| Colorado                                                       | 84-1508638                                 |
|----------------------------------------------------------------|--------------------------------------------|
| (State or Other Jurisdiction of Incorporation or Organization) |  (I.R.S. Employer Identification No.) |
|                                                           |                                       |
|                                                           |                                       |
| P.O. Box 141 Westminster, Colorado                             | 80036                                      |
| (Address of Principal Executive Offices)                       | (Zip Code)                                 |

| LargeAccelerated Filer r |   | AcceleratedFiler r |   | Non-Accelerated Filer r (Do not check if a smaller reporting company) |   | Smaller ReportingCompany þ |
|--------------------------|--------|--------------------|--------|----------------------------------------------------------------------------|--------|---------------------------------|

----

|   | Part 1 - Financial Information                                                |   Page |   |
|--------|-------------------------------------------------------------------------------|-------------|--------|
|   |                                                                          |        |   |
|   | Item 1 - Financial Statements (Unaudited)                                     |   3    |   |
|   |                                                                          |        |   |
|   | Item 2 - Management’s Discussion and Analysis and Results of Operations |  10    |   |
|   |                                                                          |        |   |
|   | Item 3 - Quantitative and Qualitative Disclosures about Market Risk           |   13   |   |
|   |                                                                          |        |   |
|   | Item 4 - Controls and Procedures                                              |   14   |   |
|   |                                                                          |        |   |
|   | Part 2 - Other Information                                                    |        |   |
|   |                                                                          |        |   |
|   | Item 1 - Legal Proceedings                                                    |  14    |   |
|   |                                                                          |        |   |
|   | Item 2 - Sales of Unregistered Equity Securities and Use of Proceeds          |   14   |   |
|   |                                                                          |        |   |
|   | Item 3 - Defaults upon Senior Securities                                      |   14   |   |
|   |                                                                          |        |   |
|   | Item 4 - Submission of Matters to a Vote of Security Holders                  |   14   |   |
|   |                                                                          |        |   |
|   | Item 5 - Other Information                                                    |   14   |   |
|   |                                                                          |        |   |
|   | Item 6 - Exhibits                                                             |   15   |   |

----

|                                                                                  | ARÊTE INDUSTRIES, INC. AND SUBSIDIARIES |   |         |        |   |     |       |
|---------------------------------------------------------------------------------------|----------------------------------------------|--------|--------------|-------------|--------|----------|------------|
|                                                                                  | CONSOLIDATED BALANCE SHEET                   |   |         |        |   |     |       |
|                                                                                  | (UNAUDITED)                                  |   |         |        |   |     |       |
|                                                                                  |                                         |   |         |        |   |     |       |
|                                                                                  |                                         |   |         |        |   |     |       |
|                                                                                  |                                         |   | December 31, |        |   | June 30, |       |
| ASSETS                                                                                |                                         | 2010   |         |        | 2011   |     |
| Current assets                                                                        |                                         |   |         |        |   |     |       |
|     Cash and cash equivalents                                     |                                         |   | $            | 15,990      |   |     | $          | 21,457 |   |
|     Prepaid expenses                                              |                                         |   |         | 85,139      |   |     |       | 459,028 |   |
|     Revenue receivable                                            |                                         |   |         | 12,625      |   |     |       | 794 |   |
| Total current assets                                                                  |                                         |   |         | 113,754     |   |     |       | 481,279 |   |
|                                                                                  |                                         |   |         |        |   |     |       |   |   |
| Furniture and equipment, at cost net of accumulated                                   |                                         |   |         |        |   |     |       |   |
|     depreciation of $173,076(2010) and $206,241(2011)             |                                         |   | 277,736      |        |   |     | 255,626    |   |
|                                                                                  |                                         |   |         |        |   |     |       |   |   |
| Deposit and deferred costs Oil & Gas Purchase                                     |                                         |   | -            |        |   |     | 500,000    |   |
|                                                                                  |                                         |   |         |        |   |     |       |   |   |
|                                                                                  |                                         |   | $            | 391,490     |   |     | $          | 1,236,905 |   |
|                                                                                  |                                         |   |         |        |   |     |       |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                        |                                         |   |         |        |   |     |       |   |
| Current liabilities                                                                   |                                         |   |         |        |   |     |       |   |   |
|     Accounts payable                                              |                                         |   | $            | 604,271     |   |     | $          | 598,550 |   |
|     Accrued expenses                                              |                                         |   |         | 267,373     |   |     |       | 87,365 |   |
|     Accrued payroll taxes                                         |                                         |   |         | 111,690     |   |     |       | 111,690 |   |
|     Contacts payable                                              |                                         |   |         | 536,528     |   |     |       | 18,750 |   |
|     Notes payable                                                 |                                         |   |         | -           |   |     |       | 250,000 |   |
|     Notes payable & advances related parties                  |                                         |   | 704,475      |        |   |     | 105,219    |   |
|                                                                                  |                                         |   |         |        |   |     |       |   |   |
| Total current liabilities                                                             |                                         |   |         | 2,224,337   |   |     |       | 1,171,574 |   |
|                                                                                  |                                         |   |         |        |   |     |       |   |   |
| Stockholders' equity (deficit)                                                        |                                         |   |         |        |   |     |       |   |   |
|     Convertible Class A preferred stock; $10 face value,          |                                         |   |         |        |   |     |       |   |
|       1,000,000 shares authorized                       |                                         |   |         |        |   |     |       |   |   |
|       Series 1, 30,000 shares authorized, 0 (2010)      |                                         |   |         |        |   |     |       |   |
|       and 0 (2011) shares issued and outstanding        |                                         |   | -            |        |   |     | -          |   |
|       Series 2, 25,000 shares authorized, 0 (2010)      |                                         |   |         |        |   |     |       |   |
|       and 0 (2011) shares issued and outstanding        |                                         |   | -            |        |   |     | -          |   |
|     Common stock, no par value; 4,990,000 shares                  |                                         |   |         |        |   |     |       |   |
|       authorized, 4,972,635 (2010) and 7,664,476 (2011) |                                         |   | 13,611,903   |        |   |     | 16,804,154 |   |
|       shares issued and outstanding                     |                                         |   |         |        |   |     |       |   |   |
|     Accumulated deficit                                           |                                         |   |         | (15,444,750 | )      |     |       | (16,738,823 | ) |
|                                                                                  |                                         |   |         |        |   |     |       |   |   |
| Total stockholders' equity (deficit)                                                  |                                         |   |         | (1,832,847  | )      |     |       | 65,331 |   |
|                                                                                  |                                         |   |         |        |   |     |       |   |   |
|                                                                                  |                                         |   |         |        |   |     |       |   |   |
|                                                                                  |                                         |   | $            | 391,490     |   |     | $          | 1,236,905 |   |

----

|                                               |   |            |      |   |            |   |      |            |   |   |            |   |
|----------------------------------------------------|--------|-----------------|-----------|--------|-----------------|--------|-----------|-----------------|--------|--------|-----------------|--------|
|                                               |   | Three Months    |      |   | Three Months    |   |      | Six Months      |   |   | Six Months      |   |
|                                               |   | Ending June 30, |      |   | Ending June 30, |   |      | Ending June 30, |   |   | Ending June 30, |   |
|                                               |   | 2010            |      |   | 2011            |   |      | 2010            |   |   | 2011            |   |
| Revenues                                           |   |            |      |   |            |   |      |            |   |   |            |   |
|    Oil & gas revenue            |   | $               | 42,088    |   |            | $      | 15,983    |            |   | $      | 100,481         |   |   | $ | 45,639 |   |
|    Other income                     |   |            | -         |   |            |   | -         |            |   |   | -               |   |   |   | - |   |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
| Total revenues                                     |   |            | 42,088    |   |            |   | 15,983    |            |   |   | 100,481         |   |   |   | 45,639 |   |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
| Operating expenses                                 |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
|    Oil & gas operating expenses |   |            | 82,142    |   |            |   | 43,619    |            |   |   | 167,649         |   |   |   | 111,373 |   |
|    Depreciation                     |   |            | 11,055    |   |            |   | 11,055    |            |   |   | 22,110          |   |   |   | 22,110 |   |
|    Rent                             |   |            | 863       |   |            |   | 956       |            |   |   | 1,670           |   |   |   | 2,143 |   |
|    Acquisition expense              |   |            | -         |   |            |   | 457,500   |            |   |   | -               |   |   |   | 457,500 |   |
|    Other operating expenses         |   |            | 176,614   |   |            |   | 320,689   |            |   |   | 339,810         |   |   |   | 712,423 |   |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
| Total operating expenses                           |   |            | 270,674   |   |            |   | 833,819   |            |   |   | 531,239         |   |   |   | 1,305,549 |   |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
| Net loss from operations                           |   |            | (228,586  | )      |            |   | (817,836  | )               |   |   | (430,758        | )      |   |   | (1,259,910 | ) |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
| Other income (expense):                            |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
|     Interest income            |   |            | -         |   |            |   | 139       |            |   |   | 1               |   |   |   | 279 |   |
|     Interest expense           |   |            | (11,798   | )      |            |   | (22,697   | )               |   |   | (23,595         | )      |   |   | (34,442 | ) |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
| Total other income (expense)                       |   |            | (11,798   | )      |            |   | (22,558   | )               |   |   | (23,594         | )      |   |   | (34,163 | ) |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
| Net (loss)                                         |   | $               | (240,384  | )      |            | $      | (840,394  | )               |   | $      | (454,352        | )      |   | $ | (1,294,073 | ) |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
| Basic and diluted loss per share                   |   |            | (0.05     | )      |            |   | (0.12     | )               |   |   | (0.09           | )      |   |   | (0.22 | ) |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
|                                               |   |            |      |   |            |   |      |            |   |   |            |   |   |   |   |   |
| Weighted average common shares outstanding         |   |            | 4,930,000 |   |            |   | 6,985,000 |            |   |   | 4,930,000       |   |   |   | 5,995,000 |   |

----

| ARÊTE INDUSTRIES, INC. AND SUBSIDIARIES             |
|----------------------------------------------------------|
| CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) |
| For the six months ended June 30, 2011                   |
| (UNAUDITED)                                              |

|                                                                                            |   |                |      |   |   |   |       |                |   |   |        |   |
|-------------------------------------------------------------------------------------------------|--------|---------------------|-----------|--------|--------|--------|------------|---------------------|--------|--------|-------------|--------|
|                                                                                            |   |                |      |   |   |   |       |                |   |   |        |   |
|                                                                                            |   |                |      |   |   |   |       |                |   |   |        |   |
|                                                                                            |   | Common Stock Shares |      |   | Amount |   |       | Accumulated Deficit |   |   | Total       |   |
| Balance at December 31, 2010                                                                    |   |                | 4,972,635 |   |   | $      | 13,611,903 |                |   | $      | (15,444,750 | )      |   | $ | (1,832,847 | ) |
|     Issuance of common stock to directors                                   |   |                |      |   |   |   |       |                |   |   |        |   |   |   |   |   |
|         and consultants for services                    |   |                | 1,690,841 |   |   |   | 1,753,751  |                |   |   |        |   |   |   | 1,753,751 |   |
|     Issuance of common stock in exchange                                    |   |                |      |   |   |   |       |                |   |   |        |   |   |   |   |   |
|         for debt conversion:                            |   |                |      |   |   |   |       |                |   |   |        |   |   |   |   |   |
|         1) Notes to common stock                        |   |                | 835,000   |   |   |   | 835,000    |                |   |   |        |   |   |   | 835,000 |   |
|         2) Notes to common stock officers and directors |   |                | 62,500    |   |   |   | 500,000    |                |   |   |        |   |   |   | 500,000 |   |
|     Issuance of common stock in exchange                                    |   |                |      |   |   |   |       |                |   |   |        |   |   |   |   |   |
|        for cash                                              |   |                | 103,500   |   |   |   | 103,500    |                |   |   |        |   |   |   | 103,500 |   |
|      Net loss                                                          |   |                |      |   |   |   |       |                |   |   | (1,294,073  | )      |   |   | (1,294,073 | ) |
| Balance at June 30, 2011                                                                        |   |                | 7,664,476 |   |   | $      | 16,804,154 |                |   | $      | (16,738,823 | )      |   | $ | 65,331 |   |

----

|                                                                                        |                                                                                                                                  |                                                                                                                             | 2010                                                                                                                                  |                                                                                        | 2011                                                                                                    |
|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
|                                                                                        |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |                                                                                        |                                                                                                    |
| Cash flows from operating activities:                                                       |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |
|     Net (loss)                                                          |                                                                                                                                  |                                                                                                                             |       $     (454,352)                                                          |                                                                                        |  $       (1,294,073)                                            |
| Adjustments to reconcile net loss to net                                                    |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |
| cash used in operating activities:                                                          |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |
| Depreciation and amortization                                                               |                 22,110                                |                                                                                                                             |                 22,110                                |
| Stock issued for services, note payments and                                                |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |
|             interest on notes   |                                                                                                                                  |                                                                                                                             |                       - |                                                                                        |               469,500             |
| Non cash compensation for services                                                          |               211,805                                           |                                                                                                                             |               264,584                                           |
| Changes in assets and liabilities:                                                          |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |
|             Accounts receivable |                                                                                                                                  |                                                                                                                             |                  7,179                           |                                                                                        |                 11,832  |
|             Accounts payable    |                                                                                                                                  |                                                                                                                             |               122,644                                           |                                                                                        |                 (5,721) |
|             Accrued expenses    |                                                                                                                                  |                                                                                                                             |                 85,327                                |                                                                                        |                 72,991  |
| Total adjustments                                                                           |                                                                                                                                  |                                                                                                                             |               449,065                                           |                                                                                        |               835,296             |
|                                                                                        |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |                                                                                        |                                                                                                    |
|                                                                                        |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |                                                                                        |                                                                                                    |
| Net cash provided (used) in operating activities                                            |                 (5,287)                               |                                                                                                                             |             (458,777)                                                     |
|                                                                                        |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |                                                                                        |                                                                                                    |
| Cash flows from investing activities:                                                       |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |
| Deposit oil and gas properties                                                              |                       - |                                                                                                                             |             (500,000)                                                     |
|                                                                                        |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |                                                                                        |                                                                                                    |
| Net cash used in investing activities                                                       |                       - |                                                                                                                             |             (500,000)                                                     |
|                                                                                        |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |                                                                                        |                                                                                                    |
| Cash flows from financing activities:                                                       |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |
|      Notes payable receipts                                        |                                                                                                                                  |                                                                                                                             |                       - |                                                                                        |               870,000             |
| Proceeds from sale of common stock                                                          |                       - |                                                                                                                             |               103,500                                           |
| Reciept of advances - related parties                                                       |                       - |                                                                                                                             |                       - |
| Payment of advances - related parties                                                       |                       - |                                                                                                                             |                 (9,256)                               |
|                                                                                        |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |                                                                                        |                                                                                                    |
| Net cash provided by financing activities                                                   |                       - |                                                                                                                             |               964,244                                           |
|                                                                                        |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |                                                                                        |                                                                                                    |
| Net increase (decrease) in cash and cash equivalents                                        |                 (5,287)                               |                                                                                                                             |                  5,467                           |
| Cash and cash equivalents at beginning of period                                            |                 16,764                                |                                                                                                                             |                 15,990                                |
|                                                                                        |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |                                                                                        |                                                                                                    |
| Cash and cash equivalents at end of period                                                  |  $             11,477                                           |                                                                                                                             |  $             21,457                                           |
|                                                                                        |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |                                                                                        |                                                                                                    |
| Supplemental disclosure of cash flow information:                                           |                                                                                                                                  |                                                                                                                             |                                                                                                                                  |
|                                                                                        |                                                                                                                                  |                                                                                                                             | 2010                                                                                                                                  |                                                                                        | 2011                                                                                                    |
| Interest paid during the period                                                             |                                                                                                                                  |  $                    - |                                                                                                                                  |  $             17,755 |
| Income taxes paid during the period                                                         |  $                   -            |                                                                                                                             |  $                     -     |

|   |                                                                                                                                  |   |   |   |   |   |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|   | Supplemental disclosure of non-cash investing and financing activities:                                                               |   |
|   |     During the quarter ended June 30, 2011 non-cash expenses for contracts with consultants amounted to $264,584. |
|   |     During the quarter ended June 30, 2011 wages to officers and directors and fees to                            |   |   |
|   |         consultants of $1,284,251 were paid by the issuance of common stock                   |   |
|   |     During the year ended June 30, 2010 non-cash expenses for contracts with consultants amounted to $211,805.    |
|   |     During the quarter ended June 30, 2011, notes payable of $1,335,000 were converted into common stock.         |
|   |     During the quarter ended June 30, 2010 wages to officers and directors and fees to                            |
|   |         consultants of $0 were paid by the issuance of common stock                           |   |

----

----

| ·   | The Company issued common stock to pay its contract obligations and the pledged shares in exchange for the |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | The board of directors authorized three of the directors to exchange $500,000 of their loans and advances to the company for 62,500 shares of common stock or $8.00 per common share, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company issued 72,841 shares of common stock for its obligation for directors fees accrued of 128,000, |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | The Company sold 103,500 shares of common stock for cash of $103,500, |
|--------------------|-----------------------------------------------------------------------|

| ·   | The Company issued 75,000 shares for consulting services, related to the acquisition of properties, valued at $457,500, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company paid 3,000 shares of common stock in exchange for loan fees of $12,000, and |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | The Company exchanged $835,000 of notes for 835,000 shares of common stock |
|--------------------|----------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2010   |    |   | 2011   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|           Advances – Donald Prosser (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $      | 220,000 |   |   | $      | 20,000 |   |
|           Advances – Donald Prosser (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 4,290   |   |   |   | -- |   |
|           Advances – Donald Prosser (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 215,000 |   |   |   | -- |   |
|           Advances – Charles Gamber (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 4,966   |   |   |   | -- |   |
|           Advances – William Stewart (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 20,219  |   |   |   | 20,219 |   |
|           Advances – William Stewart (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 75,000  |   |   |   | 25,000 |   |
|           Advances – Charles Davis (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 125,000 |   |   |   | -- |   |
|           Advances – Charles Davis (2)                                                                                  |   |   | 40,000  |   |   |   | 40,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |    |   |   |   |   |   |
| Balances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $      | 704,475 |   |   | $      | 105,219 |   |

----

----

----

| ·   | The Company issued common stock to pay its contract obligations and the pledged shares in exchange for the |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | The board of directors authorized three of the directors to exchange $500,000 of their loans and advances to the company for 62,500 shares of common stock or $8.00 per common share, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company issued 72,841 shares of common stock for its obligation for directors fees accrued of $128,000, |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | The Company sold 103,500 shares of common stock for cash of $103,500, |
|--------------------|-----------------------------------------------------------------------|

| ·   | The Company issued 75,000 shares for consulting services related to the acquisition of properties, valued at $475,000, |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company paid 3,000 shares of common stock in exchange for loan fees of $12,000, and |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | The Company exchanged $835,000 of notes for 835,000 shares of common stock. |
|--------------------|-----------------------------------------------------------------------------|

----

----

| 31.1 | Certification of CEO pursuant to Rule 13a-14(a)  or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2 | Certification of CFO pursuant to Rule 13a-14(a)  or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                          |
| 32.2 | Certification of CFRO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.                         |

----

| By:    | /s/ Donald W Prosser, CEO                          |
|-----------------------|----------------------------------------------------|
|                  | Donald W Prosser, Principal Executive Officer      |
|                  | Dated: August 22, 2011                             |
|                  |                                               |
|                  |                                               |
| By:    | /s/ John Herzog, Interim CFO                       |
|                  | John Herzog                                        |
|                  | Interim Principal Financial and Accounting Officer |
|                  | Dated: August 22, 2011                             |

----

----