----

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| COLORADO                                                       |   | 93-0955290                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or Other Jurisdiction of                                |   | (I.R.S. Employer Identification No.) |
| In Company)                                                    |   |                                 |
|                                                           |   |                                 |
| 330 W. Pleasantview Avenue, Suite 163140 58th Street, Suite 8E |   | (201) 788-3785                       |
| Hackensack, NJ 07601                                           |   | (Issuer’s Telephone Number,    |
| (Address of Principal Executive Offices)                       |   | Including Area Code)                 |

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

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| Part & Item | Section                                                                              | Page      |
|-----------------|--------------------------------------------------------------------------------------|-----------|
| PART I          |                                                                                 |
| ITEM 1.         | DESCRIPTION OF BUSINESS                                                              |   4  |
| ITEM 1A.        | RISK FACTORS                                                                         |   5  |
| ITEM 1B.        | UNRESOLVED STAFF COMMENTS                                                            |   5  |
| ITEM 2.         | DESCRIPTION OF PROPERTY                                                              |   5  |
| ITEM 3.         | LEGAL PROCEEDINGS                                                                    |   6  |
| ITEM 4.         | SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS                         |   6  |
| PART II         |                                                                                 |
| ITEM 5.         | MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS                                |   7  |
| ITEM 6.         | SELECTED FINANCIAL DATA                                                              |   8  |
| ITEM 7.         | MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                      |   8  |
| ITEM 7A.        | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                            |   10 |
| ITEM 8.         | FINANCIAL STATEMENTS                                                                 |   10 |
| ITEM 9.         | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |   10 |
| ITEM 9A.        | CONTROLS AND PROCEDURES                                                              |   10 |
| ITEM 9B         | OTHER INFORMATION                                                                    |   12 |
| PART III        |                                                                                 |
| ITEM 10.        | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE                              |   12 |
| ITEM 11.        | EXECUTIVE COMPENSATION                                                               |   13 |
| ITEM 12.        | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                       |   14 |
| ITEM 13.        | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                       |   14 |
| ITEM 14.        | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                               |   14 |
| PART IV         |                                                                                 |
| ITEM 15.        | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                           |   14 |
| SIGNATURES      |                                                                                 | 14        |

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| Period                           | High Bid | Low Bid |
|----------------------------------|----------|---------|
| Year Ended 31 December 2011 (*)  |     |    |
| 1st Quarter                      | $0.9000  | $0.1500 |
| 2nd Quarter                      | $1.4000  | $0.3000 |
| 3rd Quarter                      | $0.7500  | $0.0500 |
| 4th Quarter                      | $2.7500  | $0.1000 |
| Year ended December 31, 2010 (*) |     |    |
| 1st Quarter                      | $11.5000 | $0.5000 |
| 2nd Quarter                      | $2.2000  | $0.2500 |
| 3rd Quarter                      | $0.5000  | $0.1000 |
| 4th Quarter                      | $0.8000  | $0.1500 |

| Date                                             | Amount of Securities and class     | Consideration                               | Principals          | Exemption           | Terms of Conversion or Exercise          | Use of Proceeds                           |
|--------------------------------------------------|------------------------------------|---------------------------------------------|---------------------|---------------------|------------------------------------------|-------------------------------------------|
|                                             | Preferred C, Preferred A           | $100,000Stock BasedCompensation             | Gary Kouletas, CEO  | 144 Issuance        | Taken in 70,000 class A and 20,000 class | N/A                                       |
| November 2011                               | CS, not yet converted †      | $50,000                                     | Cova Holdings, Inc. | Convertible Note    |                                     | Operating Capital                         |
| November 30, 2011, original notes date from 2008 | 34,732,000                         | Exercise of prior notes dating back to 2008 | Various 3           | 144                 | At par                                   | Operating capital                         |
| August 2011                                      | CS, not yet converted              | $75,000                                     | Sunrise Capital     | Regulation D filing | @ $0.25                                  | Purchase of mine                          |
| August 2011                                      | CS, not yet converted 1            | $75,000                                     | PMT Capital         | Regulation D filing | @ $0.25                                  | Purchase of mine                          |
| September 2011                                   | CS, not yet converted  1 | $50,000                                     | Adler               | Regulation D filing | @ $0.25                                  | FCCSI/permitting process for mine 2       |
| October 2011                                     | CS, not yet converted  1 | $75,000                                     | Cornell Funding     | Regulation D filing | @ $0.25                                  | Retire outstanding debt                   |
| October 2011                                     | CS, not yet converted 1            | $75,000                                     | Ygar Capital        | Regulation D filing | @ $0.25                                  | FCCSI/permitting process and operations 2 |

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|   | i) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iii) | provide reasonable assurance regarding prevention or timely detection of unauthorized    acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Name and Principal Position      | Year | Salary     | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan compen-sation | Non-qualified deferred compensation earnings | All other Compensation | Total    |
|----------------------------------|------|------------|-------|--------------|---------------|-----------------------------------------|----------------------------------------------|------------------------|----------|
| Kouletas, Gary, CEO and Director | 2011 | $-0-       | -0-   | $100,000     | -0-           | -0-                                     | -0-                                          | -0-                    | $100,000 |
| Stitzer, Paul, Director          | 2011 |   -0- | -0-   | -0-          | -0-           | -0-                                     | -0-                                          | -0-                    | $0.00    |

----

| Plan Category                                              | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants, and rights | Number of Securities Remaining available for future issuance under equity compensation plans (excluding securities reflected in column a) |
|------------------------------------------------------------|---------------------------------------------------------------------------------------------|------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|                                                       | (a)                                                                                         | (b)                                                                          | (c)                                                                                                                                       |
| Equity compensation plans approved by security holders     | None                                                                                        |
| Equity compensation plans NOT approved by security holders |
| Total                                                      | -0-                                                                                         | -0-                                                                          | -0-                                                                                                                                       |

|              | Audit Fees | Audit Related Fees | Tax Fees | All Other Fees |
|-------------------|------------|--------------------|----------|----------------|
|  Marcum, LLP | 2010       | 2011               | 2010     | 2011           | 2010 | 2011 | 2010 | 2011 |
| -0-               | $22,500    | -0-                |     | -0-            |   | -0- |   |
| Jerome Rosenberg  |       | $3,000             |     | -0-            |   | -0- |   | -0- |

|                       | All Grade Mining, Inc. |                                                 |
|----------------------------|------------------------|------------------------------------------------------|
|                       |                   |                                                 |   |
| Date:  April 25, 2012 | By:                    | /s/ Gary Kouletas                                    |   |
|                       |                   | Name:  Gary Kouletas                            |   |
|                       |                   | Title:  President (Principal Executive Officer) |   |
|                       |                   |                                                 |   |

----

|                                                                                                | Page      |
|-----------------------------------------------------------------------------------------------------|-----------|
|                                                                                                |      |
| Report of Independent Registered Public Accounting Firms                                            |   16 |
|                                                                                                |      |
| Consolidated Balance Sheets as of December 31, 2011 and 2010                                        |   18 |
|                                                                                                |      |
| Consolidated Statements of Operations for the Years Ended December 31, 2011                         |      |
|      and 2010 and for the period January 3, 2006                           |      |
|      (Date of commencement as a development stage company) to              |      |
|      December 31, 2011                                                     |   20 |
|                                                                                                |      |
| Consolidated Statements of Changes in Stockholders’ Deficiency                                |      |
|      for the period January 3, 2006 (Date of commencement as a development |      |
|      stage company) to December 31, 2011                                   |   21 |
|                                                                                                |      |
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2011                         |      |
|      and 2010 and for the period January 3, 2006                           |      |
|      (Date of commencement as a development stage company) to              |      |
|      December 31, 2011                                                     |   24 |
|                                                                                                |      |
| Notes to consolidated financial statements                                                          |   26 |

----

----

|   | /s/Jerome Rosenberg CPA, P.C.Jerome Rosenberg CPA, P.C. Melville, New YorkSeptember 22, 2011 |
|--------|---------------------------------------------------------------------------------------------------|

----

|                                                                                                            |   | December 31, |    |   | December 31, |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|--------------|--------|
|                                                                                                            |   | 2011         |    |   | 2010         |   |
| CURRENT ASSETS:                                                                                                 |   |         |    |   |         |   |
| Cash                                                                                                            |   | $            | 1,040   |   |         | $      | - |   |
|                                                                                                            |   |         |    |   |         |   |   |   |
| Total current assets                                                                                            |   |         | 1,040   |   |         |   | - |   |
|                                                                                                            |   |         |    |   |         |   |   |   |
| FIXED ASSETS, Net of accumulated depreciation of $87 and $7,731 as of December 31, 2011 and 2010, respectively. |   |         | 350     |   |         |   | 5,305 |   |
|                                                                                                            |   |         |    |   |         |   |   |   |
| OTHER ASSETS:                                                                                                   |   |         |    |   |         |   |   |   |
| Depository payment towards acquisition of iron ore mine                                                         |   |         | 250,000 |   |         |   | - |   |
|                                                                                                            |   |         |    |   |         |   |   |   |
| TOTAL ASSETS                                                                                                    |   | $            | 251,390 |   |         | $      | 5,305 |   |

| CURRENT LIABILITIES:                                                                                                     |   |   |      |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Accounts payable                                                                                                         |   | $      | 164,215   |   |   | $      | 120,363 |   |
| Cash overdraft                                                                                                           |   |   | -         |   |   |   | 317 |   |
| Accrued interest payable                                                                                                 |   |   | 15,193    |   |   |   | 6,990 |   |
| Payroll taxes payable                                                                                                    |   |   | 8,716     |   |   |   | - |   |
| Advances payable, stockholders                                                                                           |   |   | 7,302     |   |   |   | 9,146 |   |
| Loans payable                                                                                                            |   |   | 205,000   |   |   |   | 17,900 |   |
| Convertible debentures                                                                                                   |   |   | 48,000    |   |   |   | 10,000 |   |
| Derivative liability                                                                                                     |   |   | 1,372,600 |   |   |   | - |   |
| Total current liabilities                                                                                                |   |   | 1,821,026 |   |   |   | 164,716 |   |
|                                                                                                                     |   |   |      |   |   |   |   |   |
| Convertible debentures, net of debt discount of $144,400 and $0 as of December 31, 2011 and 2010, net of current portion |   |   | 255,600   |   |   |   | - |   |
| Deferred income                                                                                                          |   |   | -         |   |   |   | 17,500 |   |
| TOTAL LIABILITIES                                                                                                        |   |   | 2,076,626 |   |   |   | 182,216 |   |

----

|                                                                                                                                                                                                                                                               |   | December 31, |                 |   | December 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|----------------------|--------|--------------|--------|
|                                                                                                                                                                                                                                                               |   | 2011         |                 |   | 2010         |   |
| COMMITMENTS AND CONTINGENCIES:                                                                                                                                                                                                                                     |   |         | -                    |   |         |   | - |   |
|                                                                                                                                                                                                                                                               |   |         |                 |   |         |   |   |   |
| STOCKHOLDERS’ DEFICIENCY:                                                                                                                                                                                                                                    |   |         |                 |   |         |   |   |   |
|                                                                                                                                                                                                                                                               |   |         |                 |   |         |   |   |   |
| Convertible Preferred Stock Class A, no par value, 100,000 shares  authorized at December 31, 2011 and none authorized at December 31, 2010. Issued and outstanding 20,000 shares at December 31, 2011, none issued and outstanding at December 31, 2010 |   |         | 46,000               |   |         |   |     - |   |
| Convertible Preferred Stock Class B, no par value, 400,000 shares authorized at December 31, 2011 and none authorized at December 31, 2010. None issued and outstanding at December 31, 2011 and December 31, 2010                                                 |   |         |   -             |   |         |   |   - |   |
| Preferred Stock Class C, no par value, 50,000 shares authorized at December 31, 2011 and none authorized at December 31, 2010. Issued and outstanding 20,000 shares at December 31, 2011, none issued and outstanding at December 31, 2010                         |   |         |     9,000  |   |         |   |     - |   |
|    Common stock, par value $.001 per share; authorized 500,000,000 shares at December 31, 2011 and 2010. Issued and outstanding, 85,058,759 shares at December 31, 2011 and 338,731 at December 31, 2010                                            |   |         |     85,059 |   |         |   |     339 |   |
| Additional paid in capital                                                                                                                                                                                                                                         |   |         | 164,039              |   |         |   | 169,027 |   |
| Deficit accumulated during the development stage                                                                                                                                                                                                                   |   |         | (2,129,334           | )      |         |   | (346,277 | ) |
|                                                                                                                                                                                                                                                               |   |         |                 |   |         |   |   |   |
| Total stockholders’ deficiency                                                                                                                                                                                                                               |   |         | (1,825,236           | )      |         |   | (176,911 | ) |
|                                                                                                                                                                                                                                                               |   |         |                 |   |         |   |   |   |
| Total liabilities and stockholders’ deficiency                                                                                                                                                                                                               |   | $            | 251,390              |   |         | $      | 5,305 |   |

----

|                                                 |   |                   |            |   |                   |   |          | January 3, 2006                                             |   |
|------------------------------------------------------|--------|------------------------|-----------------|--------|------------------------|--------|---------------|-------------------------------------------------------------|--------|
|                                                 |   | Year EndedDecember 31, |            |   | Year EndedDecember 31, |   |          | (date of commencementas a developmentstage company) through |   |
|                                                 |   | 2011                   |            |   | 2010                   |   |          | December 31, 2011                                           |   |
|                                                 |   |                   |            |   |                   |   |          |                                                        |   |
| REVENUES                                             |   | $                      | -               |   |                   | $      | -             |                                                        |   | $ | 7,500 |   |
| COST OF REVENUES                                     |   |                   | -               |   |                   |   | -             |                                                        |   |   | 3,135 |   |
|                                                 |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| Gross profit                                         |   |                   | -               |   |                   |   | -             |                                                        |   |   | 4,365 |   |
|                                                 |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| OPERATING EXPENSES:                                  |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| Officer’s compensation                         |   |                   | 100,000         |   |                   |   | -             |                                                        |   |   | 100,000 |   |
| Mine related expenses                                |   |                   | 232,500         |   |                   |   | -             |                                                        |   |   | 232,500 |   |
| Consulting fees                                      |   |                   | 60,000          |   |                   |   | 60,000        |                                                        |   |   | 120,000 |   |
| General and administrative                           |   |                   | 167,657         |   |                   |   | 28,552        |                                                        |   |   | 422,505 |   |
|                                                 |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| Total Operating Expenses                             |   |                   | 560,157         |   |                   |   | 88,552        |                                                        |   |   | 875,005 |   |
|                                                 |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| Operating Loss                                       |   |                   | (560,157        | )      |                   |   | (88,552       | )                                                           |   |   | (870,640 | ) |
|                                                 |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| OTHER INCOME AND (EXPENSES):                         |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| Interest income                                      |   |                   | 12              |   |                   |   | -             |                                                        |   |   | 12 |   |
| Other income                                         |   |                   | 17,500          |   |                   |   | -             |                                                        |   |   | 17,500 |   |
| Change in fair value of derivative liability         |   |                   | (645,600        | )      |                   |   | -             |                                                        |   |   | (645,600 | ) |
| Interest expense                                     |   |                   | (594,812        | )      |                   |   | (1,746        | )                                                           |   |   | (604,506 | ) |
| Loss on negotiated debt settlement                   |   |                   | -               |   |                   |   | -             |                                                        |   |   | (26,100 | ) |
|                                                 |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| Total other expenses                                 |   |                   | (1,222,900      | )      |                   |   | (1,746        | )                                                           |   |   | (1,258,694 | ) |
|                                                 |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| Net Loss                                             |   | $                      | (1,783,057      | )      |                   | $      | (90,298       | )                                                           |   | $ | (2,129,334 | ) |
|                                                 |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| Earnings per share – basic and diluted         |   | $                      | (0.23           | )      |                   | $      | (0.27         | )                                                           |   |   |   |   |
|                                                 |   |                   |            |   |                   |   |          |                                                        |   |   |   |   |
| Weighted average number of common shares outstanding |   |                   |  7,661,977 |   |                   |   |  338,731 |                                                        |   |   |   |   |

----

|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   | DeficitAccumulated |   |            |   |   |
|--------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------------|--------|------------------------|--------|-----------------|------------------------|--------|--------|-----------------|--------|--------|-------------------|-----------------|--------|--------------------|--------|-----------------|--------|--------|
|                                                                                                               |   | Class APreferred Stock |            |   | Class BPreferred Stock |   |            | Class CPreferred Stock |   |   | Common Stock    |   |   | AdditionalPaid in |            |   | DuringDevelopment  |   |            |   |   |
|                                                                                                               |   | Shares                 |            |   | Amount                 |   |            | Shares                 |   |   | Amount          |   |   | Shares            |            |   | Amount             |   |            | Shares |   |   | Amount |   |   | Capital |   |   | Stage |   |   | Total |   |
|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| January 3, 2006 (Date of commencement as a developmental stage company)                                            |   |                   | -               |   |                   | $      | -               |                   |   |   | -               |   |   | $                 | -               |   |               |   | -               |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 781 shares issued at $0.50 per share                                                                               |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | 781 |   |   |   | 1 |   |   |   | 390 |   |   |   | - |   |   |   | 391 |   |
|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                           |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (18,016 | ) |   |   | (18,016 | ) |
|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2006                                                                                      |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | 781 |   |   |   | 1 |   |   |   | 390 |   |   |   | (18,016 | ) |   |   | (17,625 | ) |
|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| November 6, 2007- Compensatory stock issuance                                                                      |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | 40,000 |   |   |   |  40 |   |   |   | 19,960 |   |   |   | - |   |   |   | 20,000 |   |
|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                           |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (24,500 | ) |   |   | (24,500 | ) |
|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2007                                                                                      |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | 40,781 |   |   |   | 41 |   |   |   | 20,350 |   |   |   | (42,516 | ) |   |   | (22,125 | ) |
|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| January 28, 2008- Issuance 600 shares of common stock at $150 per share                                            |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   |  600 |   |   |   |  1 |   |   |   | 89,999 |   |   |   | - |   |   |   | 90,000 |   |
|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| February 1, 2008- Conversion of existing note payable of $15,000 plus accrued interest of $4,125 into common stock |   |                   |     - |   |                   |   |     - |                   |   |   |     - |   |   |              |     - |   |               |   |     - |   |   |   |     - |   |   |   |     38,250 |   |   |   |      38 |   |   |   |     19,087 |   |   |   |     - |   |   |   |     19,125 |   |
|                                                                                                               |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| February 1, 2008- Cancellation of 39,400 shares of common stock issued                                             |   |                   |   -        |   |                   |   |   -        |                   |   |   |   -        |   |   |              |   -        |   |               |   |   -        |   |   |   |   - |   |   |   | (39,400 | ) |   |   | (39 | ) |   |   | (19,661 | ) |   |   |   - |   |   |   | (19,700 | ) |

----

|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   | DeficitAccumulated |   |            |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------------|--------|------------------------|--------|-----------------|------------------------|--------|--------|-----------------|--------|--------|-------------------|-----------------|--------|--------------------|--------|-----------------|--------|--------|
|                                                                                                                                   |   | Class APreferred Stock |            |   | Class BPreferred Stock |   |            | Class CPreferred Stock |   |   | Common Stock    |   |   | AdditionalPaid in |            |   | DuringDevelopment  |   |            |   |   |
|                                                                                                                                   |   | Shares                 |            |   | Amount                 |   |            | Shares                 |   |   | Amount          |   |   | Shares            |            |   | Amount             |   |            | Shares |   |   | Amount |   |   | Capital |   |   | Stage |   |   | Total |   |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| February 1, 2008- Merger with Hybred International pursuant to the plan of merger; shares issued on a 1:1 basis to Hybred shareholders |   |                   |     - |   |                   |   |     - |                   |   |   |     - |   |   |              |     - |   |               |   |     - |   |   |   |     - |   |   |   |     160,000 |   |   |   |      160 |   |   |   |     8,290 |   |   |   | (47,080 | ) |   |   | (38,630 | ) |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| February 1, 2008- Issuance 39,400 shares to cancel debt                                                                                |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | 39,400 |   |   |   | 39 |   |   |   | 19,961 |   |   |   | - |   |   |   | 20,000 |   |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                               |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (104,276 | ) |   |   | (104,276 | ) |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2008                                                                                                          |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | 239,631 |   |   |   | 240 |   |   |   | 138,026 |   |   |   | (193,872 | ) |   |   | (55,606 | ) |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of existing loan payable of $5,000 into common stock by issuing 99,100 shares                                               |   |                   |   -        |   |                   |   |   -        |                   |   |   |   -        |   |   |              |   -        |   |               |   |   -        |   |   |   |   - |   |   |   |   99,100 |   |   |   |   99 |   |   |   | 31,001 |   |   |   | - |   |   |   | 31,100 |   |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                               |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (62,107 | )  |   |   | (62,107 | ) |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2009                                                                                                          |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | 338,731 |   |   |   | 339 |   |   |   | 169,027 |   |   |   | (255,979 | ) |   |   | (86,613 | ) |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                               |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (90,298 | ) |   |   | (90,298 | ) |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2010                                                                                                          |   |                   | -               |   |                   |   | -               |                   |   |   | -               |   |   |              | -               |   |               |   | -               |   |   |   | - |   |   |   | 338,731 |   |   |   | 339 |   |   |   | 169,027 |   |   |   | (346,277 | ) |   |   | (176,911 | ) |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| February 25, 2011- Court ordered disgorgement of 12,000 (6,000,000 pre-reverse split) shares of common stock                           |   |                   |     - |   |                   |   |     - |                   |   |   |     - |   |   |              |     - |   |               |   |     - |   |   |   |     - |   |   |   | (12,000 | ) |   |   | (12 | ) |   |   |     12 |   |   |   |     - |   |   |   |     - |   |
|                                                                                                                                   |   |                   |            |   |                   |   |            |                   |   |   |            |   |   |              |            |   |               |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                                       |   |                   |                        |   |                   |   |                                             |                   |   |   |                   |   |   |              |                   |   | DeficitAccumulated |   |                        |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------------------------|--------|------------------------|--------|--------------------------------------------------|------------------------|--------|--------|------------------------|--------|--------|-------------------|------------------------|--------|--------------------|--------|-----------------------------|--------|--------|
|                                                                                                                                                                       |   | Class APreferred Stock |                        |   | Class BPreferred Stock |   |                                             | Class CPreferred Stock |   |   | Common Stock           |   |   | AdditionalPaid in |                   |   | DuringDevelopment  |   |                        |   |   |
|                                                                                                                                                                       |   | Shares                 |                        |   | Amount                 |   |                                             | Shares                 |   |   | Amount                 |   |   | Shares            |                   |   | Amount             |   |                        | Shares |   |   | Amount |   |   | Capital |   |   | Stage |   |   | Total |   |
|                                                                                                                                                                       |   |                   |                        |   |                   |   |                                             |                   |   |   |                   |   |   |              |                   |   |               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| November 23, 2011- Issuance of 70,000 shares of Class A preferred stock and 20,000 shares of Class C preferred stock to the president  representing compensation |   |                   |       70,000 |   |                   |   |        91,000 |                   |   |   |       - |   |   |              |       - |   |               |   |       20,000 |   |   |   |       9,000 |   |   |   |       - |   |   |   |       - |   |   |   |       - |   |   |   |       - |   |   |   |       100,000 |   |
|                                                                                                                                                                       |   |                   |                        |   |                   |   |                                             |                   |   |   |                   |   |   |              |                   |   |               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| November 30, 2011- Issuance of shares for the settlement of debt                                                                                                           |   |                   | -                           |   |                   |   | -                                                |                   |   |   | -                      |   |   |              | -                      |   |               |   | -                           |   |   |   | - |   |   |   | 34,732,028 |   |   |   | 34,732 |   |   |   | - |   |   |   | - |   |   |   | 34,732 |   |
|                                                                                                                                                                       |   |                   |                        |   |                   |   |                                             |                   |   |   |                   |   |   |              |                   |   |               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| November 29, 2011- Conversion of 50,0000 shares of  Class A preferred stock into 50,000,000 shares of common stock by the president                              |   |                   | (50,000                     | )      |                   |   | (45,000                                          | )                      |   |   |       - |   |   |              |       - |   |               |   |       -      |   |   |   |       - |   |   |   |       50,000,000 |   |   |   |       50,000 |   |   |   | (5,000 | ) |   |   |       - |   |   |   |       - |   |
|                                                                                                                                                                       |   |                   |                        |   |                   |   |                                             |                   |   |   |                   |   |   |              |                   |   |               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                   |   |                   | -                           |   |                   |   | -                                                |                   |   |   | -                      |   |   |              | -                      |   |               |   | -                           |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,783,057 | ) |   |   | (1,783,057 | ) |
|                                                                                                                                                                       |   |                   |                        |   |                   |   |                                             |                   |   |   |                   |   |   |              |                   |   |               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2011                                                                                                                                               |   |                   | 20,000                      |   |                   | $      | 46,000                                           |                   |   |   | -                      |   |   | $                 | -                      |   |               |   | 20,000                      |   |   | $ | 9,000 |   |   |   | 85,058,759 |   |   | $ | 85,059 |   |   | $ | 164,039 |   |   | $ | (2,129,334 | ) |   | $ | (1,825,236 | ) |

----

|                                                    |   |         |       |   |         |   |    | January 3, 2006       |   |
|---------------------------------------------------------|--------|--------------|------------|--------|--------------|--------|---------|-----------------------|--------|
|                                                    |   | For the      |       |   | For the      |   |    | (date of commencement |   |
|                                                    |   | Year Ended   |       |   | Year ended   |   |    | as a development      |   |
|                                                    |   | December 31, |       |   | December 31, |   |    | stage company) though |   |
|                                                    |   | 2011         |       |   | 2010         |   |    | December 31, 2011     |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                   |   |         |       |   |         |   |    |                  |   |
| Net Loss                                                |   | $            | (1,783,057 | )      |         | $      | (90,298 | )                     |   | $ | (2,129,334 | ) |
| Adjustments to reconcile net loss to                    |   |         |       |   |         |   |    |                  |   |   |   |   |
| net cash used by operating activities:                  |   |         |       |   |         |   |    |                  |   |   |   |   |
| Depreciation expense                                    |   |         | 1,485      |   |         |   | 1,864   |                  |   |   | 9,216 |   |
| Impairment of equipment                                 |   |         | 3,907      |   |         |   | -       |                  |   |   | 3,907 |   |
| Stock based compensation                                |   |         | 100,000    |   |         |   | -       |                  |   |   | 120,000 |   |
| Amortization of debt discount                           |   |         | 43,600     |   |         |   | -       |                  |   |   | 43,600 |   |
| Deferred income                                         |   |         | (17,500    | )      |         |   | -       |                  |   |   | - |   |
| Change in fair value of derivative liability            |   |         | 645,600    |   |         |   | -       |                  |   |   | 645,600 |   |
| Interest Expense                                        |   |         | 539,000    |   |         |   | -       |                  |   |   | 539,000 |   |
| Changes in assets and liabilities:                      |   |         |       |   |         |   |    |                  |   |   |   |   |
| Accounts payable                                        |   |         | 43,852     |   |         |   | 68,500  |                  |   |   | 223,190 |   |
| Accrued interest payable                                |   |         | 30,035     |   |         |   | 1,746   |                  |   |   | 37,025 |   |
| Payroll taxes payable                                   |   |         | 8,716      |   |         |   | -       |                  |   |   | 8,716 |   |
|                                                    |   |         |       |   |         |   |    |                  |   |   |   |   |
| NET CASH USED BY OPERATING ACTIVITIES                   |   |         | (384,362   | )      |         |   | (18,188 | )                     |   |   | (499,080 | ) |
|                                                    |   |         |       |   |         |   |    |                  |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                   |   |         |       |   |         |   |    |                  |   |   |   |   |
| Purchase of property and equipment                      |   |         | (437       | )      |         |   | -       |                  |   |   | (13,473 | ) |
| Depository payment towards acquisition of iron ore mine |   |         | (250,000   | )      |         |   | -       |                  |   |   | (250,000 | ) |
|                                                    |   |         |       |   |         |   |    |                  |   |   |   |   |
| NET CASH USED BY INVESTING ACTIVITIES                   |   |         | (250,437   | )      |         |   | -       |                  |   |   | (263,473 | ) |
|                                                    |   |         |       |   |         |   |    |                  |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                   |   |         |       |   |         |   |    |                  |   |   |   |   |
| Cash overdraft                                          |   |         | (317       | )      |         |   | 317     |                  |   |   | - |   |
| Repayment of advances                                   |   |         | (1,844     | )      |         |   | -       |                  |   |   | (1,844 | ) |
| Cash proceeds from advances                             |   |         | -          |   |         |   | 3,146   |                  |   |   | 9,146 |   |
| Cash proceeds from loans                                |   |         | 200,000    |   |         |   | -       |                  |   |   | 217,900 |   |
| Cash proceeds from convertible debentures               |   |         | 438,000    |   |         |   | 10,000  |                  |   |   | 448,000 |   |
| Issuance of common stock for cash                       |   |         | -          |   |         |   | -       |                  |   |   | 90,391 |   |
|                                                    |   |         |       |   |         |   |    |                  |   |   |   |   |
| NET CASH PROVIDED BY FINANCING ACTIVITIES               |   |         | 635,839    |   |         |   | 13,463  |                  |   |   | 763,593 |   |

----

|                                              |   |         |    |   |         |   |   | January 3, 2006        |   |
|---------------------------------------------------|--------|--------------|---------|--------|--------------|--------|--------|------------------------|--------|
|                                              |   | For the      |    |   | For the      |   |   | (date of commencement  |   |
|                                              |   | Year Ended   |    |   | Year ended   |   |   | as a development       |   |
|                                              |   | December 31, |    |   | December 31, |   |   | stage company) through |   |
|                                              |   | 2011         |    |   | 2010         |   |   | December 31, 2011      |   |
|                                              |   |         |    |   |         |   |   |                   |   |
| Increase (decrease)  in cash            |   |         | 1,040   |   |         |   | (4,725 | )                      |   |   | 1,040 |   |
|                                              |   |         |    |   |         |   |   |                   |   |   |   |   |
|  Cash, beginning of period                   |   |         | -       |   |         |   | 4,725  |                   |   |   | - |   |
|                                              |   |         |    |   |         |   |   |                   |   |   |   |   |
| Cash, end of period                               |   |         | 1,040   |   |         |   | -      |                   |   |   | 1,040 |   |
|                                              |   |         |    |   |         |   |   |                   |   |   |   |   |
|                                              |   |         |    |   |         |   |   |                   |   |   |   |   |
|                                              |   |         |    |   |         |   |   |                   |   |   |   |   |
| Supplemental Disclosure of Cash Flow Information: |   |         |    |   |         |   |   |                   |   |   |   |   |
| Cash paid for interest                            |   | $            | -       |   |         | $      | -      |                   |   | $ | - |   |
| Cash paid for income taxes                        |   | $            | -       |   |         | $      | -      |                   |   | $ | - |   |
|                                              |   |         |    |   |         |   |   |                   |   |   |   |   |
| Non-cash investing and financing activities:      |   |         |    |   |         |   |   |                   |   |   |   |   |
| Debt discount related to convertible debentures   |   | $            | 188,000 |   |         | $      | -      |                   |   | $ | 188,000 |   |
| Issuance of shares for the settlement of debt     |   | $            | 34,732  |   |         | $      | -      |                   |   | $ | 77,857 |   |

----

| Note 1- | NATURE OF BUSINESS: |
|---------|---------------------|

----

| Note 2- | GOING CONCERN: |
|---------|----------------|

----

| Note 3- | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: |
|---------|---------------------------------------------|

----

| Note 3- | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) |
|---------|---------------------------------------------------------|

----

| Note 3- | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) |
|---------|---------------------------------------------------------|

|                                |   | As of December 31, |       |
|-------------------------------------|--------|--------------------|------------|
|                                |   | 2011               |       |   | 2010 |   |
| Convertible Preferred Stock Class A |   |               | 20,000,000 |   |   |   | -- |   |
| Convertible debentures              |   |               | 1,905,962  |   |   |   | 40,000 |   |
| Total Common Stock Equivalents      |   |               | 21,905,962 |   |   |   | 40,000 |   |

----

| Note 3- | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) |
|---------|---------------------------------------------------------|

----

| Note 3- | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) |
|---------|---------------------------------------------------------|

----

| Note 3- | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) |
|---------|---------------------------------------------------------|

| Note 4- | PROPERTY AND EQUIPMENT: |
|---------|-------------------------|

|   | Property and equipment consist of the following at December 31, 2011 and 2010: |
|--------|--------------------------------------------------------------------------------|

|                        |   | As of December 31, |   |
|-----------------------------|--------|--------------------|--------|
|                        |   | 2011               |   |   | 2010 |   |
| Furniture                   |   | $                  | 437    |   |   | $ | -- |   |
| Tools and dies              |   |               | --     |   |   |   | 13,036 |   |
|                        |   | $                  | 437    |   |   |   | 13,036 |   |
| Accumulated depreciation    |   |               | (87    | ) |   |   | (7,731 | ) |
| Property and Equipment, net |   | $                  | 350    |   |   | $ | 5,305 |   |

----

| Note 5- | DEPOSITORY PAYMENT TOWARDS ACQUISITION OF IRON ORE MINE: |
|---------|----------------------------------------------------------|

|            Date |   | Amount |      |
|-------------------------------------------------------------------|--------|--------|-----------|
| February 28, 2012                                                 |   | $      | 500,000   |   |
| August 31, 2012                                                   |   |   | 500,000   |   |
| February 28, 2013                                                 |   |   | 500,000   |   |
| August 31, 2013                                                   |   |   | 500,000   |   |
| February 28, 2014                                                 |   |   | 500,000   |   |
| August 31, 2014                                                   |   |   | 500,000   |   |
| Total payments                                                    |   | $      | 3,000,000 |   |

| Note 6- | FAIR VALUE: |
|---------|-------------|

----

| Note 6- | FAIR VALUE: (continued) |
|---------|-------------------------|

|                                                  |   | Quoted Prices in Active Markets for Identical Liabilities(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |   | Balance at December 31, 2011 |   |
|-------------------------------------------------------|--------|--------------------------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|------------------------------------------|--------|--------|-----------------------------------|--------|
| Embedded conversion feature – December 31, 2011 |   | $                                                                  | --     |   |                                         | $      | --     |                                     |   | $      | 1,372,600                         |   |   | $ | 1,372,600 |   |

----

| Note 6- | FAIR VALUE: (continued) |
|---------|-------------------------|

|                                         |   | Embedded Conversion Feature |      |
|----------------------------------------------|--------|-----------------------------|-----------|
| Balance January 1, 2011                      |   | $                           | --        |   |
|                                         |   |                        |      |   |
| Included in other income expense             |   |                        |      |   |
| Change in fair value of derivative liability |   |                        | 645,600   |   |
| Interest Expense                             |   |                        | 539,000   |   |
| Included in liabilities                      |   |                        | 188,000   |   |
| Included in stockholder's equity             |   |                        | --        |   |
| Transfers in and /or out of Level 3          |   |                        | --        |   |
| Balance December  31, 2011         |   | $                           | 1,372,600 |   |

| Note 7- | LOANS PAYABLE: |
|---------|----------------|

|   |   | As of December 31, |    |
|--------|--------|--------------------|---------|
|   |   | 2011               |    |   | 2010 |   |
| (a)    |   | $                  | 1,000   |   |   | $ | 11,000 |   |
| (b)    |   |               | 4,000   |   |   |   | 6,900 |   |
| (c)    |   |               | 150,000 |   |   |   | -- |   |
| (d)    |   |               | 50,000  |   |   |   | -- |   |
|   |   | $                  | 205,000 |   |   | $ | 17,900 |   |

|   | a) | During the year ended December 31, 2006, the Company borrowed the sum of $16,000 from Louis Savaglio, an independent third party. The loan is payable on demand and bears interest at the rate of 6.75% per annum. On November 30, 2009, the Company had repaid $5,000 with the issuance of 99,100 shares of common stock. On July 14, 2011 Mr. Savaglio assigned $10,000 of his debt together with accrued interest of $3,156 to four entities unrelated to the Company. Each new entity has a note for $3,289 carrying interest at 6%. Subsequently those four entities converted their loans into 13,462,000 shares of the Company’s common stock. The balance due to Mr. Savaglio as of December 31, 2011 and 2010 was $1,000 and $11,000respectively. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Note 7- | LOANS PAYABLE: |
|---------|----------------|

|   | b) | During August 2008, the Company borrowed the sum of $4,000 from Brett Hamburger, a consultant to the Company on a non-interest bearing basis. The loan is payable upon demand and as of December 31, 2011, it remained unpaid. Additionally during 2009, the Company borrowed $2,900 from Christine Mulijono, the wife of Brett Hamburger. This loan was payable on demand and carried an interest rate of 10% per annum. This loan and its accumulated interest was converted into 3,764,000 shares of the Company’s common stock on November 23, 2011 for the settlement of $2,900 and $864 or principal and accrued interest, respectively. As of December 31, 2011 and 2010 the amount payable under this loan was $4,000 and $6,900, respectively. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | On September 15, 2011, the Company borrowed $150,000 from an unrelated third party. The loan was due on October 15, 2011 together with interest at a rate of 25% per annum. As of December 31, 2011, the accumulated interest on this loan was $4,688. The Company is not in compliance with the repayment terms of the loan as it was not repaid on its maturity date and is currently in technical default. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | On November 15, 2011, the Company borrowed $50,000 from an unrelated third party. The loan was due and payable upon the Company filing its Regulation D Offering with the SEC which occurred on August 1, 2011. The note accrues interest at a rate of 4.0% per annum. As of December 31, 2011, the Company is not in compliance with the repayment terms of the loan and is currently in technical default. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note 8- | CONVERTIBLE DEBENTURES: |
|---------|-------------------------|

|                                                                       |   | December 31, |    |
|----------------------------------------------------------------------------|--------|--------------|---------|
|                                                                       |   | 2011         |    |   | 2010 |   |
| Convertible Debentures                                                     |   | $            | 448,000 |   |   | $ | 10,000 |   |
| Less current portion                                                       |   |         | 48,000  |   |   |   | 10,000 |   |
| Less debt discount                                                         |   |         | 144,400 |   |   |   | -- |   |
| Long term Convertible Debentures, net of current portion and debt discount |   | $            | 255,600 |   |   | $ | -- |   |
|                                                                       |   |         |    |   |   |   |   |   |

|   | a) | On September 9, 2010 the Company borrowed the sum of $10,000 from an unrelated third party. The convertible debenture is payable on demand and bears interest at the rate of 8% per annum. The loan agreement provides at the option of the note holder to convert their principal balance to 40,000 shares of common stock ($0.25 per share) at any time that the loan remains unpaid. As of December 31, 2011 and 2010 the $10,000 is payable. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Note 8- | CONVERTIBLE DEBENTURES: (continued) |
|---------|-------------------------------------|

|   | b) | On April 13, 2011, the Company borrowed the sum of $10,000 from an unrelated third party. The convertible debenture is payable on demand and bears interest at the rate of 10% per annum. The loan agreement provides for the right of this individual to convert the loan into shares of common stock at a stated conversion price of the average of the 3 lowest daily trades in the previous 20 days with a 50% discount. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | On May 18, 2011, the Company borrowed the sum of $28,000 from an unrelated third party on a non-interest bearing basis and is payable on demand. The loan agreement provides for the right of the holder to convert the outstanding loan into common shares of the Company at any time that the loan remains unpaid, at a conversion price of $.14 per share. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Note 8- | CONVERTIBLE DEBENTURES: (continued) |
|---------|-------------------------------------|

|   | d) | On July 17, 2011, the Company borrowed $50,000 from an unrelated third party, pursuant to a convertible debenture agreement. The debenture bears interest at 5% per annum and has a term of 5 years maturing on July 17, 2016. The debenture is convertible into common stock at $0.25 per share. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e) | On August 29, 2011, the Company borrowed $75,000 from an unrelated third party, pursuant to a convertible debenture agreement. The debenture bears interest at 5% per annum and has a term of 5 years maturing on August 29, 2016. The debenture is convertible into common stock at $0.25 per share. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | f) | On August 29, 2011, the Company borrowed $75,000 from another unrelated third party, pursuant to a convertible debenture agreement. The debenture bears interest at 5% per annum and has a term of 5 years maturing on August 29, 2016. The debenture is convertible into common stock at $0.25 per share. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | g) | On September 16, 2011, the Company borrowed $50,000 from an unrelated third party, pursuant to a convertible debenture agreement. The debenture bears interest at 5% per annum and has a term of 5 years maturing on September 16, 2016. The debenture is convertible into common stock at $0.25 per share. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Note 8- | CONVERTIBLE DEBENTURES: (continued) |
|---------|-------------------------------------|

|   | h) | On October 24, 2011, the Company borrowed $75,000 from an unrelated third party, pursuant to a convertible debenture agreement. The debenture bears interest at 5% per annum and has a term of 5 years maturing on October 24, 2016. The debenture is convertible into common stock at $0.25 per share. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | i) | On October 25, 2011, the Company borrowed $75,000 from an unrelated third party, pursuant to a convertible debenture agreement. The debenture bears interest at 5% per annum and has a term of 5 years maturing on October 25, 2016. The debenture is convertible into common stock at $0.25 per share. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Note 9- | RELATED PARTY TRANSACTIONS: |
|---------|-----------------------------|

| Note 10- | STOCKHOLDERS’ EQUITY: |
|----------|-----------------------------|

----

| Note 11- | PREFERRED STOCK: |
|----------|------------------|

| Note 12- | DISGORGEMENT OF SHARES OF COMMON STOCK: |
|----------|-----------------------------------------|

----

| Note 13- | INCOME TAXES: |
|----------|---------------|

|                                           |   | 2011   |     |   | 2010   |   |
|------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Deferred Tax Asset                             |   |   |     |   |   |   |
| Net operating loss carryovers                  |   | $      | 334,132  |   |   | $      | 344,700 |   |
| Derivative liability                           |   |   | 57,673   |   |   |   | - |   |
| Fixed asset depreciation                       |   |   | 1,921    |   |   |   | - |   |
| Total deferred tax asset                       |   |   | 393,726  |   |   |   | 344,700 |   |
| Valuation allowance                            |   |   | (336,053 | )      |   |   | (344,700 | ) |
| Deferred tax asset, net of valuation allowance |   |   | 57,673   |   |   |   | - |   |
|                                           |   |   |     |   |   |   |   |   |
| Deferred Tax Liabilities                       |   |   |     |   |   |   |   |   |
| Convertible debt                               |   |   | (57,673  | )      |   |   | - |   |
| Total deferred tax liabilities                 |   |   | (57,673  | )      |   |   | - |   |
| Net deferred tax asset (liability)             |   | $      | -        |   |   | $      | - |   |

----

| Note 13- | INCOME TAXES: (continued) |
|----------|---------------------------|

|                           |   | December 31, |     |
|--------------------------------|--------|--------------|----------|
|                           |   | 2011         |     |   | 2010 |   |
|                           |   |         |     |   |   |   |
| Federal                        |   | $            | -        |   |   | $ | - |   |
| Current                        |   |         | -        |   |   |   | - |   |
| Deferred                       |   |         | (168,888 | ) |   |   | (30,701 | ) |
| State and local                |   |         | -        |   |   |   | - |   |
| Current                        |   |         | -        |   |   |   | - |   |
| Deferred                       |   |         | (29,506  | ) |   |   | (5,364 | ) |
| Change in valuation allowance  |   |         | 198,394  |   |   |   | 36,065 |   |
| Income tax provision (benefit) |   | $            | -        |   |   | $ | - |   |

----

| Note 13- | INCOME TAXES: (continued) |
|----------|---------------------------|

|                                         |   | 2011   |   | 2010   |
|----------------------------------------------|--------|--------|--------|--------|
| Federal statutory rate                       |   |   | (34.0  | )%     |   |   | (34.0 | )% |
| State tax benefit, net of federal tax        |   |   | (5.9   | )      |   |   | (5.9 | ) |
| Non-deductible Stock based compensation      |   |   | -      |   |   |   | - |   |
| Change in fair value of derivative liability |   |   | 14.3   |   |   |   | - |   |
| Other permanent differences                  |   |   | 1.7    |   |   |   | - |   |
| Debt discount on convertible debt            |   |   | 12.9   |   |   |   | - |   |
| Change in valuation allowance                |   |   | 11.0   |   |   |   | 39.9 |   |
| Effective rate                               |   |   | 0      | %      |   |   | 0 | % |

| Note 14- | CREDIT RISK: |
|----------|--------------|

| Note 15- | COMMITMENTS AND CONTINGENCIES: |
|----------|--------------------------------|

----

| Note 15- | COMMITMENTS AND CONTINGENCIES: |
|----------|--------------------------------|

| Note 16- | SUBSEQUENT EVENT: |
|----------|-------------------|

----