----

----

|                                                           |                                                                               |
|----------------------------------------------------------------|------------------------------------------------------------------------------------|
| þ                                                         |  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  |
|                                                           |  ACT OF 1934                                                                  |
| For the quarterly period ended: January 31, 2010               |
| Or                                                             |
|                                                           |                                                                               |
| o                                                              |  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE |
|                                                           |  ACT OF 1934                                                                  |
| For the transition period from: _____________ to _____________ |

| Nevada                                                        |   | 333-140306             |   | 20-2356853                       |
|---------------------------------------------------------------|--------|------------------------|--------|----------------------------------|
| (State or other jurisdiction ofincorporation or organization) |   | Commissionfile number) |   | (IRS EmployerIdentification No.) |

| Large Accelerated Filer | o | Accelerated Filer | o | Non-Accelerated Filer | o | Smaller Reporting Company | þ |
|-------------------------|---|-------------------|---|-----------------------|---|---------------------------|--------|

----

----

----

| INDEX                          |                                                                                                                                                                                |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |                                                                                                                                                                                |   |   |   |
|                           |                                                                                                                                                                                | Page No.(s) |   |
| PART I - FINANCIAL INFORMATION |                                                                                                                                                                                |   |   |
|                           |                                                                                                                                                                                |   |   |   |
| Item 1.                        | Financial Statements                                                                                                                                                                |   |   |   |
|                           |                                                                                                                                                                                |   |   |   |
|                           | Consolidated Balance Sheets as of January 31, 2010 (Unaudited) and October 31, 2009                                                                                                 |   | 1 |   |
|                           |                                                                                                                                                                                |   |   |   |
|                           | Consolidated Statements of Operations For the Three Months Ended January 31, 2010 and For the Period from April 9, 2009 (Inception) through January 31, 2010 (Unaudited)            |   | 2 |   |
|                           |                                                                                                                                                                                |   |   |   |
|                           | Consolidated Statement of Stockholders’ Equity For the Period from April 9, 2009 (Inception) through January 31, 2010 (Unaudited)                                             |   | 3 |   |
|                           |                                                                                                                                                                                |   |   |   |
|                           | Consolidated Statements of Cash Flows For the Three Months Ended January 31, 2010 and For the Period from April 9, 2009 (Inception) through January 31, 2010  (Unaudited) |   | 4 |   |
|                           |                                                                                                                                                                                |   |   |   |
|                           | Notes to the Consolidated Financial Statements (Unaudited)                                                                                                                          |   | 5 |   |
|                           |                                                                                                                                                                                |   |   |   |
| Item 2.                        | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                         |   | 17 |   |
|                           |                                                                                                                                                                                |   |   |   |
| Item 3.                        | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                          |   | 22 |   |
|                           |                                                                                                                                                                                |   |   |   |
| Item 4.                        | Controls and Procedures                                                                                                                                                             |   | 23  |   |
|                           |                                                                                                                                                                                |   |   |   |
| PART II - OTHER INFORMATION    |                                                                                                                                                                                |   |   |
|                           |                                                                                                                                                                                |   |   |   |
| Item 1.                        | Legal Proceedings                                                                                                                                                                   |   | 23 |   |
|                           |                                                                                                                                                                                |   |   |   |
| Item 2.                        | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                         |   | 23 |   |
|                           |                                                                                                                                                                                |   |   |   |
| Item 3.                        | Defaults Upon Senior Securities                                                                                                                                                     |   | 24 |   |
|                           |                                                                                                                                                                                |   |   |   |
| Item 4.                        | Submission of Matters to a Vote of Security Holders                                                                                                                                 |   | 24 |   |
|                           |                                                                                                                                                                                |   |   |   |
| Item 5.                        | Other Information                                                                                                                                                                   |   | 24 |   |
|                           |                                                                                                                                                                                |   |   |   |
| Item 6.                        | Exhibits                                                                                                                                                                            |   | 24 |   |
|                           |                                                                                                                                                                                |   |   |   |
| SIGNATURES                     |                                                                                                                                                                                | 25 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | January 31, 2010 |       |   | October 31, 2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|------------|--------|-----------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | (Unaudited)           |       |   |                  |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                  |       |   |                  |   |
| Current assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                  |       |   |                  |   |
|    Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                     | 4,913      |   |                  | $      | 2,221 |   |
|    Prepaid expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                  | 35,917     |   |                  |   | 56,781 |   |
|    Other receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                  | 43,417     |   |                  |   | - |   |
|    Capitalized issuance expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                  | 15,584     |   |                  |   | 57,667 |   |
| Total current assets                                                                                                                                                                                                                             |   |                  | 99,831     |   |                  |   | 116,669 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                  |       |   |                  |   |   |   |
| Property and equipment, net of accumulated depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                  | 10,445,970 |   |                  |   | 10,538,970 |   |
| Equipment, net held for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                  | 3,090,000  |   |                  |   | 5,150,000 |   |
| License agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                  | -          |   |                  |   | 1,500,000 |   |
| Total assets                                                                                                                                                                                        |   | $                     | 13,635,801 |   |                  | $      | 17,305,639 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                  |       |   |                  |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                  |       |   |                  |   |   |   |
| Current liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                  |       |   |                  |   |   |   |
|   Accounts payable and accrued expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                     | 1,241,167  |   |                  | $      | 865,067 |   |
|   Related party payables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                  | 624,626    |   |                  |   | 214,085 |   |
|    Notes payable, net of discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                  | 1,374,000  |   |                  |   | 1,320,250 |   |
|   Accrued interest payable                                                                                                                                                                                              |   |                  | 317,648    |   |                  |   | 282,502 |   |
|   Common stock in dispute (500,000 shares held by Company)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                  | 2,000,000  |   |                  |   | - |   |
|   Current portion of deferred     liability                                                                                                                                                    |   |                  | -          |   |                  |   | 60,000 |   |
| Total current liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                  | 5,557,441  |   |                  |   | 2,741,904 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                  |       |   |                  |   |   |   |
| Deferred liability, net of current portion                                                                                                                                                                                   |   |                  | -          |   |                  |   | 1,440,000 |   |
| Derivative liability                                                                                                                                                                                |   |                  | 4,827,503  |   |                  |   | 4,392,823 |   |
| Deferred income tax liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                  | 1,792,934  |   |                  |   | 1,792,934 |   |
|             Total liabilities                                                                                                           |   |                  | 12,177,878 |   |                  |   | 10,367,661 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                  |       |   |                  |   |   |   |
| Stockholders’ equity:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                  |       |   |                  |   |   |   |
| Convertible preferred stock, Series A, at $0.001 par value; 1,000,000 authorized, liquidation preference of $100 per share; 22,500 shares authorized; 22,500 shares issued and outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                  | 90,467     |   |                  |   | 53,973 |   |
| Common stock, $0.001 par value, 74,000,000 shares  authorized, 17,581,077 shares issued and 17,156,077 and 17,581,077 outstanding at January 31, 2010 and October 31, 2009, respectively                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                  | 17,156     |   |                  |   | 17,581 |   |
| Additional paid-in capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                  | 3,636,969  |   |                  |   | 3,386,023 |   |
| Earnings (deficit) accumulated during the development stage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                  | (2,286,669 | )      |                  |   | 3,480,401 |   |
| Total stockholders’ equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                  | 1,457,923  |   |                  |   | 6,937,978 |   |
| Total liabilities and stockholders’  equity                                                                                                                                         |   | $                     | 13,635,801 |   |                  | $      | 17,305,639 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Three months ended January 31, 2010 |       |   | For the period from April 9, 2009 (Inception) through January 31, 2010 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|------------|--------|-----------------------------------------------------------------------------|--------|
| Revenue:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                        | -          |   |                                                                        | $      | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     |       |   |                                                                        |   |   |   |
| Operating expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                     |       |   |                                                                        |   |   |   |
|  Professional fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                     | 391,024    |   |                                                                        |   | 728,778 |   |
|      Compensation expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                     | 2,250,521  |   |                                                                        |   | 2,250,521 |   |
|      Management services                                                                                                          |   |                                     | 125,000    |   |                                                                        |   | 215,987 |   |
|      Depreciation and amortization                                                                                                |   |                                     | 146,750    |   |                                                                        |   | 401,000 |   |
| General and administrative                                                                                                                                                |   |                                     | 274,723    |   |                                                                        |   | 485,351 |   |
| Total operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                     | 3,188,018  |   |                                                                        |   | 4,081,637 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     |       |   |                                                                        |   |   |   |
| Loss from operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     | (3,188,018 | )      |                                                                        |   | (4,081,637 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     |       |   |                                                                        |   |   |   |
| Other expense (income):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                     |       |   |                                                                        |   |   |   |
| Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                     | 47,878     |   |                                                                        |   | 92,900 |   |
| Loss on derivative liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                     | 471,174    |   |                                                                        |   | 4,622,834 |   |
| Other income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                     | -          |   |                                                                        |   | (16,779 | ) |
| Impairment on equipment held for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     | 2,060,000  |   |                                                                        |   | 2,060,000 |   |
| Total other expense (income)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                     | 2,579,052  |   |                                                                        |   | 6,758,955 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     |       |   |                                                                        |   |   |   |
| Loss before income taxes and extraordinary gain                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                     | (5,760,760 | )      |                                                                        |   | (10,840,592 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     |       |   |                                                                        |   |   |   |
| Income tax provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     | -          |   |                                                                        |   | (1,792,934 | ) |
| Loss before extraordinary gain                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                     | (5,767,070 | )      |                                                                        |   | (12,633,526 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     |       |   |                                                                        |   |   |   |
| Extraordinary gain on acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                     | -          |   |                                                                        |   | 10,346,857 |   |
| Net loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                        | (5,767,070 | )      |                                                                        | $      | (2,286,669 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     |       |   |                                                                        |   |   |   |
| Net loss per common share – basic and diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                                        | (0.33      | )      |                                                                        | $      | (073 | ) |
| Net income per common share from extraordinary gain on acquisition – basic & diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                     | -          |   |                                                                        |   | 0.60 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     |       |   |                                                                        |   |   |   |
| Net loss per common share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                                        | (0.33      | )      |                                                                        | $      | (0.13 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     |       |   |                                                                        |   |   |   |
| Weighted average number of common shares outstanding - basic and diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                     | 17,647,110 |   |                                                                        |   | 17,237,643 |   |

----

|                                                    |   | PreferredStock(Shares) |   |   | PreferredStock($) |   |    | Discount on Preferred Stock($) |   |   | CommonStock(Shares) |   |   | CommonStock($) |        |   | AdditionalPaid-inCapital($) |   |   | (Deficit)Income Accumulated During the DevelopmentStage($) |   |   | TotalStockholders’Equity($) |   |
|---------------------------------------------------------|--------|------------------------|--------|--------|-------------------|--------|---------|--------------------------------|--------|--------|---------------------|--------|--------|----------------|-------------|--------|-----------------------------|--------|--------|------------------------------------------------------------|--------|--------|-----------------------------------|--------|
| Balance at April 9, 2009 (Inception)                    |   |                   | -      |   |              | $      | -       |                           |   | $      | -                   |   |   |           | 9,760,000   |   |                        | $      | 9,760  |                                                       |   | $      | 49,995                            |   |   | $ | (83,218 | ) |   | $ | (23,463 | ) |
| Reverse Acquisition                                     |   |                   |   |   |              |   |    |                           |   |   |                |   |   |           | 7,321,077   |   |                        |   | 7,321  |                                                       |   |   | (66,745                           | )      |   |   | 83,218 |   |   |   | 23,794 |   |
| Sale of 12,000 preferred shares                         |   |                   | 12,000 |   |              |   | 120,000 |                           |   |   | (120,000            | )      |   |           |        |   |                        |   |   |                                                       |   |   |                              |   |   |   |   |   |   |   | - |   |
| Sale of 5,000 preferred shares                          |   |                   | 5,000  |   |              |   | 50,000  |                           |   |   | (50,000             | )      |   |           |        |   |                        |   |   |                                                       |   |   |                              |   |   |   |   |   |   |   | - |   |
| Sale of 5,500 preferred shares                          |   |                   | 5,500  |   |              |   | 55,000  |                           |   |   | (55,000             | )      |   |           |        |   |                        |   |   |                                                       |   |   |                              |   |   |   |   |   |   |   | - |   |
| Shares issued for cancelled warrants                    |   |                   |   |   |              |   |    |                           |   |   |                |   |   |           | 500,000     |   |                        |   | 500    |                                                       |   |   | 3,402,773                         |   |   |   |   |   |   |   | 3,403,273 |   |
| Amortization of discount on preferred shares            |   |                   |   |   |              |   |    |                           |   |   | 53,973              |   |   |           |        |   |                        |   |   |                                                       |   |   |                              |   |   |   |   |   |   |   | 53,973 |   |
| Net income                                              |   |                   |   |   |              |   |    |                           |   |   |                |   |   |           |        |   |                        |   |   |                                                       |   |   |                              |   |   |   | 3,480,401 |   |   |   | 3,480,401 |   |
| Balance at October 31, 2009                             |   |                   | 22,500 |   |              |   | 225,000 |                           |   |   | (171,027            | )      |   |           | 17,581,077  |   |                        |   | 17,581 |                                                       |   |   | 3,386,023                         |   |   |   | 3,480,401 |   |   |   | 6,937,978 |   |
| Shares in dispute, held by Company,                     |   |                   |   |   |              |   |    |                           |   |   |                |   |   |           | (500,000    | )      |                        |   | (500   | )                                                          |   |   | (1,999,500                        | )      |   |   |   |   |   |   | (2,000,000 | ) |
| Shares issued for services                              |   |                   |   |   |              |   |    |                           |   |   |                |   |   |           |        |   |                        |   |   |                                                       |   |   | 2,250,446                         |   |   |   |   |   |   |   | 2,250,446 |   |
| Issuance of shares to Harborview                        |   |                   |   |   |              |   |    |                           |   |   |                |   |   |           | 75,000      |   |                        |   | 75     |                                                       |   |   |                              |   |   |   |   |   |   |   | 75 |   |
| Amortization of discount on  preferred shares |   |                   |   |   |              |   |    |                           |   |   | 36,494              |   |   |           |        |   |                        |   |   |                                                       |   |   |                              |   |   |   |   |   |   |   | 36,494 |   |
| Net loss                                                |   |                   |   |   |              |   |    |                           |   |   |                |   |   |           |        |   |                        |   |   |                                                       |   |   |                              |   |   |   | (5,767,070 | ) |   |   | (5,767,070 | ) |
| Balance at January 31, 2010                             |   |                   | 22,500 |   |              | $      | 225,000 |                           |   | $      | (134,533            | )      |   |           | 17,156, 077 |   |                        | $      | 17,156 |                                                       |   | $      | 3,636,969                         |   |   | $ | (2,286,669 | ) |   | $ | 1,457,923 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Three months ended January 31, 2010 |       |   | For the period from April 9, 2009 (Inception) through January 31, 2010 |        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|------------|--------|-----------------------------------------------------------------------------|-------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     |       |   |                                                                        |        |
| Cash flows from operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                     |       |   |                                                                        |        |
| Net loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                                        | (5,767,070 | )      | $                                                                           | (2,286,669  | )  |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                     |       |   |                                                                        |        |   |
| Gain on acquisition, net of cash acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                     | -          |   |                                                                        | (10,284,842 | ) |
| Discount on note payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                     | -          |   |                                                                        | (215,000    | ) |
| Impairment on equipment held for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                     | 2,060,000  |   |                                                                        | 2,060,000   |   |
| Stock compensation expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                     | 2,250,521  |   |                                                                        | 2,250,521   |   |
| Loss on derivative liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                     | 471,174    |   |                                                                        | 4,700,906   |   |
| Depreciation and amortization                                                                                                                                               |   |                                     | 146,750    |   |                                                                        | 401,000     |   |
| Discount on preferred stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                     | (36,494    | )      |                                                                        | (207,521    | ) |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                     | 71,640     |   |                                                                        | 95,434      |   |
| Changes in operating assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                     |       |   |                                                                        |        |   |
| Prepaid expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                     | 20,864     |   |                                                                        | (35,917     | ) |
| Related party accounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                     | (43,417    | )      |                                                                        | (43,417     | ) |
| Licensing agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     | -          |   |                                                                        | (1,500,000  | ) |
| Capitalized issuance expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                     | 42,083     |   |                                                                        | (15,584     | ) |
| Accounts payable and accrued expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                     | 376,100    |   |                                                                        | 790,457     |   |
| Related party accounts payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                     | 410,541    |   |                                                                        | 624,626     |   |
| Deferred liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                     | -          |   |                                                                        | 1,500,000   |   |
|         Income taxes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     | -          |   |                                                                        | 1,792,934   |   |
| Net cash provided by (used in) operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     | 2,692      |   |                                                                        | (373,072    | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     |       |   |                                                                        |        |   |
| Cash flows from investing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                     |       |   |                                                                        |        |   |
| Cash paid for acquisition of Liquafaction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                     | -          |   |                                                                        | (62,015     | ) |
|                Net cash used in investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                     | -          |   |                                                                        | (62,015     | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     |       |   |                                                                        |        |   |
| Cash flows from financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                     |       |   |                                                                        |        |   |
| Sale of Series A convertible preferred stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                     | -          |   |                                                                        | 225,000     |   |
| Cash from note payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                     | -          |   |                                                                        | 215,000     |   |
| Net cash  provided by financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     | -          |   |                                                                        | 440,000     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     |       |   |                                                                        |        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     |       |   |                                                                        |        |   |
| Net decrease in cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                     | 2,692      |   |                                                                        | 4,913       |   |
| Cash and cash equivalents, beginning of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                     | 2,221      |   |                                                                        | -           |   |
| Cash and cash equivalents, end of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                                        | 4,913      |   | $                                                                           | 4,913       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     |       |   |                                                                        |        |   |
| Supplemental disclosures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                     |       |   |                                                                        |        |   |
| Cash paid during the period for interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                                        | 18,811     |   | $                                                                           | -           |   |
| Cash paid during the period for income taxes                                                                                             |   | $                                        | -          |   | $                                                                           | -           |   |

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| Level 1 |   | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.                                              |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Level 2 |   | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| Level 3 |   | Pricing inputs that are generally observable inputs and not corroborated by market data.                                                                    |

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| · | Of management’s responsibility for establishing and maintaining adequate internal control over its financial reporting; |
|--------|-------------------------------------------------------------------------------------------------------------------------------|

| · | Of management’s assessment of the effectiveness of its internal control over financial reporting as of year end; and |
|--------|----------------------------------------------------------------------------------------------------------------------------|

| · | Of the framework used by management to evaluate the effectiveness of the Company’s internal control over financial reporting.  Furthermore, it is required to file the auditor’s attestation report separately on the Company’s internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                  |   | July 14, 2009 |       |
|-------------------------------------------------------|--------|---------------|------------|
| Property & equipment                              |   | $             | 10,631,970 |   |
| Inventory available for sale                          |   |          | 5,150,000  |   |
|      Total assets            |   |          | 15,781,970 |   |
| Liabilities                                           |   |          | 1,868,749  |   |
|      Total acquisition price |   | $             | 3,473,364  |   |

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| Note Holder               |   | Date of Issuance                             |   | Maturity Date |   | Interest Rate |                                |   | Issue Amount |   |
|---------------------------|--------|----------------------------------------------|--------|---------------|--------|---------------|-------------------------------------|--------|--------------|--------|
| NWNRG/ADAB (1)            |   |     4/27/2007            |   | 1/31/2010     |   |          |      9.25% |   |         | $      | 360,000 |   |
| Shawn Bunce (2)           |   |     5/29/2007            |   | 1/31/2010     |   |          | 12.00                               |   |         |   | 358,000 |   |
| Bruce Blackwell (3)       |   |       8/1/2008 |   | 1/31/2010     |   |          | 12.00                               |   |         |   | 220,000 |   |
| Harborview Master Fund LP |   |     7/31/2009            |   | 11/30/2009    |   |          | 18.00                               |   |         |   | 215,000 |   |
| Bruce Blackwell (4)       |   |       5/1/2007 |   | 1/31/2010     |   |          | 12.00                               |   |         |   | 200,000 |   |
| Marguerite Heiser (5)     |   |   11/26/2007                       |   | 10/31/2010    |   |          | 9.25                                |   |         |   | 11,000 |   |
| Pat Brannen (6)           |   |     2/15/2008            |   | 8/9/2008      |   |          | 9.50                                |   |         |   | 10,000 |   |
|                      |   |                                         |   |          |   |          |                                |   |         | $      |         1,374,000 |   |
| Accrued Interest          |   |                                         |   |          |   |          |                                |   |         | $      |      317,648 |   |

| Note (5): | Marguerite Heiser entered into 3 separate promissory notes with Liquafaction; $39,600, $30,000 and $4,650.  The note for $39,600 was secured by equipment and was due on August 9, 2008.  When the principal balance and interest due was not paid as per the initial agreement, Marguerite Heiser enforced the security agreement and the equipment was sold to reduce her total notes payable balance.  A verbal agreement with Marguerite Heiser was entered into for $11,000 and is included in the notes payable balance at January, 31, 2010. |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | Development of a 4 million gallon per year (mmgy) cellulosic ethanol production facility located in an area with a large availability of straw biomass. The project is attractive as the initial cellulosic facility due to the fact that the site for the proposed facility has existing ethanol components and equipment, initial design work for the project has already been completed, and certain permits for ethanol production already exist at the facility. These elements, combined with the goal of engineering and constructing a relatively small commercial scale production facility, provide the potential to complete the project and bring it online in as little as relatively quickly. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Development of a 60 mmgy cellulosic ethanol production facility to be located adjacent to an existing pulping facility. The project will leverage the existing mill assets for the handling of large quantities of wood biomass and the capability to produce pulp cellulose, and will utilize a proprietary technology to convert the cellulose to fermentable sugars. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 1. | To preserve and create jobs and to promote economic recovery |
|----|--------------------------------------------------------------|

| 2. | To  assist those most impacted by the recession |
|----|------------------------------------------------------|

| 3. | To provide investments needed to increase economic efficiency by spurring technological advances in science and health |
|----|------------------------------------------------------------------------------------------------------------------------|

| 4. | To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits |
|----|-------------------------------------------------------------------------------------------------------------------------------|

| 5. | To stabilize State and local government budgets in order to minimize and avoid reduction in essential services and counterproductive state and local tax increases. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (a)  | Evaluation of Disclosure Controls and Procedures |
|-----------|--------------------------------------------------|

| (b)  | Changes in Internal Controls over Financial Reporting |
|-----------|-------------------------------------------------------|

| 11/12/2009 |  Issued 75,00 common shares valued at $2.62 per share in payment        |
|------------|------------------------------------------------------------------------------|
|       |  for services and fees to employees, directors and other third parties. |

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|                | EVOLUTION RESOURCES, INC. (Registrant) |                                                                      |
|---------------------|---------------------------------------------|---------------------------------------------------------------------------|
|                |                                        |                                                                      |   |
| Date: July 21, 2010 | By:                                         | /s/ Dennis G. McLaughlin                                   |   |
|                |                                        | Dennis G. McLaughlin                                                 |   |
|                |                                        | President and Chief Executive Officer (Principal Executive Officer)  |   |
|                |                                        |                                                                      |   |