
of operations before other income and expenses. See Note 12 – Assets and Liabilities Measured at Fair Value,
to financial statements contained within Item 8 of Part II of this Form 10-K for additional information with respect to the determination
of fair value for the Company’s marketable securities.



Gain on extinguisment of debt



On May 8, 2012, the Company and Amacore
entered into a Stock Purchase Agreement (the “Amacore Purchase Agreement”) whereby the Company purchased 37.21 million
shares of the Company’s common stock from Amacore. Pursuant to the Amacore Purchase Agreement, the Company paid to Amacore
a purchase price equal to $300 thousand. In connection with the Amacore Purchase Agreement, Amacore forgave the Company’s
indebtedness to Amacore in principal and interest equal to $362 thousand which was written off to gain on extinguishment of debt.



Furthermore, in connection with and concurrently
with the Amacore Purchase Agreement, the Company and Amacore entered into an Agreement of Conveyance, Transfer and Assignment of
Assets and Assumption of Obligations (the “Conveyance Agreement”) whereby the Company assigned, sold, conveyed and
transferred all of the Company’s right, title and interest in certain intellectual property rights related to the Company’s
ZLinked technology, which intellectual property rights are defined and identified in a Conveyance Agreement (the “Assets”).
Pursuant to the Conveyance Agreement, Amacore agreed to assume any and all liabilities and obligations associated with the Assets,
regardless of when such liabilities and obligations arose.



On May 8, 2012, the Company and Infusion
entered into a Stock Purchase Agreement (the “Infusion Purchase Agreement”) whereby the Company purchased 15.2 million
shares of the Company’s common stock from Infusion. Pursuant to the Infusion Purchase Agreement, the Company paid to Infusion
a purchase price equal to $100 thousand.



Furthermore, in connection with the Infusion
Purchase Agreement, Infusion forgave and surrendered for cancellation that certain promissory note in principal amount of $2,000,000
(the “Note”) along with accrued interest of $818 thousand and unrealized gain on the conversion feature of $593 thousand
for the year ended July 31, 2012, were written off to gain on extinguishment of debt. The Note was issued by the Company to Infusion
in connection with that certain License and Marketing Agreement, dated October 9, 2009, by and between the Company and Infusion.
Lastly, Infusion terminated and released any and all of Infusion’s security interest arising out of that certain Security
Agreement, dated December 2, 2010, by and between the Company and Infusion.



Subsequent to the close of October 31,
2011, an amendment was drafted to Mark Jarvis’s existing employee agreement. It noted a reduction to his yearly salary as
well as extinguishment of all deferred compensation prior to the amendment. Therefore, $67 thousand was written off to gain on
extinguishment of debt.



Income Taxes:



For the year ended July 31, 2012, the Company
estimated approximately $3 thousand in tax expense as compared to $4 thousand for the year ended July 31, 2011.



The
Company realized no federal tax benefit from the deferred tax asset resulting from its historical net operating loss carryforwards
as the deferred tax asset is fully reserved.



Net
Income (Loss):



The
Company had net loss of approximately $435 thousand for the year ended July 31, 2012, as compared to a net income of $1.6 million
for the year ended July 31, 2011. The main reason the Company went from earnings to a net loss is due to the $6.1 million unrealized
gain on the change in fair value of the Company’s liability warrants for the year ended July 31, 2011.



Earnings
(Loss) per Common Share:



Earnings
per common share amounted to $0.03 for the year ended July 31, 2012, as compared to a loss per common share of $0.03 for the year
ended July 31, 2011.



16







Off Balance Sheet Arrangements



As of July 31, 2012, the Company did not
have any off balance sheet arrangements.





Liquidity and Capital Resources



The following table compares our cash flows
for the year ended July 31, 201 to the corresponding prior period:



|                                          |  | For the Year Ended July 31, 2012 |            |   | For the Year Ended July 31, 2011 |  
|----------------------------------------- |  | -------------------------------- | ---------- | - | -------------------------------- | -
|                                          |  |                                  |            |   |                                  |  
|Net cash used in operating activities     |  | $                                | (2,378,060 | ) |                                  | $
|Net cash used in investing activities     |  |                                  | (18,837    | ) |                                  |  
|Net cash provided by financing activities |  |                                  | 2,635,366  |   |                                  |  
|                                          |  |                                  |            |   |                                  |  
|Net (decrease) increase in cash           |  | $                                | 238,469    |   |                                  | $



Since its inception, the Company has met
its capital needs principally through sale of its equity securities and the issuance of debt. The proceeds from the sale of these
securities have been used for the Company’s operating expenses, such as salary expenses, professional fees, rent expenses
and other general and administrative expenses discussed above. At July 31, 2012, the Company had negative working capital of approximately
$1.5 million, an accumulated deficit of approximately $20.2 million and negative cash flows from operating activities of approximately
$2.4 million.



During fiscal 2010, the Company raised
from a shareholder $5.3 million of equity funding. During fiscal 2011, the Company raised from a shareholder $1.5 million of equity
funding. In order to raise capital, the Company may sell additional equity or issued additional convertible debt securities which
would result in additional dilution to our stockholders. The issuance of additional debt would result in increased expenses and
could subject us to covenants that may have the effect of restricting our operations. We can provide no assurance that additional
financing will be available in an amount or on terms acceptable to us, if at all. If we are unable to obtain additional funds
when they are needed or if such funds cannot be obtained on terms favorable to us, we may be unable to execute upon our business
plan or pay our costs and expenses as they are incurred, which could have a material, adverse effect on our business, financial
condition and results of operations.  Currently, the Company does not maintain a line of credit or term loan with any commercial
bank or other financial institution. The Company has approximately $858 thousand of outstanding notes payable as of July 31, 2012.



Critical Accounting Policies



Revenue Recognition



Administrative Websites



Company’s independent representatives
pay a fee to the Company entitling them to use of websites that facilitate their business operations.  Revenue is recognized
ratably over the website subscription period.



Advertising Sales



Prior to exiting the discount fee for service
business, the Company marketed subscriptions to a service that facilitates the ability of customers, typically small business owners,
to display commercial advertising via an on-line search directory.  Revenue was recognized ratably over the advertising
subscription period.



Commissions



The Company is paid a commission for its
sales of third-party products. Commissions are recognized as products are sold and services performed and the Company has accomplished
all activities necessary to complete the earnings process.



17







Consumable Products



The company markets a nutritional drink
called “Zeal”. Revenue from the sale of this consumable product is recognized upon shipment of the product.



Marketing Fees and Materials



The Company also earns ancillary revenue
from the sale of marketing materials to sales consultants.  Revenue is recognized when marketing materials are delivered.



Membership Fees



Prior to exiting the discount fee for service
business, the Company recognized revenues from membership fees as earned for the sales of other lifestyle discount benefit programs,
such as household protection and personal financial services.  These arrangements were generally renewable monthly and
revenue was recognized over the renewal period.  These products included elements sold through contracts with third-party
providers.  Based on consideration of each contractual arrangement, revenue was reported on a gross basis.



Use of Estimates



The preparation of these consolidated financial
statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses,
and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including the
allowance for sales refunds and chargebacks, capitalization of certain assets, depreciable/amortizable lives, impairment of long-lived
assets, determination of amount of allowance for doubtful accounts, the fair value of marketable securities, the expected volatility
of common stock, and the fair value of common stock and warrants as well as the allocation of proceeds from the issuance of debt
and equity instruments.We base our estimates on historical experience and on various other assumptions that
we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items,
are reasonable.



Marketable Securities



The Company’s marketable securities
consist of non-registered common stock. The Company fair values these securities on a recurring basis and has accounted for these
securities as trading securities in accordance with U.S. GAAP.  These investments are carried in the accompanying consolidated
balance sheet at fair value, with the difference between cost and fair value (unrealized gains and losses) included in the Statement
of Operations.  Marketable securities are classified as current assets as they are available to meet the current operating
needs of the Company.



Share-Based Compensation



The Company recognizes the cost resulting
from all share-based payment transactions in the financial statements using a fair-value-based measurement method.  The
Company uses the Black-Scholes Option Pricing Model in computing the fair value of warrant instrument issuances.



The measurement date for valuing share-based
payments made to non-employees is the earlier of the date at which a commitment for performance by the counterparty to earn the
equity instruments is reached or the date at which the counterparty’s performance is complete.



Convertible Instruments



The Company reviews the terms of convertible
debt and preferred stock for indications requiring bifurcation and separate accounting for the embedded conversion feature. Generally,
embedded conversion features where the ability to physical or net-share settle the conversion option is not within the control
of the Company or the number of shares is variable are bifurcated and accounted for as derivative financial instruments. (See Derivative
Financial Instruments below.) Bifurcation of the embedded derivative instrument requires allocation of the proceeds first to
the fair value of the embedded derivative instrument with the residual allocated to the host instrument. The resulting discount
to the debt instrument or to the redemption value of convertible preferred securities is accreted through periodic charges to interest
expense over the term of the note or to dividends over the period to earliest conversion date using the effective interest rate
method, respectively.



18





Derivative Financial Instruments



The Company does not use derivative financial
instruments to hedge exposures to cash-flow or market risks. However, certain other financial instruments, such as warrants to
purchase the Company’s common stock and the embedded conversion features of debt and preferred instruments that are not considered
indexed to the Company’s common stock are classified as liabilities when either (a) the holder possesses rights to net-cash
settlement, (b) physical or net share settlement is not within the control of the Company, or (c) based on its anti-dilutive provisions.
In such instances, net-cash settlement is assumed for financial accounting and reporting. Such financial instruments are initially
recorded at fair value and subsequently adjusted to fair value at the close of each reporting period. Fair value for option-based
derivative financial instruments is determined using the Black-Scholes Option Pricing Model.



Income Taxes



The Company accounts for income taxes using
an asset and liability method pursuant to which deferred tax assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided against
deferred tax assets based on the weight of available evidence when it is more likely than not that some or all of the deferred
tax assets will not be realized.



When tax returns are filed, it is highly
certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty
about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position
is recognized in the financial statements in the period during which, based on all available evidence, we believe it is more likely
than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if
any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition
threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement
with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured
as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated
interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with
unrecognized tax benefits are classified as income tax expense in the statement of operations.



Fair Value Measurements



U.S. GAAP defines fair value as the price
that would be received to sell an asset or paid to transfer a liability to a third party with the same credit standing (an exit
price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. In many cases, the exit price and the transaction (or entry) price will be the same at initial recognition.
However, in certain cases, the transaction price may not represent fair value. Fair value is a market-based measurement determined
based on a hypothetical transaction at the measurement date, considered from the perspective of a market participant, not based
solely upon the perspective of the reporting entity. When quoted prices are not used to determine fair value, consideration is
given to three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. Entities
are required to determine the most appropriate valuation technique to use, given what is being measured and the availability of
sufficient inputs. Inputs to fair valuation techniques are prioritized, allowing for the use of unobservable inputs to the extent
that observable inputs are not available. The applicable guidance establishes a three-level hierarchy, based on the priority of
the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability’s
classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels
are defined as follows:





|Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Level 2 | Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1, quoted prices in markets that are not active, or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Level 3 | Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.  Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as those for which the determination of fair value requires significant management judgment or estimation.





19







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



Not applicable.



ITEM 8. FINANCIAL STATEMENTS.



















20







Report of Independent Registered Public
Accounting Firm



To the Board of Directors and Stockholders

Zurvita Holdings, Inc.

Houston, Texas



We have audited the accompanying consolidated
balance sheets of Zurvita Holdings, Inc. as of July 31, 2012 and July 31, 2011, and the related consolidated statements of operations,
stockholders' deficit, and cash flows for the years then ended. 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 audit 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 consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Zurvita Holdings, Inc. as of July
31, 2012 and July 31, 2011, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.
generally accepted accounting principles.



The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the
Company has suffered recurring losses from operations and has not generated sufficient cash flows from operations to meet its needs.
This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty.



/s/ Thomas Howell Ferguson P.A.






Tampa, Florida

November 15, 2012





21









ZURVITA HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                             |  | July 31, 2012 |             |   | July 31, 2011 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ----------- | - | ------------- | -
|ASSETS                                                                                                                                                                                                       |  |               |             |   |               |  
|Current assets                                                                                                                                                                                               |  |               |             |   |               |  
|Cash                                                                                                                                                                                                         |  | $             | 239,375     |   |               | $
|Marketable securities (at fair value)                                                                                                                                                                        |  |               | –           |   |               |  
|Accounts receivable                                                                                                                                                                                          |  |               | 347,533     |   |               |  
|Deferred expenses                                                                                                                                                                                            |  |               | 1,500       |   |               |  
|Prepaid expenses                                                                                                                                                                                             |  |               | 89,808      |   |               |  
|Total current assets                                                                                                                                                                                         |  |               | 678,216     |   |               |  
|                                                                                                                                                                                                             |  |               |             |   |               |  
|Property, plant and equipment (net)                                                                                                                                                                          |  |               | 59,473      |   |               |  
|                                                                                                                                                                                                             |  |               |             |   |               |  
|Merchant account deposit                                                                                                                                                                                     |  |               | 213,651     |   |               |  
|Total assets                                                                                                                                                                                                 |  | $             | 951,340     |   |               | $
|                                                                                                                                                                                                             |  |               |             |   |               |  
|LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT                                                                                                                                            | 
|Current liabilities                                                                                                                                                                                          |  |               |             |   |               |  
|Accounts payable                                                                                                                                                                                             |  | $             | 302,511     |   |               | $
|Accounts payable - related party                                                                                                                                                                             |  |               | 125,998     |   |               |  
|Notes payable - current                                                                                                                                                                                      |  |               | 158,127     |   |               |  
|Notes payable - related party                                                                                                                                                                                |  |               | 700,000     |   |               |  
|Accrued expenses                                                                                                                                                                                             |  |               | 837,244     |   |               |  
|Deferred revenue                                                                                                                                                                                             |  |               | 80,161      |   |               |  
|Deferred compensation - related party                                                                                                                                                                        |  |               | –           |   |               |  
|Income tax payable                                                                                                                                                                                           |  |               | 2,822       |   |               |  
|Total current liabilities                                                                                                                                                                                    |  |               | 2,206,863   |   |               |  
|                                                                                                                                                                                                             |  |               |             |   |               |  
|Notes payable - long term                                                                                                                                                                                    |  |               | –           |   |               |  
|Fair value of warrants                                                                                                                                                                                       |  |               | 262,799     |   |               |  
|Total liabilities                                                                                                                                                                                            |  |               | 2,469,662   |   |               |  
|                                                                                                                                                                                                             |  |               |             |   |               |  
|Redeemable preferred stock                                                                                                                                                                                   |  |               | 8,825,291   |   |               |  
|                                                                                                                                                                                                             |  |               |             |   |               |  
|Stockholders' deficit                                                                                                                                                                                        |  |               |             |   |               |  
|Common stock ($.0001 par value, 300,000,000 shares authorized; 69,498,713 and 69,497,713 shares issued and 61,498,713 and 12,750,954 shares outstanding as of July 31, 2012 and July 31, 2011, respectively) |  |               | 7,316       |   |               |  
|Additional paid-in capital                                                                                                                                                                                   |  |               | 10,469,335  |   |               |  
|Accumulated deficit                                                                                                                                                                                          |  |               | (20,210,264 | ) |               |  
|Treasury stock                                                                                                                                                                                               |  |               | (610,000    | ) |               |  
|Total stockholders' deficit                                                                                                                                                                                  |  |               | (10,343,613 | ) |               |  
|                                                                                                                                                                                                             |  |               |             |   |               |  
|Total liabilities, redeemable preferred stock and stockholders' deficit                                                                                                                                      |  | $             | 951,340     |   |               | $



The accompanying notes are an integral part
of these consolidated financial statements.



22









ZURVITA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS





|                                                                       |  | For the Year Ended |           
|---------------------------------------------------------------------- |  | ------------------ | ----------
|                                                                       |  | July 31,           |           
|                                                                       |  | 2012               |           
|REVENUES                                                               |  |                    |           
|Administrative websites                                                |  | $                  | 608,140   
|Advertising sales                                                      |  |                    | 158,460   
|Commissions                                                            |  |                    | 260,138   
|Consumable products                                                    |  |                    | 6,471,840 
|Marketing fees and materials                                           |  |                    | 269,599   
|Membership fees                                                        |  |                    | 125,616   
|Total revenues                                                         |  |                    | 7,893,793 
|                                                                       |  |                    |           
|COST OF SALES                                                          |  |                    |           
|Benefit and service cost                                               |  |                    | 599,267   
|Consumable products manufacturing cost                                 |  |                    | 1,764,293 
|Sales commissions                                                      |  |                    | 4,150,418 
|Total cost of sales                                                    |  |                    | 6,513,978 
|                                                                       |  |                    |           
|GROSS PROFIT                                                           |  |                    | 1,379,815 
|                                                                       |  |                    |           
|OPERATING EXPENSES                                                     |  |                    |           
|Depreciation                                                           |  |                    | 32,914    
|Office related expenses                                                |  |                    | 537,960   
|Payroll and employee benefits                                          |  |                    | 1,854,733 
|Professional fees                                                      |  |                    | 679,027   
|Selling and marketing                                                  |  |                    | 941,289   
|Travel                                                                 |  |                    | 126,428   
|Total operating expenses                                               |  |                    | 4,172,351 
|                                                                       |  |                    |           
|Loss from operations before other income (expenses)                    |  |                    | (2,792,536
|                                                                       |  |                    |           
|OTHER INCOME (EXPENSE)                                                 |  |                    |           
|Gain on change in fair value of share conversion feature               |  |                    | –         
|Gain (loss) on change in fair value of warrants                        |  |                    | 38,256    
|Gain (loss) on extinguishment of debt                                  |  |                    | 2,676,167 
|Gain on sale of noncomponent entity                                    |  |                    | –         
|Interest expense                                                       |  |                    | (319,812  
|Interest income                                                        |  |                    | 2,315     
|Loss on change in fair value of marketable securities                  |  |                    | (36,800   
|Loss on note receivable                                                |  |                    | –         
|Total other income (expense)                                           |  |                    | 2,360,126 
|                                                                       |  |                    |           
|(Loss) income before income taxes                                      |  |                    | (432,410  
|                                                                       |  |                    |           
|Income taxes                                                           |  |                    | 2,822     
|                                                                       |  |                    |           
|Net (loss) income                                                      |  | $                  | (435,232  
|                                                                       |  |                    |           
|Basic and diluted earnings (loss) per share                            |  | $                  | (0.03     
|                                                                       |  |                    |           
|Basic and diluted weighted average number of common shares outstanding |  |                    | 12,750,954





The accompanying notes are an integral
part of these consolidated financial statements.





23





ZURVITA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
DEFICIT

For the Year Ended
July 31, 2012



|                                          |  | Shares Common Stock |             |   | Common Stock |   |       | Treasury Stock |  |   | Additional Paid-In Capital |   |  | Accumulated Deficit |            |  | Total Stockholder's Deficit |  
|----------------------------------------- |  | ------------------- | ----------- | - | ------------ | - | ----- | -------------- |  | - | -------------------------- | - |  | ------------------- | ---------- |  | --------------------------- | -
|Balance, July 31, 2010                    |  |                     | 61,497,713  |   |              | $ | 6,950 |                |  | $ | (210,000                   | ) |  | $                   | 9,978,738  |  |                             | $
|                                          |  |                     |             |   |              |   |       |                |  |   |                            |   |  |                     |            |  |                             |  
|Share-based compensation                  |  |                     | –           |   |              |   | –     |                |  |   | –                          |   |  |                     | 405,253    |  |                             |  
|                                          |  |                     |             |   |              |   |       |                |  |   |                            |   |  |                     |            |  |                             |  
|Exercise of comon stock warrants          |  |                     | 1,000       |   |              |   | –     |                |  |   | –                          |   |  |                     | 500        |  |                             |  
|                                          |  |                     |             |   |              |   |       |                |  |   |                            |   |  |                     |            |  |                             |  
|Net loss available to common stockholders |  |                     | –           |   |              |   | –     |                |  |   | –                          |   |  |                     | –          |  |                             |  
|                                          |  |                     |             |   |              |   |       |                |  |   |                            |   |  |                     |            |  |                             |  
|Balance, July 31, 2011                    |  |                     | 61,498,713  |   |              | $ | 6,950 |                |  | $ | (210,000                   | ) |  | $                   | 10,384,491 |  |                             | $
|                                          |  |                     |             |   |              |   |       |                |  |   |                            |   |  |                     |            |  |                             |  
|Share-based compensation                  |  |                     | –           |   |              |   | –     |                |  |   | –                          |   |  |                     | 55,210     |  |                             |  
|                                          |  |                     |             |   |              |   |       |                |  |   |                            |   |  |                     |            |  |                             |  
|Exercise of comon stock warrants          |  |                     | 3,662,241   |   |              |   | 366   |                |  |   | –                          |   |  |                     | 29,634     |  |                             |  
|                                          |  |                     |             |   |              |   |       |                |  |   |                            |   |  |                     |            |  |                             |  
|Treasury stock purchase                   |  |                     | (52,410,000 | ) |              |   | –     |                |  |   | (400,000                   | ) |  |                     | –          |  |                             |  
|                                          |  |                     |             |   |              |   |       |                |  |   |                            |   |  |                     |            |  |                             |  
|Net loss available to common stockholders |  |                     | –           |   |              |   | –     |                |  |   | –                          |   |  |                     | –          |  |                             |  
|                                          |  |                     |             |   |              |   |       |                |  |   |                            |   |  |                     |            |  |                             |  
|Balance, July 31, 2012                    |  |                     | 12,750,954  |   |              | $ | 7,316 |                |  | $ | (610,000                   | ) |  | $                   | 10,469,335 |  |                             | $









The accompanying notes are an integral part
of these consolidated financial statements.



24





ZURVITA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                       |  | For the Year Ended |           
|-------------------------------------------------------------------------------------- |  | ------------------ | ----------
|                                                                                       |  | July 31, 2012      |           
|Cash flows from operating activities                                                   |  |                    |           
|Net income (loss)                                                                      |  | $                  | (435,232  
|Adjustments to reconcile net (loss) income to net cash (used) in operating activities: |  |                    |           
|Amortization of note payable discount                                                  |  |                    | –         
|Depreciation                                                                           |  |                    | 32,915    
|Share-based compensation                                                               |  |                    | 84,844    
|Gain on change in fair value of share conversion feature                               |  |                    | –         
|Gain on sale of noncomponent entity                                                    |  |                    | –         
|Gain on change in fair value of warrants                                               |  |                    | (38,256   
|Gain on extinguishment of debt                                                         |  |                    | (1,961,860
|Loss on change in fair value of marketable securities                                  |  |                    | 36,800    
|Loss on note receivable                                                                |  |                    | –         
|Changes in operating assets and liabilities                                            |  |                    |           
|Increase in accounts receivable                                                        |  |                    | (144,818  
|Decrease in agent advanced compensation                                                |  |                    | –         
|Decrease (increase) in deferred expenses                                               |  |                    | 48,815    
|Decrease (increase) in prepaid expenses                                                |  |                    | (263,409  
|Increase in accounts payable and accrued expenses                                      |  |                    | 394,322   
|Decrease in deferred revenue                                                           |  |                    | (34,635   
|Decrease (increase) in deferred compensation related party                             |  |                    | (97,546   
|Net cash (used) in operating activities                                                |  |                    | (2,378,060
|                                                                                       |  |                    |           
|Cash flows from investing activities:                                                  |  |                    |           
|Identifiable assets sold                                                               |  |                    | –         
|Proceeds from promissory note receivable                                               |  |                    | –         
|Purchase of property and equipment                                                     |  |                    | (18,837   
|Net cash provided by (used in) investing activities                                    |  |                    | (18,837   
|                                                                                       |  |                    |           
|Cash flows from financing activities:                                                  |  |                    |           
|Proceeds from borrowings                                                               |  |                    | 700,000   
|Proceeds from exercise of warrants                                                     |  |                    | 366       
|Proceeds from sale of preferred stock                                                  |  |                    | 2,800,000 
|Principal payments made on notes payable                                               |  |                    | (465,000  
|Treasury stock repurchase                                                              |  |                    | (400,000  
|Net cash provided by financing activities                                              |  |                    | 2,635,366 
|                                                                                       |  |                    |           
|Net change in cash balance                                                             |  |                    | 238,469   
|                                                                                       |  |                    |           
|Beginning cash                                                                         |  |                    | 906       
|                                                                                       |  |                    |           
|Ending cash                                                                            |  | $                  | 239,375   
|                                                                                       |  |                    |           
|Supplemental disclosure of cash flow information                                       |  |                    |           
|Cash paid for interest                                                                 |  | $                  | 2,644     
|                                                                                       |  |                    |           
|Cash paid for taxes                                                                    |  | $                  | 9,484     



The accompanying notes are an integral part
of these consolidated financial statements.

25







ZURVITA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2012 and 2011

NOTE 1 – NATURE OF OPERATIONS



Our consolidated financial statements include
the accounts of Zurvita Holdings, Inc. (referred to herein as the “Company,” “Zurvita Holdings,” “we,”
“us” or “our”) and our wholly-owned subsidiary Zurvita, Inc. (Zurvita). Material intercompany transactions
and balances have been eliminated upon consolidation. Zurvita Holdings is a national network marketing company offering high-quality
products targeting individuals and families with a strong foothold in small town America and expanding into national urban centers.
Products are sold through Zurvita’s network of independent sales consultants.



Management’s Assessment of
Liquidity



Since the Company’s inception, the
Company has primarily met its operating cash requirements through equity contributions from The Amacore Group, Inc. (Amacore),
who was the Company’s sole shareholder prior to July 30, 2009. Subsequent to July 30, 2009, the Company has sold several
series of preferred stock for gross proceeds of $6.8 million to another related party. We are using the proceeds from the
sale of preferred stock to subsidize the Company’s operations as the Company’s revenues and operating cash flows are
not currently sufficient to support the Company’s current operations.



At July 31, 2012, the Company had negative
working capital of approximately $1.5 million, an accumulated deficit of approximately $20.2 million and negative cash flows from
operating activities of approximately $2.4 million.



Additional cash resources may be required
should the Company not meet its sales targets, exceed its projected operating costs, wish to accelerate sales or complete one or
more acquisitions or if unanticipated expenses arise or are incurred.



The Company does not currently maintain
a line of credit or term loan with any commercial bank or other financial institution and has not made any other arrangements to
obtain additional financing.  We can provide no assurance that we will not require additional financing.  Likewise,
we can provide no assurance that if we need additional financing that it will be available in an amount or on terms acceptable
to us, if at all.  If we are unable to obtain additional funds when they are needed or if such funds cannot be obtained
on terms favorable to us, we may be unable to execute our business plan or pay our costs and expenses as they are incurred, which
could have a material, adverse effect on our business, financial condition and results of operations.



These issues raise substantial doubt about
our ability to continue as a going concern for a reasonable period. Management is attempting to enhance the operations of the Company
to achieve and maintain cash-positive operations. The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.



NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES



In June 2009, the Financial Accounting
Standards Board (“FASB”) approved FASB Accounting Standards Codification (“Codification”) as the single
source of authoritative accounting guidance used in the preparation of financial statements in conformity with U.S. GAAP for all
non-governmental entities. Codification, which changed the referencing and organization of accounting guidance without modification
of existing U.S. GAAP, is effective for interim and annual periods ending after September 15, 2009. Since it did not modify existing
U.S. GAAP, Codification did not have any impact on the Company’s financial condition or results of operations.



Revenue Recognition



Administrative Websites



Company’s independent representatives
pay a fee to the Company entitling them to use of websites that facilitate their business operations.  Revenue is recognized
ratably over the website subscription period.



Advertising Sales



The Company markets subscriptions to a
service that facilitates the ability of customers, typically small business owners, to display commercial advertising via an on-line
search directory.  Revenue is recognized ratably over the advertising subscription period.



26







Commissions



The Company is paid a commission for its
sales of third-party products. Commissions are recognized as products are sold and services performed and the Company has accomplished
all activities necessary to complete the earnings process.



Consumable
Products



The company markets a nutritional drink
called “Zeal”. Revenue from the sale of this consumable product is recognized upon shipment of the product.



Marketing Fees and Materials



The Company also earns ancillary revenue
from the sale of marketing materials to sales consultants.  Revenue is recognized when marketing materials are delivered.



Membership Fees



The Company recognizes revenues from membership
fees as earned for the sales of other lifestyle discount benefit programs, such as household protection and personal financial
services.  These arrangements are generally renewable monthly and revenue is recognized over the renewal period.



Refunds and Chargebacks



The Company
records a reduction in revenue for estimated refunds and chargebacks from credit card companies based upon actual history
and management’s evaluation of current facts and circumstances.   Refunds and chargebacks totaled approximately
$72 thousand and $129 thousand for the year ended July 31, 2012 and 2011, respectively, and were recorded as a reduction of revenue
in the accompanying statements of operations.  Estimates for an allowance for refunds and chargebacks totaled approximately
$10 thousand andis included in accrued expenses in the accompanying consolidated balance sheets as of July 31, 2012 and
July 31, 2011.



Selling and Marketing Costs



The Company classifies merchant account
fees, fulfillment costs and lead cost not identifiable with specific product sales within selling and marketing costs within the
Statement of Operations.



Concentration of Credit Risk



All of the Company’s credit card
processing is with one merchant processor, as well as all marketing sales commission payments are calculated by a third-party service
provider.



Use of Estimates



The preparation of these consolidated financial
statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses,
and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including the
allowance for sales refunds and chargebacks, capitalization of certain assets, depreciable/amortizable lives, impairment of long-lived
assets, determination of amount of allowance for doubtful accounts, the fair value of marketable securities, the expected volatility
of common stock, and the fair value of common stock and warrants as well as the allocation of proceeds from the issuance of debt
and equity instruments.We base our estimates on historical experience and on various other assumptions that
we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items,
are reasonable.



Marketable Securities



The Company’s marketable securities
consist of non-registered common stock. The Company fair values these securities on a recurring basis and has accounted for these
securities as trading securities in accordance with U.S. GAAP.  These investments are carried in the accompanying consolidated
balance sheet at fair value, with the difference between cost and fair value (unrealized gains and losses) included in the Statement
of Operations.  Marketable securities are classified as current assets as they are available to meet the current operating
needs of the Company.



27







Accounts Receivable



Accounts receivable are stated at estimated
net realizable value. Accounts receivable are primarily comprised of balances due from memberships, net of estimated allowances
for uncollectible accounts. In determining collectability, historical trends are evaluated and specific customer issues are reviewed
to arrive at appropriate allowances. At July 31, 2012 and July 31, 2011, no allowance was recorded.



Property, Plant and Equipment



Property, plant and equipment are recorded
at cost. The cost of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred.
The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the property
as follows: computer hardware, 3 years; furniture and fixtures, 7 years; equipment and machinery, 5 years; and leasehold improvements,
the shorter of the term of the lease or the life of the asset. When assets are retired or otherwise disposed of, the assets and
related accumulated depreciation are eliminated from the accounts and the resulting gain or loss is reflected in the results of
operations.



Share-Based Compensation



The Company recognizes the cost resulting
from all share-based payment transactions in the financial statements using a fair-value-based measurement method.  The
Company uses the Black-Scholes Option Pricing Model in computing the fair value of warrant instrument issuances.



The measurement date for valuing share-based
payments made to non-employees is the earlier of the date at which a commitment for performance by the counterparty to earn the
equity instruments is reached or the date at which the counterparty’s performance is complete.



Convertible Instruments



The Company reviews the terms of convertible
debt and preferred stock for indications requiring bifurcation, and separate accounting for the embedded conversion feature. Generally,
embedded conversion features where the ability to physical or net-share settle the conversion option is not within the control
of the Company or the number of shares is variable are bifurcated and accounted for as derivative financial instruments. (See Derivative
Financial Instruments below.) Bifurcation of the embedded derivative instrument requires allocation of the proceeds first to
the fair value of the embedded derivative instrument with the residual allocated to the host instrument. The resulting discount
to the debt instrument or to the redemption value of convertible preferred securities is accreted through periodic charges to interest
expense over the term of the note or to dividends over the period to earliest conversion date using the effective interest rate
method, respectively.



Derivative Financial Instruments



The Company does not use derivative financial
instruments to hedge exposures to cash-flow or market risks. However, certain other financial instruments, such as warrants to
purchase the Company’s common stock and the embedded conversion features of debt and preferred instruments that are not considered
indexed to the Company’s common stock are classified as liabilities when either (a) the holder possesses rights to net-cash
settlement, (b) physical or net share settlement is not within the control of the Company, or (c) based on its anti-dilutive provisions.
In such instances, net-cash settlement is assumed for financial accounting and reporting. Such financial instruments are initially
recorded at fair value and subsequently adjusted to fair value at the close of each reporting period. Fair value for option-based
derivative financial instruments is determined using the Black-Scholes Option Pricing Model.



Income Taxes



The Company accounts for income taxes using
an asset and liability method pursuant to which deferred tax assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided against
deferred tax assets based on the weight of available evidence when it is more likely than not that some or all of the deferred
tax assets will not be realized.



28







When tax returns are filed, it is highly
certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty
about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position
is recognized in the financial statements in the period during which, based on all available evidence, we believe it is more likely
than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if
any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition
threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement
with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured
as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated
interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with
unrecognized tax benefits are classified as income tax expense in the statement of operations.



Fair Value Measurements



U.S. GAAP defines fair value as the price
that would be received to sell an asset or paid to transfer a liability to a third party with the same credit standing (an exit
price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. In many cases, the exit price and the transaction (or entry) price will be the same at initial recognition.
However, in certain cases, the transaction price may not represent fair value. Fair value is a market-based measurement determined
based on a hypothetical transaction at the measurement date, considered from the perspective of a market participant, not based
solely upon the perspective of the reporting entity. When quoted prices are not used to determine fair value, consideration is
given to three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. Entities
are required to determine the most appropriate valuation technique to use, given what is being measured and the availability of
sufficient inputs. Inputs to fair valuation techniques are prioritized, allowing for the use of unobservable inputs to the extent
that observable inputs are not available. The applicable guidance establishes a three-level hierarchy, based on the priority of
the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability’s
classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels
are defined as follows:





|Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Level 2 | Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1, quoted prices in markets that are not active, or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Level 3 | Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.  Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as those for which the determination of fair value requires significant management judgment or estimation.





Earnings (Loss) Per Share



Basic earnings (loss) per share is calculated
by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing the net income (loss) by the weighted average number
of shares of common stock outstanding for the period, adjusted for the dilutive effect of common stock equivalents, using the treasury
stock method. Convertible debt and warrants, officer, employee and non-employee stock options that are considered potentially dilutive
are included in the fully diluted shares calculation as long as the effect is not anti-dilutive. Contingently issuable shares are
included in the computation of basic loss per share when the issuance of the shares is no longer contingent.



Subsequent Events



Management has evaluated subsequent events
through the date the financial statements were issued.



29







NOTE 3 – NONCASH INVESTING AND FINANCING ACTIVITIES



The following table presents a summary of the various noncash
investing and financing transactions that the Company entered into during the years ended July 31, 2012 and 2011.



|                                |  | For the Year Ended July 31, 2012 |   |  | For the Year Ended July 31, 2011 | 
|------------------------------- |  | -------------------------------- | - |  | -------------------------------- | 
|                                |  |                                  |   |  |                                  | 
|Financed insurance agreement    |  |                                  | – |  |                                  | 
|                                |  |                                  |   |  |                                  | 
|Interest converted to principal |  |                                  | – |  |                                  | 



NOTE 4 – PROPERTY, PLANT AND EQUIPMENT



Property, Plant and Equipment consist of the following at July
31, 2012 and 2011:



|                              |  | July 31, 2012 |          |   | July 31, 2011 |  
|----------------------------- |  | ------------- | -------- | - | ------------- | -
|                              |  |               |          |   |               |  
|Computer hardware             |  | $             | 50,204   |   |               | $
|Furniture and fixtures        |  |               | 55,217   |   |               |  
|Equipment and machinery       |  |               | 25,676   |   |               |  
|Leasehold improvements        |  |               | 55,560   |   |               |  
|Machinery & Equipment         |  |               | 10,142   |   |               |  
|                              |  |               | 196,799  |   |               |  
|Less accumulated depreciation |  |               | (137,326 | ) |               |  
|                              |  |               |          |   |               |  
|Total                         |  | $             | 59,473   |   |               | $



Depreciation expense for the years ended July 31, 2012 and 2011
was approximately $33 thousand and approximately $37 thousand, respectively.





30







NOTE 5 – NOTES PAYABLE



Notes payable consist of the following:



|                                                                                                                                                                          |  | July 31, 2012 |         |  | July 31, 2011 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- |  | ------------- | -
|Related party convertible note payable; face amount $2 million; bearing interest of 6% per annum; secured; principal payment due on October 9, 2012                       |  | $             | –       |  |               | $
|                                                                                                                                                                          |  |               |         |  |               |  
|Related party promissory note payable; bearing interest of 15% per annum; unsecured; due on demand                                                                        |  |               | –       |  |               |  
|                                                                                                                                                                          |  |               |         |  |               |  
|Related party promissory notes payable; bearing interest of 10% per annum; unsecured; due on December 31, 2013                                                            |  |               | 100,000 |  |               |  
|                                                                                                                                                                          |  |               |         |  |               |  
|Related party promissory notes payable; bearing interest of 10% per annum; unsecured; due on December 31, 2013                                                            |  |               | 600,000 |  |               |  
|                                                                                                                                                                          |  |               |         |  |               |  
|Promissory note payable; bearing interest of 7.5% per annum; unsecured; principal payments due monthly approximately $27 thousand through July 2011; currently in default |  |               | 158,127 |  |               |  
|                                                                                                                                                                          |  |               |         |  |               |  
|Total notes payable                                                                                                                                                       |  |               | 858,127 |  |               |  
|                                                                                                                                                                          |  |               |         |  |               |  
|Less current portion                                                                                                                                                      |  |               | 858,127 |  |               |  
|                                                                                                                                                                          |  |               |         |  |               |  
|Total long-term debt                                                                                                                                                      |  | $             | –       |  |               | $



The convertible note’s principal
balance was due three years from the date of issuance and convertible at any time at the option of the holder at a conversion price
of $0.25 per share. The Company accounted for the conversion feature as an embedded derivative instrument requiring it to be separated
from the note payable and reported at fair value. The fair value of the conversion feature at issuance date was approximately $593
thousand. The separation of the conversion feature from the note payable resulted in a discount on the note payable and a share
conversion liability in the amount of approximately $593 thousand.



The share conversion liability is subject
to recurring fair value adjustments each reporting period (see Note 12 - Assets and Liabilities Measured at Fair Value). The discount
is amortized over the life of the note payable using the effective interest method and recorded as interest expense in the statement
of operations. During the years ended July 31, 2012 and 2011, total interest expense related to the convertible note payable was
approximately $263 and $323 thousand, respectively. Of the interest expense recognized for the years ended July 31, 2012 and 2011,
approximately $103 thousand and $130 thousand, respectively, was elected by the Company to be deferred and added to the principal
of the note.



31







On May 8, 2012, the Company and Infusion
entered into a Stock Purchase Agreement (the “Infusion Purchase Agreement”) whereby the Company purchased 15.2 million
shares of the Company’s common stock from Infusion. Pursuant to the Infusion Purchase Agreement, the Company paid to Infusion
a purchase price equal to $100 thousand.



Furthermore, in connection with the Infusion
Purchase Agreement, Infusion forgave and surrendered for cancellation that certain promissory note in principal amount of $2,000,000
(the “Note”) along with accrued interest of $818 thousand and unrealized gain on the conversion feature of $593 thousand
for the year ended July 31, 2012, were written off to gain from extinguishment of debt. The Note was issued by the Company to Infusion
in connection with that certain License and Marketing Agreement, dated October 9, 2009, by and between the Company and Infusion.
Lastly, Infusion terminated and released any and all of Infusion’s security interest arising out of that certain Security
Agreement, dated December 2, 2010, by and between the Company and Infusion.



On August 9, 2011, the Company repaid the note payable to Amacore
of $465 thousand plus accrued interest of $6 thousand.



On April 20, 2012, the Company issued to Amacore an on-demand
promissory note for $200 thousand. The note accrued interest at 15% per annum. The Company repaid the note payable plus accrued
interest of $1 thousand.



On May 3, 2012, the Company issued to Mark Jarvis a promissory
note for $100 thousand. The note accrued interest at 10% per annum and is due on December 31, 2013. As of July 31, 2012, the Company
has not repaid the note plus accrued interest of $1.3 thousand.



On June 13, 2012, the Company issued to Vicis Capital Managment
an on-demand promissory note for $600 thousand. The note accrued interest at 10% per annum and is due December 31, 2012. As of
July 31, 2012, the Company has not repaid the note plus accrued interest of $14.6 thousand.



The Company is in default with respect to the promissory note
due July 2011. Consequently, the Company has accrued interest in accordance with the promissory notes’ default provision
at an interest rate of 18%.



NOTE 6 – ACCRUED EXPENSES



Accrued expenses consist of the following at July 31, 2012 and
2011:





|                    |  | July 31, 2012 |         |  | July 31, 2011 |  
|------------------- |  | ------------- | ------- |  | ------------- | -
|Commissions         |  | $             | 461,295 |  |               | $
|Interest            |  |               | 63,279  |  |               |  
|Marketing materials |  |               | –       |  |               |  
|Payroll             |  |               | 74,202  |  |               |  
|Product             |  |               | 59,688  |  |               |  
|Refund reserve      |  |               | 10,000  |  |               |  
|Rent                |  |               | –       |  |               |  
|Sales tax payble    |  |               | 93,544  |  |               |  
|Services            |  |               | 30,000  |  |               |  
|Unclaimed property  |  |               | 40,513  |  |               |  
|Finance agreement   |  |               | 4,722   |  |               |  
|Total               |  | $             | 837,244 |  |               | $





32







NOTE 7- DEFERRED REVENUE



Deferred revenue consists of the following at July 31, 2012
and July 31, 2011:





|                      |  | July 31, 2012 |        |  | July 31, 2011 |  
|--------------------- |  | ------------- | ------ |  | ------------- | -
|Advertising           |  | $             | 3,261  |  |               | $
|Consumable products   |  |               | 47,030 |  |               |  
|Direct response media |  |               | 24,939 |  |               |  
|Marketing fees        |  |               | –      |  |               |  
|Member fees           |  |               | 4,931  |  |               |  
|Total                 |  | $             | 80,161 |  |               | $





NOTE 8 – DEFERRED COMPENSATION



Deferred compensation at July 31, 2012
was approximately $98 thousand and consisted of compensation due to Mark Jarvis, Co-Chief Executive Officer, and a consultant. 
These individuals deferred their compensation in an effort to manage cash flow while the Company undertook several capital intensive
initiatives.  Subsequent to July 31, 2011, the Company and Mark  Jarvis entered into an employment agreement amendment
which eliminated the deferred compensation due Mark Jarvis, and the Company issued 62,241 shares of restricted common stock to
satisfy the deferred compensation due consultant. No deferred compensation was due at July 31, 2012.



NOTE 9 – ASSETS AND LIABILITIES
MEASURED AT FAIR VALUE



Financial instruments which are measured
at estimated fair value on a recurring basis in the consolidated financial statements include marketable securities, a embedded
share conversion feature and non-compensatory warrants. The fair value of the marketable securities was determined by the market
price as quoted on the OTC. The fair value of the share conversion feature and warrants was determined by an independent expert
valuation specialist using the Black-Scholes Option Pricing Model.



Assets and liabilities measured at estimated
fair value and their corresponding fair value hierarchy is summarized as follows:









33












July 31, 2012

Fair Value Measurements at Reporting
Date Using






|                         |  | Quoted Prices in   |   |  | Significant  |   |         |            | 
|------------------------ |  | ------------------ | - |  | ------------ | - | ------- | ---------- | 
|                         |  | Active Markets for |   |  | Unobservable |   |         |            | 
|                         |  | Identical Assets   |   |  | Inputs       |   |         | Total      | 
|                         |  | (Level 1)          |   |  | (Level 3)    |   |         | Fair Value | 
|Marketable securities    |  | $                  | – |  |              | $ | –       |            | 
|Total assets             |  | $                  | – |  |              | $ | –       |            | 
|                         |  |                    |   |  |              |   |         |            | 
|                         |  |                    |   |  |              |   |         |            | 
|Share conversion feature |  | $                  | – |  |              | $ | –       |            | 
|Warrants                 |  |                    | – |  |              |   | 262,800 |            | 
|Total liabilities        |  | $                  | – |  |              | $ | 262,800 |            | 








July 31, 2011

Fair Value Measurements at Reporting
Date Using








|                         |  | Quoted Prices in   |        |  | Significant  |   |         |            | 
|------------------------ |  | ------------------ | ------ |  | ------------ | - | ------- | ---------- | 
|                         |  | Active Markets for |        |  | Unobservable |   |         |            | 
|                         |  | Identical Assets   |        |  | Inputs       |   |         | Total      | 
|                         |  | (Level 1)          |        |  | (Level 3)    |   |         | Fair Value | 
|Marketable securities    |  | $                  | 36,800 |  |              | $ | –       |            | 
|Total assets             |  | $                  | 36,800 |  |              | $ | –       |            | 
|                         |  |                    |        |  |              |   |         |            | 
|                         |  |                    |        |  |              |   |         |            | 
|Share conversion feature |  | $                  | –      |  |              | $ | –       |            | 
|Warrants                 |  |                    | –      |  |              |   | 299,600 |            | 
|Total liabilities        |  | $                  | –      |  |              | $ | 299,600 |            | 



The Company has categorized its assets
and liabilities measured at fair value into the three-level fair value hierarchy, as defined in Note 2, based upon the priority
of inputs to respective valuation techniques. Assets included in the level 1 of the fair value hierarchy include marketable securities
which are fair valued on a recurring basis using quoted market prices. Liabilities included within level 3 of the fair value hierarchy
presented in the preceding table include a share conversion feature and noncompensatory warrants. The valuation methodology for
liabilities within level 3 uses a combination of observable and unobservable inputs in calculating fair value.



The Company
recorded anunrealized loss of $36 thousand and $443 thousand on its marketable securities for the years ended July 31,
2012 and 2011. These losses have been included in the Statement of Operations caption “Loss on change in fair value of marketable
securities.”



34







The changes in level 3 liabilities measured
at fair value on a recurring basis during the years ended July 31, 2012 and 2011 are summarized as follows:





Fair Value Measurements

Using Significant Unobservable Inputs

(Level 3)

Warrants














|                                 |  | Balance Beginning of Period |         |  | Reclassification of Liability Warrants to Equity |   |   | Issuance |  |   | (Gain) Loss Recognized in Earnings from Change in Fair Value |  |  | Balance End of Period |        
|-------------------------------- |  | --------------------------- | ------- |  | ------------------------------------------------ | - | - | -------- |  | - | ------------------------------------------------------------ |  |  | --------------------- | -------
|For the Year Ended July 31, 2011 |  |                             |         |  |                                                  |   |   |          |  |   |                                                              |  |  |                       |        
|Share conversion feature         |  | $                           | –       |  |                                                  | $ | – |          |  | $ | –                                                            |  |  | $                     | –      
|Warrants                         |  | $                           | 299,600 |  |                                                  | $ | – |          |  | $ | –                                                            |  |  | $                     | (36,800









|                                 |  | Balance Beginning of Period |           |  | Reclassification of Liability Warrants to Equity |   |   | Issuance |  |   | (Gain) Loss Recognized in Earnings from Change in Fair Value |  |  | Balance End of Period |           
|-------------------------------- |  | --------------------------- | --------- |  | ------------------------------------------------ | - | - | -------- |  | - | ------------------------------------------------------------ |  |  | --------------------- | ----------
|For the Year Ended July 31, 2011 |  |                             |           |  |                                                  |   |   |          |  |   |                                                              |  |  |                       |           
|Share conversion feature         |  | $                           | 462,013   |  |                                                  | $ | – |          |  | $ | –                                                            |  |  | $                     | (462,013  
|Warrants                         |  | $                           | 6,370,000 |  |                                                  | $ | – |          |  | $ | 24,000                                                       |  |  | $                     | (6,094,400







For the year ended July 31, 2011, an unrealized gain of approximately
$462 thousand is included in earnings within the Statement of Operations caption “Gain on change in fair value of share conversion
feature.”



On May 8, 2012, the Company and Infusion entered into a Stock
Purchase Agreement (the “Infusion Purchase Agreement”) whereby the Company purchased 15.2 million shares of the Company’s
common stock from Infusion. Pursuant to the Infusion Purchase Agreement, the Company paid to Infusion a purchase price equal to
$100 thousand.



Furthermore, in connection with the Infusion Purchase Agreement,
Infusion forgave and surrendered for cancellation that certain promissory note in principal amount of $2,000,000 (the “Note”)
along with accrued interest of $818 thousand and unrealized gain on the conversion feature of $593 thousand for the year ended
July 31, 2012, were written off to gain from extinguishment of debt. The Note was issued by the Company to Infusion in connection
with that certain License and Marketing Agreement, dated October 9, 2009, by and between the Company and Infusion. Lastly, Infusion
terminated and released any and all of Infusion’s security interest arising out of that certain Security Agreement, dated
December 2, 2010, by and between the Company and Infusion.



For the years ended July 31, 2012 and 2011, an unrealized gain
of $37 thousand and an unrealized gain of $6.1 million, respectively, are included in earnings within the Statement of Operations
caption “Gain (loss) on change in fair value of warrants.” The unrealized gains for the year ended July 31, 2011 from
the change in the fair value of warrants is a result of a decrease in the Company’s share price from $0.24 to $0.04 which
is used as an input in the share price used in valuing the warrants.



Fair Value of Financial Instruments



The fair values of accounts receivable, accounts payable and
accrued expenses approximate their carrying values due to the short term nature of these instruments. The fair values of notes
payable approximate their carrying amounts as interest rates on these obligations are representative of estimated market rates
available to the Company on similar instruments.





35







NOTE 10—REDEEMABLE PREFERRED STOCK



The Company is authorized to issue 11.3 million shares of preferred
stock with a par value of $0.0001 per share. The following table summarizes the Preferred Stock issuances and number of Preferred
Shares outstanding:



|                |  |                   |  | Shares Outstanding at |           
|--------------- |  | ----------------- |  | --------------------- | ----------
|Preferred Stock |  | Date of           |  |                       |           
|Issuance        |  | Issuance          |  | July 31, 2012         |           
|Series A        |  | July 30, 2009     |  |                       | 1,750,000 
|Series B        |  | October 6, 2009   |  |                       | 2,000,000 
|Series C        |  | January 29, 2010  |  |                       | 1,000,000 
|Series C        |  | June 3, 2010      |  |                       | 2,300,000 
|Series C        |  | June 9, 2011      |  |                       | 1,500,000 
|Series C        |  | December 28, 2011 |  |                       | 2,800,000 
|                |  |                   |  |                       | 11,350,000



Series A, Series B and Series C Convertible
Preferred Stock is collectively referred to herein as “Convertible Preferred Stock.”



Significant rights of the Convertible Preferred
Stock are discussed below:



Dividends



The Convertible Preferred Stock does not
accrue dividends.



Voting Rights



Each holder of the shares of Convertible
Preferred Stock shall have the right to the number of votes equal to the number of Conversion Shares then issuable upon conversion
of the Convertible Preferred Stock held by such holder in all matters as to which shareholders are required or permitted to vote,
and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the
holders of Common Stock, and shall be entitled to vote, together with the holders of Common Stock as a single class, with respect
to any question upon which holders of Common Stock have the right to vote; provided, however, as to any holder of Convertible Preferred
Stock, the right to vote such shares shall be limited to the number of shares issuable to such holder pursuant to certain beneficial
ownership limitations (as listed below) as of the record date for such vote. To the extent permitted under applicable corporate
law, but subject to certain limitations on corporate actions as disclosed below, the Corporation’s shareholders may take
action by the affirmative vote of a majority of all shareholders of the Company entitled to vote on an action. Without limiting
the generality of the foregoing, the Company may take any of the actions by the affirmative vote of the holders of a majority of
the Convertible Preferred Stock and the Common Stock and other voting common stock equivalents, voting together as one class.



As long as any shares of Convertible Preferred
Stock are outstanding, the Company shall not, without the written consent or affirmative vote of the holders of no-less than 51
percent of the then outstanding stated value of the Convertible Preferred Stock consenting or voting as a separate class from the
common stock, either directly or by amendment, merger, consolidation or otherwise:



(i)amend
its certificate or articles of incorporation in any manner that adversely affects the rights of the holders of Convertible Preferred
Stock;



(ii)alter
or change adversely the voting or other powers, preferences, rights, privileges, or restrictions of the Convertible Preferred Stock;



(iii)increase
the authorized number of shares of preferred stock or  Convertible Preferred Stock or reinstate or issue any other series
of preferred stock;



(iv) redeem,
purchase or otherwise acquire directly or indirectly any junior securities or any shares pari passu with the Convertible Preferred
Stock;



(v)directly
or indirectly pay or declare any dividend or make any distribution in respect of, any junior securities, or set aside any monies
for the purchase or redemption (through a sinking fund or otherwise) of any junior securities or any shares pari passu with the
Convertible Preferred Stock;



36







(vi)authorize
or create any class of stock ranking as to dividends, redemption or distribution of assets upon a liquidation senior to or otherwise
pari passu with the Convertible Preferred Stock; or



(vii)enter into any agreement with respect to any of the foregoing.



Liquidation Preferences



Upon any liquidation, dissolution or winding-down
of the Company, whether voluntary or involuntary (a “Liquidation”), the holders of the shares of Convertible Preferred
Stock shall be paid in cash, before any payment shall be paid to the holders of common stock, or any other junior stock, an amount
for each share of Convertible Preferred Stock held by such holder equal to the sum of the Stated Value thereof (such applicable
amount payable with respect to a share of Convertible Preferred Stock sometimes being referred to as the “Individual Preferred
Liquidation Preference Payment” and with respect to all shares of Convertible Preferred Stock in the aggregate sometimes
being referred to as the “Aggregate Liquidation Preference Payment”).  If, upon such liquidation, dissolution
or winding-up of the Company, whether voluntary or involuntary, the assets to be distributed among the holders of shares of Convertible
Preferred Stock shall be insufficient to permit payment to the holders of Convertible Preferred Stock of an aggregate amount equal
to the Aggregate Liquidation Preference Payment, then the entire assets of the Corporation to be so distributed shall be distributed
ratably among the holders of Convertible Preferred Stock (based on the Individual Preferred Liquidation Preference Payments due
to the respective holders of Convertible Preferred Stock).



The liquidation value of Series A, Series
B and Series C Convertible Preferred Stock was $1.75 million, $2 million, $4.8 million and $2.8 million, respectively, as of July
31, 2012.



Conversion Rights



Each share of Convertible Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after the original issue date (subject to beneficial ownership
limitations as listed below), and without the payment of additional consideration by the holder thereof, into such number of fully-paid
and nonassessable shares of common stock as is determined by dividing the Stated Value per share, by the Conversion Price in effect
at the time of conversion. The Conversion Price originallyfor Series A, B and C shall be $0.0625, $0.25 and $0.25, respectively;
provided, however, that the Conversion Price, and the rate at which shares of Convertible Preferred Stock may be converted into
shares of common stock, shall be subject to adjustment as a result of stock dividends, stock splits, and subsequent equity sales
at a price lower than the Convertible Preferred Stock’s Conversion Price. Shares of Convertible Preferred Stock converted
into common stock shall be canceled and shall not be reissued.



At July 31, 2012, Series A, Series B and
Series C Convertible Preferred Stock is convertible into 28 million, 8 million, 19.2 million, and 11.2 million common shares, respectively.
If the Convertible Preferred Stock had been converted as of July 31, 2012, the aggregate market price of the common shares for
Series A, Series B and Series C would have been approximately $1.1 million, $320 thousand, $768 thousand, and $448 thousand respectively.



Beneficial Ownership Limitations



The Company shall not affect any conversion
of the Convertible Preferred Stock, and a holder shall not have the right to convert any portion of the Convertible Preferred Stock,
to the extent that, after giving effect to the conversion, such holder (together with such holder’s affiliates, and any other
person or entity acting as a group together with such holder or any of such holder’s affiliates) would beneficially own in
excess 4.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares
of common stock issuable upon conversion of Convertible Preferred Stock held by the applicable holder.  The Beneficial
Ownership Limitation provisions may be waived by such holder, at the election of such holder, upon not less than sixty one (61)
days’ prior notice to the Company, to change the Beneficial Ownership Limitation to 9.99% of the number of shares of the
common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of Convertible
Preferred Stock held by the applicable holder and the provisions of this section shall continue to apply.  Upon such
a change by a holder of the Beneficial Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the Beneficial
Ownership Limitation shall not be further waived by such holder.



Redemption Rights of the Company



Shares of the Convertible Preferred Stock
shall be redeemable, in whole or in part, at the option of the Company, by resolution of its Board of Directors at any time after
the original issue date and before the first (1st) anniversary of the original issue date at a price equal to one hundred and ten
percent (110%) of the Stated Value.



37







Redemption Rights of Holder



The Convertible Preferred Stock is redeemable
for cash in an amount representing the Stated Value of outstanding Convertible Preferred Stock. The following events give rise
to a redemption triggering event:



| | · | The Company shall be party to a change
of control transaction;
| | - | --------------------------------------------------------------

| | · | The Company shall fail to have available
a sufficient number of authorized and unreserved shares of common stock to issue to such holder upon a conversion;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Unless specifically addressed elsewhere
in the Convertible Preferred Stock’s Certificate of Designation as a Triggering Event, the Corporation shall fail to observe
or perform any other covenant, agreement or warranty contained in the Certificate of Designation, and such failure or breach shall
not, if subject to the possibility of a cure by the Company, have been cured within 20 calendar days after the date on which written
notice of such failure or breach shall have been delivered;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | There shall have occurred a bankruptcy
event or material monetary judgment;
| | - | ---------------------------------------------------------------------------





If the Company fails to pay the redemption
amount as a result of a triggering event on the date it is due, interest will accrue at a rate equal to the lesser of 18% per year,
or the maximum rate permitted by applicable law, accruing daily from the date of the triggering event until the amount is paid
in full.



Events that may result in the redemption
for cash of preferred stock, and that are not within a company’s control may require the preferred stock to be classified
outside of stockholders’ equity (in the mezzanine section). All of the above triggering events are presumed not to be within
our control. Accordingly, these instruments are recorded in our balance sheet in the caption Redeemable Preferred Stock, which
is outside of stockholders’ equity. Management estimates the probability of the triggering events to be remote due to the
Company’s affiliation with stockholders that represent a majority of the outstanding common and preferred stock. Therefore,
the carrying value of the preferred stock has not been increased to the full redemption value. The reason the carrying value is
not equal to the redemption amount is due to the allocation of value to certain warrants issued in connection with the preferred
stock. The following table summarizes for each preferred stock issuance the value allocated to the warrants and preferred stock:



|                |  |                   |  | Total    |            |  | Value        |   |           | Preferred Stock | 
|--------------- |  | ----------------- |  | -------- | ---------- |  | ------------ | - | --------- | --------------- | 
|Preferred Stock |  | Date of           |  | Proceeds |            |  | Allocated to |   |           | Carrying        | 
|Issuance        |  | Issuance          |  | Received |            |  | Warrants     |   |           | Amount          | 
|Series A        |  | July 30, 2009     |  | $        | 1,750,000  |  |              | $ | 539,000   |                 | 
|Series B        |  | October 6, 2009   |  |          | 2,000,000  |  |              |   | 930,838   |                 | 
|Series C        |  | January 29, 2010  |  |          | 1,000,000  |  |              |   | 431,415   |                 | 
|Series C        |  | June 3, 2010      |  |          | 2,300,000  |  |              |   | 598,000   |                 | 
|Series C        |  | June 9, 2011      |  |          | 1,500,000  |  |              |   | 24,000    |                 | 
|Series C        |  | December 28, 2011 |  |          | 2,800,000  |  |              |   | 1,456     |                 | 
|Total           |  |                   |  | $        | 11,350,000 |  |              | $ | 2,524,709 |                 | 



NOTE 11 - COMMON STOCK



The Company has authorized 300 million
common shares with a par value of $0.0001 per share. On all matters required by law to be submitted to a vote of the holders of
common stock, each share of common stock is entitled to one vote per share.



On July 30, 2009, the Company granted Mr.
Jarvis 1.8 million shares of common stock, to be held in escrow, in connection with the execution of an employment agreement. These
shares will be issued to Mr. Jarvis is accordance with the vesting period or upon completion of certain performance measures. Due
to the forward stock split, the amount of shares was increased to 7.2 million shares of common stock. The shares are subject to
a vesting period in which 3.6 million shares vest on July 30, 2010 and July 30, 2011, respectively. The grant date fair value was
approximately $306 thousand.



For the years ended July 31, 2012 and 2011,
approximately $55 thousand and $405 thousand, respectively, of stock-based compensation expense was recognized, as a result of
various share issuances.



38







On July 31, 2009, the Company entered into
a stock repurchase agreement with a majority shareholder to purchase 8 million shares for $210 thousand or $0.26 per share. The
treasury stock was recorded at cost. Management’s plan is to retain these shares.



On May 8, 2012, the Company and Amacore
entered into a Stock Purchase Agreement (the “Amacore Purchase Agreement”) whereby the Company purchased 37.21 million
shares of the Company’s common stock from Amacore. Pursuant to the Amacore Purchase Agreement, the Company paid to Amacore
a purchase price equal to $300 thousand. The treasury stock was recorded at cost.



On May 8, 2012, the Company and Infusion
entered into a Stock Purchase Agreement (the “Infusion Purchase Agreement”) whereby the Company purchased 15.2 million
shares of the Company’s common stock from Infusion. Pursuant to the Infusion Purchase Agreement, the Company paid to Infusion
a purchase price equal to $100 thousand. The treasury stock was recorded at cost.



NOTE 12 –WARRANTS



During 2009, Zurvita’s Board of Directors
adopted the 2009 Incentive Stock Plan (the 2009 Plan), pursuant to which we reserved for issuance 6 million shares of Zurvita common
stock to be used as awards to employees, directors, consultants, and other service providers. The purpose of the 2009 Plan is to
provide an incentive to attract and retain officers, consultants, advisors and employees whose services are considered valuable,
to encourage a sense of proprietorship and to stimulate an active interest of such persons into Zurvita’s development and
financial success. Under the 2009 Plan, Zurvita is authorized to issue incentive stock options intended to qualify under Section
422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive
awards. The 2009 Plan is administered by the Board’s designated Compensation Committee. As of July 31, 2011, approximately
5.2 million total options were issued under the 2009 Plan.



During the year ended July 31, 2011, the
Company issued approximately 6.45 million warrants to purchase common stock.



The following table summarizes the status
of all warrants outstanding and exercisable at July 31, 2012.



Outstanding Warrants



|
|



|Range of Exercise Prices |  | Number of Warrants |            |  | Weighted Average Exercise Price |   |      | Weighted Average Remaining Contractual Life in Years
|------------------------ |  | ------------------ | ---------- |  | ------------------------------- | - | ---- | ----------------------------------------------------
|$0.01 to $0.49           |  |                    | 71,908,000 |  |                                 | $ | 0.17 |                                                     
|$0.50 to $0.99           |  |                    | 100,000    |  |                                 | $ | 0.75 |                                                     
|                         |  |                    | 72,008,000 |  |                                 | $ | 0.16 |                                                     





Exercisable Warrants

|Range of Exercise Prices |  | Number of Warrants |            |  | Weighted Average Exercise Price |   |      | Weighted Average Remaining Contractual Life in Years
|------------------------ |  | ------------------ | ---------- |  | ------------------------------- | - | ---- | ----------------------------------------------------
|$0.01 to $0.49           |  |                    | 71,870,500 |  |                                 | $ | 0.17 |                                                     
|$0.50 to $0.99           |  |                    | 100,000    |  |                                 | $ | 0.75 |                                                     
|                         |  |                    | 71,970,500 |  |                                 | $ | 0.17 |                                                     



Compensatory Equity Warrants



During the year ended July 31, 2012, the
Company issued compensatory equity warrants to purchase an aggregate of approximately 433 thousand shares of common stock.



39







Assumptions used to determine the fair
value of the compensatory warrants granted during the years ended July 31, 2012 and 2011are
as follows.



|                        |  | July 31, 2012 |  | July 31, 2011
|----------------------- |  | ------------- |  | -------------
|Expected dividends      |  | 0%            |  | 0%           
|Expected volatility     |  | 70%           |  | 65%          
|Risk free interest rate |  | 0.25% - 0.94% |  | 0.70% - 1.30%
|Expected life           |  | 5 years       |  | 5 years      



The following table summarizes the activity
for compensatory warrants classified as equity for the year ended July 31, 2012.



|                             |  | Compensatory Equity Warrants |           |  | Weighted Average Exercise Price |   |      | Weighted Average Remaining Contractual Term |  |  | Aggregate Intrinsic Value | 
|---------------------------- |  | ---------------------------- | --------- |  | ------------------------------- | - | ---- | ------------------------------------------- |  |  | ------------------------- | 
|Outstanding at July 31, 2011 |  |                              | 5,175,000 |  |                                 | $ | 0.22 |                                             |  |  | 3.89                      | 
|Issued                       |  |                              | 433,000   |  |                                 |   | 0.23 |                                             |  |  | –                         | 
|Exercised                    |  |                              | –         |  |                                 |   | –    |                                             |  |  | –                         | 
|Cancelled or Expired         |  |                              | –         |  |                                 |   | –    |                                             |  |  | –                         | 
|Outstanding at July 31, 2012 |  |                              | 5,608,000 |  |                                 | $ | 0.22 |                                             |  |  | 3.00                      | 
|Exercisable at July 31, 2012 |  |                              | 5,570,500 |  |                                 | $ | 0.22 |                                             |  |  | 2.81                      | 



The total fair value of warrants vested
during the year ended July 31, 2012 was approximately $177 thousand. The weighted average grant date fair value of warrants granted
during the year ended July 31, 2012 and 2011 was $0 and $0, respectively.



A summary of the status of the Company's
non-vested compensatory equity warrants of July 31, 2012, and the changes during the year ended July 31, 2012, is presented below.



|                             |  | Compensatory Warrants |            |   | Weighted Average Grant-Date Fair Value |  
|---------------------------- |  | --------------------- | ---------- | - | -------------------------------------- | -
|Non-vested at July 31, 2011  |  |                       | 1,316,503  |   |                                        | $
|Issued                       |  |                       | 433,000    |   |                                        |  
|Exercised                    |  |                       | –          |   |                                        |  
|Expired                      |  |                       | –          |   |                                        |  
|Vested                       |  |                       | (1,712,003 | ) |                                        |  
|Non-vested at July  31, 2012 |  |                       | 37,500     |   |                                        | $



The weighted average period over which non-vested awards are
expected to be recognized is 1 year.



Non-compensatory Liability Warrants



During the year ended July 31, 2011, Zurvita
issued in conjunction with preferred stock non-compensatory warrants to purchase an aggregate of approximately 6 million shares
of common stock. There were approximately 66.4 million non-compensatory warrants outstanding as of July 31, 2012, all of which
were classified as liabilities. These warrants are classified as liability instruments as net share settlement is not considered
within the Company’s control or certain exercise prices are not fixed which has the potential to cause a variable number
of shares and/or value exchange upon exercise.



The fair value of each option award classified
as a liability on the balance sheets is estimated on the date of the grant using the Black-Scholes Pricing Model and the assumptions
noted in the following table. The stock price used approximates the market price less a marketability discount of 30%. Expected
volatility was determined by independent valuation specialist. The risk-free rate for periods within the contractual life of the
option is based on the U.S. Treasury Strip yield curve in effect at the time of grant. The expected term of options granted represents
the period of time that options granted are expected to be outstanding.



40







Assumptions used to determine the fair
value of the non-compensatory warrants granted at and during the years ended July 31, 2012 and 2011 are as follows.



|                        |  | July 31, 2011 |  | July 31, 2010
|----------------------- |  | ------------- |  | -------------
|Expected dividends      |  | 0%            |  | 0%           
|Expected volatility     |  | 70%           |  | 65%          
|Risk free interest rate |  | 0.69% - 1.28% |  | 1.41% - 2.50%
|Expected life           |  | 7 years       |  | 5 -7 years   





A summary of the activity of the Company's
non-compensatory warrants classified as liabilities on the balance sheet during the year ended July 31, 2012 is presented below.



|                                             |  | Non-Compensatory Warrants |            |  | Weighted Average Exercise Price |   |      | Weighted Average Remaining Contractual Term | 
|-------------------------------------------- |  | ------------------------- | ---------- |  | ------------------------------- | - | ---- | ------------------------------------------- | 
|Outstanding at July 31, 2011                 |  |                           | 55,200,000 |  |                                 | $ | 0.15 |                                             | 
|Issued                                       |  |                           | 11,200,000 |  |                                 |   | 0.25 |                                             | 
|Exercised                                    |  |                           | –          |  |                                 |   | –    |                                             | 
|Cancelled or Expired                         |  |                           | –          |  |                                 |   | –    |                                             | 
|Outstanding and Exercisable at July 31, 2012 |  |                           | 66,400,000 |  |                                 | $ | 0.17 |                                             | 



As of July 31,
2012, there was no unrecognized compensation cost related to non-compensatory liability warrants as all were immediately vested
upon issuance.There were no warrants exercised during the year ended July 31, 2012 therefore no intrinsic value associated
with them. The total fair value of vested warrants at July 31, 2012 was approximately $1.5 thousand.The weighted average grant date fair value of warrants granted during the year ended July 31, 2012 and 2011 was $0 and $0,
respectively.



A summary of the status of the Company's
non-vested non-compensatory liability warrants as of July 31, 2012, and the changes during the year ended July 31, 2012, is presented
below.



|                             |  | Non-Compensatory Warrants |             |   | Weighted Average Grant-Date Fair Value |  
|---------------------------- |  | ------------------------- | ----------- | - | -------------------------------------- | -
|Non-vested at July 31, 2011  |  |                           | –           |   |                                        | $
|Issued                       |  |                           | 11,200,000  |   |                                        |  
|Exercised                    |  |                           | –           |   |                                        |  
|Vested                       |  |                           | (11,200,000 | ) |                                        |  
|Non-vested at July  31, 2012 |  |                           | –           |   |                                        | $



41







Amacore Stock Warrants Issued



During 2008, The Amacore Group, Inc (“Amacore”)
granted to Mr. Jarvis 800 thousand warrants to purchase common stock in connection with his employment
agreement with the Company. In the event the warrants are exercised, Amacore will issue the corresponding authorized and available
common stock to Mr. Jarvis. The contractual term of the warrants issued was five years.



Amacore had
accelerated the vesting conditions of the original award prior to July 31, 2009 and, therefore, no compensation expense is recorded
in fiscal 2010. As of July 31, 2011,there were 800 thousand warrants outstanding and exercisable.
No warrants expired, nor were any warrants exercised or forfeited during the nine months ended April 30, 2011 and, therefore, no
intrinsic value was realized. As of July 31, 2011, the weighted average exercise price of warrants granted was $0.60. The grant
date fair value of the warrants granted was $0.43.



Stock-Based Compensation Expense



For the years ended July 31, 2012 and 2011, the Company recognized
stock-based compensation expense, including both expense related to compensatory warrants and expense related to share awards,
with the Statement of Operations as follows:



|                              |  | For the Year Ended
 July 31, 2012 |        |  | For the Year Ended
July 31, 2011 |  
|----------------------------- |  | --------------------------------- | ------ |  | -------------------------------- | -
|Payroll and employee benefits |  | $                                 | 55,272 |  |                                  | $
|Professional fees             |  |                                   | –      |  |                                  |  
|Total                         |  | $                                 | 55,272 |  |                                  | $



NOTE 13 - INCOME TAXES



Deferred income tax assets and liabilities are determined based
upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to reverse.



The components of the income tax provision (benefit) are as
follows:



|                                 |  | For the Year Ended 
July 31, 2012 |       |  | For the Year Ended 
July 31, 2011 |  
|-------------------------------- |  | --------------------------------- | ----- |  | --------------------------------- | -
|Current:                         |  |                                   |       |  |                                   |  
|Federal income tax               |  | $                                 | –     |  |                                   | $
|State income tax                 |  |                                   | 2,822 |  |                                   |  
|Deferred:                        |  |                                   |       |  |                                   |  
|Federal income tax               |  |                                   | –     |  |                                   |  
|State income tax                 |  |                                   | –     |  |                                   |  
|Total provision for income taxes |  | $                                 | 2,822 |  |                                   | $



42







Temporary differences that give rise to
deferred tax assets and liabilities are summarized as follows:



|                                                           |  | For the Year Ended July 31, 2012 |            |   | For the Year Ended July 31, 2011 |  
|---------------------------------------------------------- |  | -------------------------------- | ---------- | - | -------------------------------- | -
|Deferred tax assets:                                       |  |                                  |            |   |                                  |  
|Deferred compensation                                      |  | $                                | 33,166     |   |                                  | $
|Employee warrant compensation                              |  |                                  | 228,956    |   |                                  |  
|Fixed assets                                               |  |                                  | 22,643     |   |                                  |  
|Marketing agreement intangible asset                       |  |                                  | 680,000    |   |                                  |  
|Membership reserve                                         |  |                                  | 3,400      |   |                                  |  
|Unrealized loss on change in fair market value of warrants |  |                                  | –          |   |                                  |  
|Unrealized loss on marketable securities                   |  |                                  | 111,112    |   |                                  |  
|Net operating loss carryforward                            |  |                                  | 6,365,102  |   |                                  |  
|Gross deferred tax asset                                   |  |                                  | 7,444,379  |   |                                  |  
|Less deferred tax asset valuation allowance                |  |                                  | (7,444,379 | ) |                                  |  
|Deferred tax asset - net                                   |  |                                  | –          |   |                                  |  
|                                                           |  |                                  |            |   |                                  |  
|Deferred tax liabilities:                                  |  |                                  |            |   |                                  |  
|Gain on share conversion                                   |  |                                  | –          |   |                                  |  
|Gross deferred tax liability                               |  |                                  | –          |   |                                  |  
|                                                           |  |                                  |            |   |                                  |  
|Net deferred tax asset                                     |  | $                                | –          |   |                                  | $



As of July 31, 2012, realization of the
Company’s net deferred tax assets of approximately $7.4 million was not considered more likely than not, and, accordingly,
a valuation allowance of an equal amount was provided. The net change in the total valuation
allowance during the year ended July 31, 2011, was approximately $324 thousand.



The
Company has a total of $18.3 million of net operating losses available to be offset against future taxable income and that expire
between 2028 and 2030.



The Company determined that there were
no uncertain tax positions, and accordingly no associated interest and penalties were required to be accrued at July 31, 2011 and
2010, respectively. The Company does not believe that there are any tax positions for which a material change in unrecognized tax
benefit or liability is reasonable possible in the next twelve months. The Company believes that there are no uncertain tax positions
which, if recognized, would impact the effective tax rate.



Below is a reconciliation of the statutory
federal income tax rate to the Company’s effective tax rate for the years ended July 31, 2012 and 2011.



|                                                 |  | For the Year Ended July 31,
    2012 |          |   |  |  |         | For the Year Ended July 31, 2011 |  |   |          |  
|------------------------------------------------ |  | ------------------------------------ | -------- | - |  |  | ------- | -------------------------------- |  | - | -------- | -
|Tax provision at U.S. federal income tax rate    |  | $                                    | (147,979 | ) |  |  | -34.00% |                                  |  | $ | 551,842  |  
|State income tax provision net of federal        |  |                                      | 2,822    |   |  |  | 0.65%   |                                  |  |   | 4,486    |  
|Adjustment for payment share exchange obligation |  |                                      | 5,270    |   |  |  | 1.21%   |                                  |  |   | 39,213   |  
|Meals and entertainment                          |  |                                      | –        |   |  |  | 0.00%   |                                  |  |   | 5,412    |  
|Penalties                                        |  |                                      | –        |   |  |  | 0.00%   |                                  |  |   | 178      |  
|Share conversion gain                            |  |                                      | –        |   |  |  | -2.99%  |                                  |  |   | (201,765 | )
|Warrant gain                                     |  |                                      | (13,007  | ) |  |  | 0.00%   |                                  |  |   | (718,699 | )
|Change in valuation allowance                    |  |                                      | 155,716  |   |  |  | 35.78%  |                                  |  |   | 323,819  |  
|Provision for income taxes                       |  | $                                    | 2,822    |   |  |  | 0.65%   |                                  |  | $ | 4,486    |  



43









NOTE 14 - EARNINGS (LOSS) PER SHARE

Earnings (loss) per share are computed
using the basic and diluted calculations on the face of the statement of operations. Basic earnings (loss) per share is calculated
by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing the net income (loss) by
the weighted average number of shares of common stock outstanding for the period, adjusted for the dilutive effect of common stock
equivalents, using the treasury stock method. Convertible debt, warrants, employee and non-employee stock options that are considered
potentially dilutive are included in the fully diluted shares calculation as long as the effect is not anti-dilutive. Contingently
issuable shares are included in the computation of basic loss per share when the issuance of the shares is no longer contingent.



The following is the computation of basic
and diluted net earnings (loss) per common share for the year ended July 31, 2012 and 2011:



|                                                            |  | For the Year Ended July 31, 2012 |            |   | For the Year Ended July 31, 2011 |  
|----------------------------------------------------------- |  | -------------------------------- | ---------- | - | -------------------------------- | -
|Numerator:                                                  |  |                                  |            |   |                                  |  
|Net (loss) income available to common stockholders          |  | $                                | (435,232   | ) |                                  | $
|                                                            |  |                                  |            |   |                                  |  
|Denominator:                                                |  |                                  |            |   |                                  |  
|Weighted average basic and fully diluted shares outstanding |  |                                  | 12,750,954 |   |                                  |  
|                                                            |  |                                  |            |   |                                  |  
|Net (loss) income per common share - basic and diluted      |  | $                                | (0.03      | ) |                                  | $



During the years ended July 31, 2012 and
2011, the effect of convertible debt, outstanding exercisable warrants and convertible preferred stock were not included within
the Company’s earnings (loss) per share calculation as they were either out-of-the money or anti-dilutive.



Securities that could potentially dilute
earnings per share in the future, but which were not included in the calculation of diluted earnings per share because they were
either out-of-the money or to do so would have been anti-dilutive are as follows:



|                                                              |  | For the Year Ended July 31, 2012 |             |  | For the Year Ended July 31, 2011 | 
|------------------------------------------------------------- |  | -------------------------------- | ----------- |  | -------------------------------- | 
|                                                              |  |                                  |             |  |                                  | 
|Potentially dilutive securities outstanding at end of period: |  |                                  |             |  |                                  | 
|Common stock warrants                                         |  |                                  | 72,008,000  |  |                                  | 
|Convertible note payable                                      |  |                                  | –           |  |                                  | 
|Convertible preferred stock:                                  |  |                                  |             |  |                                  | 
|Series A                                                      |  |                                  | 28,000,000  |  |                                  | 
|Series B                                                      |  |                                  | 8,000,000   |  |                                  | 
|Series C                                                      |  |                                  | 30,400,000  |  |                                  | 
|Total Preferred Stock                                         |  |                                  | 66,400,000  |  |                                  | 
|                                                              |  |                                  |             |  |                                  | 
|                                                              |  |                                  |             |  |                                  | 
|Total potentially dilutive securities                         |  |                                  | 138,408,000 |  |                                  | 



44







NOTE 15 - COMMITMENTS AND CONTINGENCIES



The Company is committed under a lease
of office space through July 31, 2015. For the years ended July 31, 2012 and 2011, rent expense was approximately $108 thousand
and $108 thousand, respectively.



The following is a schedule of future minimum
lease payments required under the said lease.



|                    
|--------------------
|As of July 31, 2012:
|                    
|2013                
|2014                
|2015                
|                    



Employment Agreement with Mark Jarvis



On
July 30, 2009, the Company entered into an employment agreement with Mark Jarvis (the “Jarvis Agreement”), pursuant
to which Mr. Jarvis agreed to serve as Co-CEO of the Company for a term of two years.  Pursuant to the Jarvis Agreement,
Mr. Jarvis shall receive annual compensation of $480 thousand (the “Base Salary”).  Mr. Jarvis shall also
be entitled certain other benefits, including health insurance, as may be provided to other comparable executives of Zurvita Holdings.  In
addition, within 30 days of the execution of the Jarvis Agreement, the Company shall place 7.2 million shares of the Company’s
common stock in escrow on behalf of Mr. Jarvis (the “Initial Jarvis Shares”). The Initial Jarvis Shares are subject
to a vesting period pursuant to which (i) 3.6 million shares shall vest on July 30, 2010, and (ii) 3.6 million shares shall vest
on July 30, 2011.  In addition, in the event that for the first quarter ending six months after July 30, 2009 Zurvita
Holdings is cash flow positive, the Company shall, within 30 days of the Company filing its Form 10-Q, issue to Mr. Jarvis 7.2
million shares. Alternatively, for the two quarters ending six (6) months after Start-Up Period, (“Extended Measuring Quarters”),
should the average Zurvita Holdings monthly cash flow during the Extended Measuring Quarters, as documented on the monthly cash
flow statements, and verified in the Quarterly Report(s), be operationally cash flow positive, the Performance Shares shall be
issued to Executive subject to a one year vesting period from the time of initial grant.  However, these shares were
not issued at either of these aforementioned periods, as the requirements for issuance were not met. In addition to his Base Salary,
Mr. Jarvis shall also be eligible to receive certain incentive bonus compensation (the “Incentive Bonus”) based upon
the revenue generated by Zurvita Holdings.  Mr. Jarvis’ Incentive Bonus shall be calculated as 10% of Zurvita
Holdings net income.  If Mr. Jarvis’ employment is terminated by the Company as a result of his disability (as
such term is defined in the Jarvis Agreement), Mr. Jarvis shall be entitled to receive a lump sum payment equal to his (i) accrued
but unpaid Base Salary, (ii) any outstanding expense reimbursements, (iii) any accrued but unpaid Incentive Bonus, (iv) a monthly
amount, which when added to any amounts received by Mr. Jarvis from any disability policy in effect at the time of his disability,
will equal Mr. Jarvis’ Base Salary for the 12 month period following the date of disability termination.



Subsequent
to July 31, 2011, the Company and Mark  Jarvis entered into an employment agreement amendment which eliminated the deferred
compensation due Mark Jarvis, and the Company issued 62,241 shares of restricted common stock to satisfy the deferred compensation
due consultant. No deferred compensation was due at July 31, 2012.



NOTE
16 - LEGAL PROCEEDINGS



As
of July 31, 2011, the Company was involved in various additional claims or disputes arising in the normal course of business.
The outcome of such claims cannot be determined at this time. Management does not believe that the ultimate outcome of these matters
will have a material impact on the Company’s operations or cash flows.



NOTE 17
- RELATED PARTY TRANSACTIONS



Commissions
Paid



There
are immediate family members of Mr. Jarvis, who operate as independent sales consultants who were paid commission compensation
which approximated $199 thousand for the year ended July 31, 2012, and approximately $92 thousand for the year ended July 31,
2011. These payments were for work they performed on behalf of the Company.



45







Interest on Note Payable to Infusion
Brands International, Inc. f/k/a OmniReliant Holdings, Inc.



The Company recognized interest expense
with respect to the note payable due to Infusion Brands, who is a significant shareholder of the company. For the year ended July
31, 2012 and 2011, interest expense was approximately $263 thousand and $323 thousand, respectively. Of the interest expense recognized,
approximately $159 thousand and $192 thousand relates to the amortization of the discount.



On May 8, 2012, the Company and Infusion
entered into a Stock Purchase Agreement (the “Infusion Purchase Agreement”) whereby the Company purchased 15.2 million
shares of the Company’s common stock from Infusion. Pursuant to the Infusion Purchase Agreement, the Company paid to Infusion
a purchase price equal to $100 thousand.



Furthermore, in connection with the Infusion
Purchase Agreement, Infusion forgave and surrendered for cancellation that certain promissory note in principal amount of $2,000,000
(the “Note”) along with accrued interest of $818 thousand and unrealized gain on the conversion feature of $593 thousand
for the year ended July 31, 2012, were written off to gain from extinguishment of debt. The Note was issued by the Company to Infusion
in connection with that certain License and Marketing Agreement, dated October 9, 2009, by and between the Company and Infusion.
Lastly, Infusion terminated and released any and all of Infusion’s security interest arising out of that certain Security
Agreement, dated December 2, 2010, by and between the Company and Infusion.



Agreement with Amacore



The Company entered into a Marketing and
Sales Agreement on July 31, 2009, pursuant to which Amacore agreed to provide certain services to Zurvita. In addition, pursuant
to the Agreement, Zurvita shall continue to have the right to benefit from certain agreements which Amacore maintains with product
and service providers. For the year ended July 31, 2012, Zurvita paid Amacore $386 thousand, for these services, as compared to
$461 thousand for the prior year.



On August 10, 2010, Amacore issued to the
Company an on-demand promissory note for $1.7 million. The note accrued interest at 6% per annum. As of July 31, 2011, Amacore
had repaid the note plus accrued interest of $16 thousand on August 17, 2010.



On January 14, 2011, the Company issued
to Amacore an on-demand promissory note for $375 thousand. The note accrued interest at 15% per annum. As of July 31, 2011, the
Company had repaid the note plus accrued interest of $5 thousand.



On April 29, 2011, the Company issued to
Amacore an on-demand promissory note for $30 thousand. The note accrued interest at 15% per annum. As of July 31, 2011, the Company
had repaid the note plus accrued interest of $147.



On June 30, 2011, the Company issued to
Amacore an on-demand promissory note for $150 thousand. The note accrued interest at 15% per annum. As of July 31, 2012, the Company
had repaid the note plus accrued interest of $2.5 thousand.



On June 30, 2011, the Company issued to
Amacore an on-demand promissory note for $295 thousand. The note accrued interest at 15% per annum. As of July 31, 2012, the Company
had repaid the note plus accrued interest of $1.8 thousand.



On April 20, 2012, the Company issued to
Amacore an on-demand promissory note for $200 thousand. The note accrued interest at 15% per annum. As of July 31, 2012, the Company
repaid the note plus accrued interest of $1 thousand.



Note Payable to Mark Jarvis



On July 19, 2011, the Company issued to
Mark Jarvis an on-demand promissory note for $20 thousand. The note accrued interest at 15% per annum. As of July 31, 2012, the
Company had repaid the note plus accrued interest of $99.



On June 13, 2012, the Company issued to
Mark Jarvis an on-demand promissory note for $100 thousand. The note accrued interest at 10% per annum. As of July 31, 2012, the
Company had not repaid the note plus accrued interest of $1.3 thousand.



Note Payable to Vicis Capital Management



On May 3, 2012, the Company issued to Vicis
Capital Management an on-demand promissory note for $600 thousand. The note accrued interest at 10% per annum. As of July 31, 2012
the Company had not repaid the note plus accrued interest of $14.6 thousand.



46





ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.



We had no changes in or disagreements with accountants on accounting
and financial disclosure in 2011 or 2010.



ITEM 9A. CONTROLS AND PROCEDURES.



Evaluation of Disclosure Controls and
Procedures



Our management, with the participation
of our principal executive and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this annual report
on Form 10-K. Based on this evaluation, our principal executive and principal financial officer concluded that our disclosure controls
and procedures are ineffective to ensure that information we are required to disclose in reports that we file or submit under the
Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and
(ii) is accumulated and communicated to our management, including our principal executive and principal financial officers, as
appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are not designed adequately
to provide reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls
and procedures include components of our internal control over financial reporting. Management's assessment of the effectiveness
of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no
matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system's objectives
will be met. This conclusion was based on the material weaknesses identified below with regard to internal controls over financial
reporting.



Report of Management on Internal Control over Financial Reporting



Our management is responsible for establishing
and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is a process
designed by, or under the supervision of, our principal executive and principal financial officer and effected by our Board of
Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in
the United States of America.  Internal control over financial reporting includes policies and procedures that (i) pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect the Company’s transactions and dispositions
of its assets; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements
in accordance with generally accepted accounting principles in the United States of America and that receipts and expenditures
of the Company’s assets are made in accordance with authorizations of our management and directors; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have
a material effect on our financial statements.  Because of its inherent limitations, internal control over financial
reporting is not intended to provide absolute assurance that a misstatement of the Company’s financial statements would be
prevented or detected.



Our management conducted an evaluation
of the effectiveness of our internal control over financial reporting as of July 31, 2012 using the criteria set forth in the Internal
Control over Financial Reporting – Guidance for Smaller Public Companies issued by the Committee of Sponsoring Organizations
of the Treadway Commission.   Based upon the evaluation, our management concluded that our internal controls over financial
reporting were not effective as of July 31, 2012 because of a material weakness in our internal control over financial reporting.  A
material weakness is a control deficiency that results in a more than remote likelihood that a material misstatement of the annual
or interim financial statements will not be prevented or detected on a timely basis by employees in the normal course of their
assigned functions.  Our management concluded that we have several material weaknesses in our internal control over financial
reporting because of inadequate segregation of duties over authorization, review and recording of transactions as well as the financial
reporting of such transactions.  In addition, the use of multiple locations for processing transactions causes a lack
of standardization in the financial reporting process of the Company which increases the risk that financial information is not
captured completely and accurately. The Company has developed a plan and is in process of executing the plan to mitigate these
material weaknesses, which includes the addition of personnel to the accounting function through the consolidating of accounting
location.  Upon the consolidation of locations, the risk of incomplete and inaccurate reporting of financial information
will be mitigated. In addition, consultants are used to provide specialized technical skills such as valuation of warrant instruments
requiring fair value accounting and impairment testing. The use of specialists reduces the likeliness of a material error occurring
in more technical accounting areas.



47







This annual report does not include an
attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management's
report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit
the Company to provide only management's report in this annual report.



Changes in Internal Controls



There was no change in our internal control
over financial reporting that occurred during the periods covered by this annual report on Form 10-K that materially affected,
or is reasonably likely to materially affect, our internal control over financial reporting.



ITEM 9B - OTHER INFORMATION



Not Applicable.

























48





PART III





ITEM 10.DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE



The following table sets forth the respective
names, ages and positions of our directors and executive officers.



|Name of Officers and Directors |  | Age |  | Position                                            
|------------------------------ |  | --- |  | ----------------------------------------------------
|Jay Shafer                     |  | 53  |  | Co-Chief Executive Officer, Interim CFO and Director
|                               |  |     |  |                                                     
|Mark Jarvis                    |  | 52  |  | Co-Chief Executive Officer and Director             
|                               |  |     |  |                                                     
|Shad Stastney                  |  | 42  |  | Director                                            
|                               |  |     |  |                                                     
|Keith Hughes                   |  | 53  |  | Director                                            



Executive Officers and Directors



Jay Shafer – Chief Executive Officer,
Interim CFO and Director



Jay Shafer is the Co-Chief Executive Officer,
Interim CFO and a Director of the Company.  Mr. Shafer also serves as Chief Executive Officer and as a director of Amacore.  Mr.
Shafer also served as President of Amacore from January 2007 through December 2008.  Prior to joining Amacore, Mr. Shafer
was employed by Protective Marketing Enterprises, Inc. (PME) from 1997 to 2006. He served as PME’s Vice President Business
Development from 1997 to 2002 and as its Chief Executive Officer from 2002 to 2006. He was Vice President- Financial Services Division
of John Harland Company from 1988 to 1997.





Mark Jarvis – Co-Chief Executive
Officer and Director



Mark Jarvis is the Co-Chief Executive Officer
and a Drector of the Company.  Mr. Jarvis was employed by Amacore as a Senior Vice President of Sales and Marketing solely
responsible for the development of Zurvita, Inc., formally a wholly owned subsidiary of Amacore.  Mr. Jarvis served as Zurvita
Inc.’s President from February 2008 through July 2009.  Prior to joining Amacore, Mr. Jarvis enjoyed a prosperous 26-year
career in direct sales marketing with national companies Ameriplan, Reliv Nutritional Products, Primerica Financial Services and
Amway.  His longevity and success in the direct sales industry demonstrates his visionary leadership in building high-performance
teams and developing new business leaders for increased sales and organizational growth.



Shadron Stastney – Director



Shadron Stastney was elected to the Board
of Directors in March 2010.  Mr. Statsney also serves on the board of directors of Amacore. Mr. Stastney is the Chief
Operating Officer and Head of Research for Vicis Capital, LLC, a company he jointly founded in 2004. Mr. Stastney also jointly
founded Victus Capital Management LLC in 2001. From 1998 through 2001, Mr. Stastney worked with the corporate equity derivatives
origination group of Credit Suisse First Boston, eventually becoming a Director and Head of the Hedging and Monetization Group,
a joint venture between derivatives and equity capital markets. In 1997, he joined Credit Suisse First Boston’s then-combined
convertible/equity derivative origination desk. From 1994 to 1997, he was an associate at the law firm of Cravath, Swaine and Moore
in New York, in their tax and corporate groups, focusing on derivatives. He graduated from the University of North Dakota in 1990
with a B.A. in Political Theory and History, and from the Yale Law School in 1994 with a J.D. degree focusing on corporate and
tax law. Mr. Stastney currently is a director of Ambient Corporation, MDwerks, Inc and Master Silicon Carbide Industries, Inc.



49







Keith Hughes - Director



Keith Hughes was elected to the Board of
Directors in March 2010. Mr. Hughes also serves on the board of directors of Amacore. Mr. Hughes has been the Chief Financial
Officer and Chief Compliance Officer for Vicis Capital, LLC since January 2006.  From 1986 through 1998, Mr. Hughes worked
at the Union Bank of Switzerland (UBS) where he was a Managing Director and the Equity Controller for North America.  From
1998 to 2001, he held various financial roles with hedge funds including Treasurer, Controller and Chief Financial Officer.  From
2001 to 2006, he worked at International Fund Services, the fund administrator, where he was a Managing Director of Operation.  Mr.
Hughes is a CPA and received a B.A. in Accounting from St. John’s University in 1978.



Jason Post – Former Chief Financial Officer



On July 18, 2012, Jason Post resigned from his position as Chief
Financial Officer and Corporate Secretary of Zurvita Holdings, Inc. to pursue other interests. There were no disagreements or disputes
between the Company and Mr. Post which led to his resignation, which was effective immediately.  Jay Shafer will act as interim
Corporate Secretary as well as interim CFO until such time as the Board of Directors convenes and appoints another person to that
position.





BOARD OF DIRECTORS



Audit, Nominating and Compensation Committees



Our Board of Directors does not have standing audit and nominating
committees, committees performing similar functions, or charters for such committees. Instead, the functions that might be delegated
to such committees are carried out by our Board of Directors, to the extent required.  Our Board of Directors believes that
the cost of establishing such committees, including the costs necessary to recruit and retain qualified independent directors to
serve on our Board of Directors and such committees and the legal costs to properly form and document the authority, policies and
procedures of such committees are not justified under our current circumstances.



The Company has designated a Compensation Committee.



Given our lack of operations to date, our Board of Directors
believes that its current members have sufficient knowledge and experience to fulfill the duties and obligations of the audit committee
for our company.



We have no audit committee financial expert. We believe that
the cost related to retaining a financial expert at this time is prohibitive. Further, because of our stage of development, we
believe the services of a financial expert are not warranted.



Our Board of Directors does not currently have a policy for
the qualification, identification, evaluation, or consideration of board candidates. Our Board of Directors does not believe that
a defined policy with regard to the qualification, identification, evaluation, or consideration of candidates recommended by stockholders
is necessary at this time, due to the lack of operations and the fact that we have not received any stockholder recommendations
in the past.



We expect to create one or more of such committees and/or policies
as determined by our Board of Directors, provided that we will be required to have audit and compensation committees when, and
if, our shares of Common Stock commence trading on the Nasdaq Capital or Global Market or on a national securities exchange such
as the American Stock Exchange.



As of July 14, 2010, the Company created
within its Board, a Compensation Committee.



Code of Ethics



We have not yet adopted a Code of Business Conduct and Ethics
that applies to our principal executive officer, principal financial officer, and principal accounting officer or controller, or
persons performing similar functions. However, we intend to adopt a formal Code of Business Conduct and Ethics.



50







Corporate Governance



Meetings and committees of the Board of Directors



Our Board of Directors (the Board) conducts
its business through meetings of the Board and through activities of its committees.



During our last fiscal year, our board of directors had two
telephone meetings. All other proceedings of the Board of Directors were conducted by written consent.



Procedure for Nominating Directors



We have not made any material changes to
the procedures by which security holders may recommend nominees to our board of directors.



The Board does not have a written policy
or charter regarding how director candidates are evaluated or nominated for the board. Additionally, the Board has not adopted
particular qualifications or minimum standards that candidates for the board must meet. Instead, the Board considers how a candidate
could contribute to the company's business and meet the needs of the company and the board.



The Board will consider candidates for
director recommended by our stockholders. Candidates recommended by stockholders are evaluated with the same methodology as candidates
recommended by management or members of the board. To refer a candidate for director, please send a resume or detailed description
of the candidate's background and experience with a letter describing the candidate's interest in the company to, 800 Gessner Road,
Houston, Texas, 77024 Attention: Chairman. All candidate referrals are reviewed by at least one current board member.



Audit Committee and Audit Committee
Financial Expert



As of July 31,
2011, the Company did not have an audit committee. However, Keith Hughes who is a Director of the Board is considered the financial
expert of the Board. Since our common stock is not listed for trading on a national securities exchange, but rather quoted on theOTC Markets Group (the “OTCQX”), we are not subject to rules relating to the independence
of our directors or audit committee members.



Other Committees



The Board has a compensation committee
and functions of which are performed by Mark Jarvis, Keith Hughes and Jason Post.



The Board has no nominating committee,
the functions of which are performed by the Board.



All of our directors hold office until
the next annual meeting of stockholders or until their successors are duly elected and qualified, and all executive officers hold
office at the discretion of the Board of Directors.



Involvement in Certain Legal Proceedings



There have been no events under any bankruptcy act, no criminal
proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director,
executive officer, promoter or control person of Company during the past five years.



Director Independence



Our common stock is quoted on the OTCQX,
which does not have director independence requirements. None of our current board members are independent with respect to NASDAQ
rule 4200(a)(15), which states a director is not considered to be independent if he or she also is an executive officer or employee
of the corporation.



51







Term of Office



Our directors are appointed for a one-year term to hold office
until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers
are appointed by our board of directors and hold office until removed by the board.



Shareholder Communications



Shareholder communications may be sent to our board of directors
by mail addressed to: Board of Directors, Zurvita Holdings, Inc., 800 Gessner, Houston, Texas 77024.



Additional Information



You may request a copy of public filings made by the Company
with the SEC, by writing to our Corporate Secretary at Zurvita Holdings, Inc., 800 Gessner, Houston, Texas 77024. Copies of the
documents mentioned above also may be found on the SEC’s EDGAR database at www.sec.gov.





ITEM 11. EXECUTIVE COMPENSATION



Summary Compensation Table



The following table sets forth the compensation
earned for services for the two most recently completed years by (i) Zurvita Holdings’s Co-Chief Executive Officer’s
and (ii) the one additional most highly compensated executive officers whose total compensation during the years ended July 31,
2012 and 2011.



|Name and Principal Position                              |  | Year |  | Base Salary ($) |         | Bonus ($) |  | Stock Awards ($)(1) |  | Option Awards ($)(1) |         | Non-Equity Incentive Plan Compensation
    ($) |  | Nonqualified Deferred Compensation
    Earnings       ($) |  | All Other Compensation ($) |   | Total Compensation ($) | 
|-------------------------------------------------------- |  | ---- |  | --------------- | ------- | --------- |  | ------------------- |  | -------------------- | ------- | ---------------------------------------------- |  | --------------------------------------------------------- |  | -------------------------- | - | ---------------------- | 
|                                                         |  |      |  |                 |         |           |  |                     |  |                      |         |                                                |  |                                                           |  |                            |   |                        | 
|Jay Shafer                                               |  | 2011 |  |                 | –       |           |  | –                   |  |                      | –       |                                                |  | 83,356                                                    |  |                            | – |                        | 
|Co-Chief Executive Officer, Interim CFO and
    Director |  | 2012 |  |                 | –       |           |  | –                   |  |                      | –       |                                                |  | –                                                         |  |                            | – |                        | 
|                                                         |  |      |  |                 |         |           |  |                     |  |                      |         |                                                |  |                                                           |  |                            |   |                        | 
|Mark Jarvis                                              |  | 2011 |  |                 | 454,000 |           |  | –                   |  |                      | 229,606 |                                                |  | –                                                         |  |                            | – |                        | 
|Co-Chief Executive Officer and Director                  |  | 2012 |  |                 | 325,000 |           |  | –                   |  |                      | –       |                                                |  | –                                                         |  |                            | – |                        | 
|                                                         |  |      |  |                 |         |           |  |                     |  |                      |         |                                                |  |                                                           |  |                            |   |                        | 
|Jason Post                                               |  | 2011 |  |                 | –       |           |  | –                   |  |                      | –       |                                                |  | 46,946                                                    |  |                            | – |                        | 
|Former Chief Financial Officer                           |  | 2012 |  |                 | –       |           |  | –                   |  |                      | –       |                                                |  | –                                                         |  |                            | – |                        | 















52







Narrative Disclosure to Summary Compensation
Table

Employment Agreement with Mark Jarvis



On July 30, 2009, the Company entered into an employment agreement
with Mark Jarvis (the “Jarvis Agreement”), pursuant to which Mr. Jarvis agreed to serve as Co-CEO of the Company for
a term of two years.  Pursuant to the Jarvis Agreement, Mr. Jarvis shall receive annual compensation of $480 thousand
(the “Base Salary”).  Mr. Jarvis shall also be entitled certain other benefits, including health insurance,
as may be provided to other comparable executives of Zurvita Holdings.  In addition, within 30 days of the execution
of the Jarvis Agreement, the Company shall place 7.2 million shares of the Company’s common stock in escrow on behalf of
Mr. Jarvis (the “Initial Jarvis Shares”). The Initial Jarvis Shares are subject to a vesting period pursuant to which
(i) 3.6 million shares shall vest on July 30, 2010, and (ii) 3.6 million shares shall vest on July 30, 2011.  In addition,
in the event that for the first quarter ending six months after July 30, 2009 Zurvita Holdings is cash flow positive, the Company
shall, within 30 days of the Company filing its Form 10-Q, issue to Mr. Jarvis 7.2 million shares. Alternatively, for the two quarters
ending six (6) months after Start-Up Period, (“Extended Measuring Quarters”), should the average Zurvita Holdings monthly
cash flow during the Extended Measuring Quarters, as documented on the monthly cash flow statements, and verified in the Quarterly
Report(s), be operationally cash flow positive, the Performance Shares shall be issued to Executive.  These shares were
not issued at either of these aforementioned periods, as the requirements for issuance was not met. The Performance Shares shall
be subject to a one year vesting period from the time of initial grant.  In addition to his Base Salary, Mr. Jarvis shall
also be eligible to receive certain incentive bonus compensation (the “Incentive Bonus”) based upon the revenue generated
by Zurvita Holdings.  Mr. Jarvis’ Incentive Bonus shall be calculated as 10% of Zurvita Holdings net income.  If
Mr. Jarvis’ employment is terminated by the Company as a result of his disability (as such term is defined in the Jarvis
Agreement), Mr. Jarvis shall be entitled to receive a lump sum payment equal to his (i) accrued but unpaid Base Salary, (ii) any
outstanding expense reimbursements, (iii) any accrued but unpaid Incentive Bonus, (iv) a monthly amount, which when added to any
amounts received by Mr. Jarvis from any disability policy in effect at the time of his disability, will equal Mr. Jarvis’
Base Salary for the 12 month period following the date of disability termination.



Subsequent to July 31, 2011, the Company and Mark  Jarvis
entered into an employment agreement amendment which eliminated the deferred compensation due Mark Jarvis, and the Company issued
62,241 shares of restricted common stock to satisfy the deferred compensation due consultant. No deferred compensation was due
at July 31, 2012.

2009 Incentive Stock Plan



During 2009, our Board of Directors adopted the 2009 Incentive
Stock Plan (the 2009 Plan), pursuant to which we reserved for issuance 6 million shares of our common stock to be used as awards
to employees, directors, consultants, and other service providers. The purpose of the 2009 Plan is to provide an incentive to attract
and retain officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship
and to stimulate an active interest of such persons into our development and financial success. Under the 2009 Plan, Zurvita is
authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock
appreciation rights, performance shares, restricted stock and long term incentive awards. The 2009 Plan is administered by the
Board designated Compensation Committee.



Director Compensation



There is currently no formal Director Compensation Policy.



Family Relationships



Tracy Jarvis who is Mark Jarvis’ spouse has a commission
agreement with the Company to recognize her for the past efforts in founding Zurvita Inc. and to reward her for her continued involvement
in developing Zurvita Holdings’s business, marketing and compensation plans as well as her involvement in the recruitment
of independent marketing representatives.  Significant terms of the agreement are detail below:



53







Relationship – Tracy is designated as the
master representative of the Company.  All existing and future independent representatives of the Company shall be in
her downline and placed underneath her in the Company’s genealogy structure.



Compensation – As sole compensation for her services,
she will receive commissions based on her position in the Company’s downline for the sale of commissionable products. Compensation
shall begin the month following the first month during which the Company is cash-flow positive and in the same manner as the payment
of compensation to the other independent marketing representatives.



Term – The agreement is effective as of July
29, 2009 and shall continue so long as the Company and its successors or assigns sell commissionable products through independent
representatives.



Tracy continues to work with the Company to grow its independent
representative base as well as consult on products and commission structures.



Outstanding Equity Awards at Fiscal Year-End Table



The following table sets forth, for each named executive officer,
information regarding unexercised options as of the end of our fiscal year ended July 31, 2012.



Compensation of Directors



The following table sets forth the compensation
of directors for the years ended July 31, 2012 and 2011.



|Name and Principal Position |  | Year |  | Base Salary ($) |   | Bonus ($) |  | Stock Awards ($)(1) |  | Option Awards ($)(1) |   | Non-Equity Incentive Plan Compensation ($) |  | Nonqualified Deferred Compensation Earnings
($) |  | All Other Compensation ($)(4) |   | Total Compensation ($) | 
|--------------------------- |  | ---- |  | --------------- | - | --------- |  | ------------------- |  | -------------------- | - | ------------------------------------------ |  | ----------------------------------------------- |  | ----------------------------- | - | ---------------------- | 
|                            |  |      |  |                 |   |           |  |                     |  |                      |   |                                            |  |                                                 |  |                               |   |                        | 
|Guy Norberg                 |  | 2011 |  |                 | – |           |  | –                   |  |                      | – |                                            |  | 85,356                                          |  |                               | – |                        | 
|Former Director             |  | 2012 |  |                 | – |           |  | –                   |  |                      | – |                                            |  | –                                               |  |                               | – |                        | 





1) Represents the dollar amount recognized
for financial statement reporting purposes in accordance with SFAS 123R. For a discussion of valuation assumptions, see Note 13
to the financial statements contained in this Annual Report of Form 10K.



ITEM
12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The following table sets forth certain
information known to us with respect to the beneficial ownership (as defined in Instruction 4 to Item 403 of Regulation S-K
under the Securities Exchange Act of 1934) of our Common Stock by (i) each person who we anticipate being a beneficial owner
of more than five percent (5%) of any class of our voting securities, (ii) each of our directors and named executive officers,
and (iii) all of our executive officers and directors as a group.  Except as otherwise listed below, the address of each
person is 800 Gessner, Houston, Texas 77024.



With respect to the dispositive control
over shares, the control rests with the board of directors for both Infusion Brands and Amacore, while for Vicis the control rests
with executive management.



54









ITEM 12 - Beneficial Ownership



|Name and Address of Beneficial Owner (1)              |  | Amount and Nature Of Beneficial Ownership (2) |             |     | Percentage of Class                (2) | 
|----------------------------------------------------- |  | --------------------------------------------- | ----------- | --- | -------------------------------------- | 
|Executive Officers and Directors:                     |  |                                               |             |     |                                        | 
|Mark Jarvis                                           |  |                                               | 7,302,500   | (3) |                                        | 
|Jay Shafer (5)                                        |  |                                               | 818,750     | (4) |                                        | 
|Keith Hughes (6)                                      |  |                                               | –           |     |                                        | 
|Shad Stastney (6)                                     |  |                                               | –           |     |                                        | 
|All officers and directors as a group (4 persons) (8) |  |                                               | 8,121,250   |     |                                        | 
|                                                      |  |                                               |             |     |                                        | 
|Other Beneficial Owners:                              |  |                                               |             |     |                                        | 
|Vicis Capital Master Fund                             |  |                                               | 132,800,000 | (7) |                                        | 



(1) Unless otherwise indicated, the address
for each individual listed in this column is c/o Zurvita Holdings, Inc., 800 Gessner, Houston, TX 77024.



(2) Unless otherwise indicated, each person
has sole investment and voting power with respect to the shares indicated, subject to community property laws, where applicable.
For purposes of this table, 149,842,451 shares of our common stock outstanding as of July 31, 2012 together with securities exercisable
or convertible into shares of our Common Stock within 60 days of July 31, 2012 for each stockholder. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect
to securities. Shares of Common Stock that are currently exercisable or exercisable within 60 days of July 31, 2012, are deemed
to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such
person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.



(3) Pursuant to the terms of Mr. Jarvis’
employment agreement, the Company granted 7,202,500 shares of the Company’s common stock to Mr. Jarvis (the “Initial
Jarvis Shares”). The Initial Jarvis Shares are subject to a vesting period pursuant to which (i) 3,602,500 shares shall vest
on July 30, 2010, and (ii) 3,600,000 sharesvested on July 30, 2011. In addition, this includes 100,000 shares of Common Stock issuable
upon exercise of outstanding warrants.



(4) Mr. Shafer's and Mr. Norberg's beneficial
ownership includes 818,750 shares of Common Stock issuable upon exercise of outstanding warrants.



(5) Beneficial owners address: 485 N. Keller
Rd., Maitland, Florida 32751



(6) Mr. Hughes and Mr. Stastney are Directors
of the Company and hold no beneficial interest in the Company.



(7) Includes 66,400,000 shares of Common
Stock issuable upon exercise of outstanding convertible preferred stock and 66,400,000 shares of Common Stock issuable upon exercise
of outstanding warrants.



(8) To the best of the Company's knowledge,
the ownership amounts reflect accurately the named officers' and beneficial owners' current holdings as of the date of this analysis.



55







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



Transactions with Related Persons



Other than the transactions described below,
none of the following parties has, since our date of incorporation, had any material interest, direct or indirect, in any transaction
with us or in any presently proposed transaction that has or will materially affect us:



| | · | Any of our directors or executive officers;
| | - | -------------------------------------------

| | · | Any person proposed as a nominee for election
as a director
| | - | -----------------------------------------------------------

| | · | Any person who beneficially owns, directly
or indirectly, shares carrying more than 5% of any class of voting securities;
| | - | -------------------------------------------------------------------------------------------------------------------------

| | · | Any of our promoters;
| | - | ---------------------

| | · | Any relative or spouse of any of the foregoing
persons who has the same house as such person.
| | - | ---------------------------------------------------------------------------------------------



There are immediate family members of Mr.
Jarvis, who operate as Independent Business Owners (“IBO”) who were paid agent advances and commission compensation
which approximated $11 thousand and $91 thousand, respectively, for the year ended July 31, 201,1 and approximately $37 thousand
and $10 thousand, respectively, for the year ended July 31, 2010. These payments were for work they performed on behalf of the
Company.



Agreement with Infusion Brands International,
Inc. f/k/a OmniReliant Holdings, Inc.



On May 8, 2012, the Company and Infusion
entered into a Stock Purchase Agreement (the “Infusion Purchase Agreement”) whereby the Company purchased 15.2 million
shares of the Company’s common stock from Infusion. Pursuant to the Infusion Purchase Agreement, the Company paid to Infusion
a purchase price equal to $100 thousand.



Furthermore, in connection with the Infusion
Purchase Agreement, Infusion forgave and surrendered for cancellation that certain promissory note in principal amount of $2,000,000
(the “Note”) along with accrued interest of $818 thousand and unrealized gain on the conversion feature of $593 thousand
for the year ended July 31, 2012, were written off to gain from extinguishment of debt. The Note was issued by the Company to Infusion
in connection with that certain License and Marketing Agreement, dated October 9, 2009, by and between the Company and Infusion.
Lastly, Infusion terminated and released any and all of Infusion’s security interest arising out of that certain Security
Agreement, dated December 2, 2010, by and between the Company and Infusion.



Agreement with Amacore



The Company entered into a Marketing and
Sales Agreement on July 31, 2009, pursuant to which Amacore agreed to provide certain services to Zurvita. In addition, pursuant
to the Agreement, Zurvita shall continue to have the right to benefit from certain agreements which Amacore maintains with product
and service providers. For the year ended July 31, 2011, Zurvita paid Amacore $461 thousand, for these services, as compared to
$478 thousand for the prior year.



On August 10, 2010, Amacore issued to the
Company an on-demand promissory note for $1.7 million. The note accrued interest at 6% per annum. As of July 31, 2011, Amacore
had repaid the note plus accrued interest of $16 thousand on August 17, 2010.



On January 14, 2011, the Company issued
to Amacore an on-demand promissory note for $375 thousand. The note accrued interest at 15% per annum. As of July 31, 2011, the
Company had repaid the note plus accrued interest of $5 thousand.



On April 29, 2011, the Company issued to
Amacore an on-demand promissory note for $30 thousand. The note accrued interest at 15% per annum. As of July 31, 2011, the Company
had repaid the note plus accrued interest of $147.



On June 30, 2011, the Company issued to
Amacore an on-demand promissory note for $150 thousand. The note accrued interest at 15% per annum. As of July 31, 2012, the Company
had repaid the note plus accrued interest of $2.5 thousand.



On June 30, 2011, the Company issued to
Amacore an on-demand promissory note for $295 thousand. The note accrued interest at 15% per annum. As of July 31, 2012, the Company
had repaid the note plus accrued interest of $1.8 thousand.



56







On April 20, 2012, the Company issued to
Amacore an on-demand promissory note for $200 thousand. The note accrued interest at 15% per annum. As of July 31, 2012, the Company
repaid the note plus accrued interest of $1 thousand.



On May 8, 2012, the Company and Amacore
entered into a Stock Purchase Agreement (the “Amacore Purchase Agreement”) whereby the Company purchased 37.21 million
shares of the Company’s common stock from Amacore. Pursuant to the Amacore Purchase Agreement, the Company paid to Amacore
a purchase price equal to $300 thousand. In connection with the Amacore Purchase Agreement, Amacore forgave the Company’s
indebtedness to Amacore in principal and interest equal to $362 thousand.



Furthermore, in connection with and concurrently
with the Amacore Purchase Agreement, the Company and Amacore entered into an Agreement of Conveyance, Transfer and Assignment of
Assets and Assumption of Obligations (the “Conveyance Agreement”) whereby the Company assigned, sold, conveyed and
transferred all of the Company’s right, title and interest in certain intellectual property rights related to the Company’s
ZLinked technology, which intellectual property rights are defined and identified in a Conveyance Agreement (the “Assets”).
Pursuant to the Conveyance Agreement, Amacore agreed to assume any and all liabilities and obligations associated with the Assets,
regardless of when such liabilities and obligations arose.



Note Payable to Mark Jarvis



On July 19, 2011, the Company issued to
Mark Jarvis an on-demand promissory note for $20 thousand. The note accrued interest at 15% per annum. As of July 31, 2012, the
Company had repaid the note plus accrued interest of $99.



On June 13, 2012, the Company issued to
Mark Jarvis a promissory note for $100 thousand. The note accrued interest at 10% per annum and is due December 31, 2013. As of
July 31, 2012, the Company had not repaid the note plus accrued interest of $1.3 thousand.



Note Payable to Vicis Capital Management



On May 3, 2012, the Company issued to Vicis
Capital Management a promissory note for $600 thousand. The note accrued interest at 10% per annum and is due December 31, 2013.
As of July 31, 2012 the Company had not repaid the note plus accrued interest of $14.6 thousand.



Director Independence



Our common stock is quoted on the OTC Markets
Group (OTCQX), which does not have director independence requirements. None of our current board members are independent with respect
to NASDAQ rule 4200(a)(15), which states a director is not considered to be independent if he or she also is an executive officer
or employee of the corporation.





57







ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



The following table presents fees for professional
audit services performed by our principal accountant, Meeks International, LLP for the audit of our annual financial statements
and review of financial statements for the years ended July 31, 2012 and 2011, respectively, and fees billed for other services
rendered by Meeks International, LLP during such years.



|           |  | For the Year Ended July 31, 2012 |        |  | For the Year Ended July 31, 2011 |  
|---------- |  | -------------------------------- | ------ |  | -------------------------------- | -
|Audit Fees |  | $                                | 82,569 |  |                                  | $
|Tax Fees   |  |                                  | –      |  |                                  |  
|Other      |  |                                  | –      |  |                                  |  
|Total      |  | $                                | 82,569 |  |                                  | $



Pre-Approval Policy And Procedures



We may not engage our independent auditors to render any audit
or non-audit service unless our Board approves the service in advance.

























58







Item 15. Exhibits



(a) Exhibits:





|3.1  | Certificate of Incorporation, dated June 28, 2007 (incorporated by reference to Exhibit 3.1 to the Company’s Form SB-2 filed with the Securities and Exchange Commission on September 6, 2007).                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                         
|3.2  | Certificate of Amendment, dated June 26, 2009 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 5, 2009).                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                         
|3.3  | Certificate of Amendment to the Certificate of Incorporation, dated August 19, 2009 (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 25, 2009).                                                                                          
|     |                                                                                                                                                                                                                                                                                                                         
|3.4  | Certificate of Amendment to the Certificate of Incorporation, dated February 3, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on February 3, 2010).                                                                                        
|     |                                                                                                                                                                                                                                                                                                                         
|3.5  | Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Form SB-2 filed with the Securities and Exchange Commission on September 6, 2007).                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                         
|4.1  | Series A Convertible Preferred Stock Certificate of Designation, dated July 30, 2009 (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 5, 2009)                                                                                           
|     |                                                                                                                                                                                                                                                                                                                         
|4.2  | Form of Series A Common Stock Purchase Warrant Certificate I between Red Sun Mining, Inc. and Vicis Capital Master fund, dated July 30, 2009 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 5, 2009).                                  
|     |                                                                                                                                                                                                                                                                                                                         
|4.3  | Form of Series A Common Stock Purchase Warrant Certificate II between Red Sun Mining, Inc. and Midtown Partners & Co. LLC, dated July 30, 2009 (incorporated by reference to Exhibit 4.3 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 5, 2009).                                
|     |                                                                                                                                                                                                                                                                                                                         
|4.4  | Securities Purchase Agreement by and between Red Sun Mining, Inc. and Vicis Capital Master Fund dated July 30, 2009 (incorporated by reference to Exhibit 4.4 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 5, 2009).                                                           
|     |                                                                                                                                                                                                                                                                                                                         
|4.5  | Amended and Restated Series C Convertible Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 8, 2010)                                                                                            
|     |                                                                                                                                                                                                                                                                                                                         
|4.6  | Second Amended and Restated Series C Convertible Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 10, 2011)                                                                                    
|     |                                                                                                                                                                                                                                                                                                                         
|4.7  | Third Amended and Restated Series C Convertible Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2011)                                                                                 
|     |                                                                                                                                                                                                                                                                                                                         
|10.1 | Agreement of Conveyance, Transfer and Assignment of Assets and Assumptions of Obligations by and between the Company and OmniReliant Holdings, Inc., dated December 2, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 8, 2010).
|     |                                                                                                                                                                                                                                                                                                                         
|10.2 | Security Agreement between the Company and OmniReliant Holdings, Inc. dated December 2, 2010 (incorporated by reference to Exhibit10.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 8, 2010).                                                                                
|     |                                                                                                                                                                                                                                                                                                                         



59







|10.3 | Securities Purchase Agreement by and between the Company and Vicis Captial Master Fund dated June 9, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 10, 2011).                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                           
|10.4 | Form of Series C Common Stock Purchase
        Warrant Certificate between the Company and Vicis Captial Master Fund, dated June 9, 2011 (incorporated by reference to Exhibit
        10.3 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 10, 2011).                
|10.5 | Securities Purchase Agreement by and between the Company and Vicis Captial Master Fund dated December 28, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2011).                                              
|     |                                                                                                                                                                                                                                                                                                           
|10.6 | Form of Series C Common Stock Purchase
        Warrant Certificate between the Company and Vicis Captial Master Fund, dated December 28, 2011 (incorporated by reference to Exhibit
        10.3 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2011).       
|10.7 | Securities Purchase Agreement by and between the Company and The Amacore Group, Inc., dated May 8, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 15, 2012).                                                          
|     |                                                                                                                                                                                                                                                                                                           
|10.8 | Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligation by and between the Company and The Amacore Group, Inc., dated May 8, 2012 (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 15, 2012).
|     |                                                                                                                                                                                                                                                                                                           
|10.9 | Securities Purchase Agreement by and between the Company and Infusion Brands International, dated May 8, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 15, 2012).                                                    
|     |                                                                                                                                                                                                                                                                                                           
|31.1 | Certification of the Principal Executive Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                           
|31.2 | Certification of Principal Financial Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                               
|     |                                                                                                                                                                                                                                                                                                           
|32.1 | Certification pursuant to Section 906 Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).                                                                                                                                                                                                                



|101.ins | XBRL Instance Document**                      
|------- | ----------------------------------------------
|101.sch | XBRL Taxonomy Schema Document**               
|101.cal | XBRL Taxonomy Calculation Document**          
|101.def | XBRL Taxonomy Linkbase Document**             
|101.lab | XBRL Taxonomy Label Linkbase Document**       
|101.pre | XBRL Taxonomy Presentation Linkbase Document**



** Pursuant to Rule 405(a)(2) of Regulation
S-T, the registrant is relying upon the applicable 30-day grace period for the initial filing of its first Interactive Data File
required to contain detail-tagged footnotes or schedules. The registrant intends to file the required detail-tagged footnotes or
schedules by the filing of an amendment to this Annual Report on Form 10-K within the 30-day period.



60







SIGNATURES



In accordance with Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.





|Dated:November 13, 2012 | /s/ Jay Shafer             | 
|----------------------- | -------------------------- | 
|                        | Jay Shafer                 | 
|                        | Co-Chief Executive Officer | 



In accordance with the Securities Exchange
Act of 1934, this report has been signed below by the following persons on behalf of the Registrant on the 6th day of December,
2010 in the capacities indicated.



/s/ Jay Shafer






Jay Shafer

Co-Chief Executive Officer and

Director



/s/ Mark Jarvis






Mark Jarvis

Co-Chief Executive Officer





/s/  Shad Stastney






Shad Stastney

Director



/s/  Keith Hughes






Keith Hughes

Director









61







Exhibit Index





|3.1  | Certificate of Incorporation, dated June 28, 2007 (incorporated by reference to Exhibit 3.1 to the Company’s Form SB-2 filed with the Securities and Exchange Commission on September 6, 2007).                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                         
|3.2  | Certificate of Amendment, dated June 26, 2009 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 5, 2009).                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                         
|3.3  | Certificate of Amendment to the Certificate of Incorporation, dated August 19, 2009 (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 25, 2009).                                                                                          
|     |                                                                                                                                                                                                                                                                                                                         
|3.4  | Certificate of Amendment to the Certificate of Incorporation, dated February 3, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on February 3, 2010).                                                                                        
|     |                                                                                                                                                                                                                                                                                                                         
|3.5  | Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Form SB-2 filed with the Securities and Exchange Commission on September 6, 2007).                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                         
|4.1  | Series A Convertible Preferred Stock Certificate of Designation, dated July 30, 2009 (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 5, 2009)                                                                                           
|     |                                                                                                                                                                                                                                                                                                                         
|4.2  | Form of Series A Common Stock Purchase Warrant Certificate I between Red Sun Mining, Inc. and Vicis Capital Master fund, dated July 30, 2009 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 5, 2009).                                  
|     |                                                                                                                                                                                                                                                                                                                         
|4.3  | Form of Series A Common Stock Purchase Warrant Certificate II between Red Sun Mining, Inc. and Midtown Partners & Co. LLC, dated July 30, 2009 (incorporated by reference to Exhibit 4.3 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 5, 2009).                                
|     |                                                                                                                                                                                                                                                                                                                         
|4.4  | Securities Purchase Agreement by and between Red Sun Mining, Inc. and Vicis Capital Master Fund dated July 30, 2009 (incorporated by reference to Exhibit 4.4 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 5, 2009).                                                           
|     |                                                                                                                                                                                                                                                                                                                         
|4.5  | Amended and Restated Series C Convertible Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 8, 2010)                                                                                            
|     |                                                                                                                                                                                                                                                                                                                         
|4.6  | Second Amended and Restated Series C Convertible Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 10, 2011)                                                                                    
|     |                                                                                                                                                                                                                                                                                                                         
|4.7  | Third Amended and Restated Series C Convertible Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2011)                                                                                 
|     |                                                                                                                                                                                                                                                                                                                         
|10.1 | Agreement of Conveyance, Transfer and Assignment of Assets and Assumptions of Obligations by and between the Company and OmniReliant Holdings, Inc., dated December 2, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 8, 2010).
|     |                                                                                                                                                                                                                                                                                                                         
|10.2 | Security Agreement between the Company and OmniReliant Holdings, Inc. dated December 2, 2010 (incorporated by reference to Exhibit10.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 8, 2010).                                                                                
|     |                                                                                                                                                                                                                                                                                                                         



62









|10.3 | Securities Purchase Agreement by and between the Company and Vicis Captial Master Fund dated June 9, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 10, 2011).                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                           
|10.4 | Form of Series C Common Stock Purchase
        Warrant Certificate between the Company and Vicis Captial Master Fund, dated June 9, 2011 (incorporated by reference to Exhibit
        10.3 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 10, 2011).                
|10.5 | Securities Purchase Agreement by and between the Company and Vicis Captial Master Fund dated December 28, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2011).                                              
|     |                                                                                                                                                                                                                                                                                                           
|10.6 | Form of Series C Common Stock Purchase
        Warrant Certificate between the Company and Vicis Captial Master Fund, dated December 28, 2011 (incorporated by reference to Exhibit
        10.3 to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2011).       
|10.7 | Securities Purchase Agreement by and between the Company and The Amacore Group, Inc., dated May 8, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 15, 2012).                                                          
|     |                                                                                                                                                                                                                                                                                                           
|10.8 | Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligation by and between the Company and The Amacore Group, Inc., dated May 8, 2012 (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 15, 2012).
|     |                                                                                                                                                                                                                                                                                                           
|10.9 | Securities Purchase Agreement by and between the Company and Infusion Brands International, dated May 8, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 15, 2012).                                                    
|     |                                                                                                                                                                                                                                                                                                           
|31.1 | Certification of the Principal Executive Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                           
|31.2 | Certification of Principal Financial Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                               
|     |                                                                                                                                                                                                                                                                                                           
|32.1 | Certification pursuant to Section 906 Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).                                                                                                                                                                                                                



|101.ins | XBRL Instance Document**                      
|------- | ----------------------------------------------
|101.sch | XBRL Taxonomy Schema Document**               
|101.cal | XBRL Taxonomy Calculation Document**          
|101.def | XBRL Taxonomy Linkbase Document**             
|101.lab | XBRL Taxonomy Label Linkbase Document**       
|101.pre | XBRL Taxonomy Presentation Linkbase Document**



** Pursuant to Rule 405(a)(2) of Regulation
S-T, the registrant is relying upon the applicable 30-day grace period for the initial filing of its first Interactive Data File
required to contain detail-tagged footnotes or schedules. The registrant intends to file the required detail-tagged footnotes or
schedules by the filing of an amendment to this Annual Report on Form 10-K within the 30-day period.





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