ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED


DECEMBER
31, 2008




UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549




FORM
10-K




x
            Annual
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934.


For the
fiscal year ended December 31, 2008.





 ̈
            Transition
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934.


For the
transition period from __________ to __________.




Commission
File Number:  333-146052




MIPSolutions,
Inc.


(EXACT
NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




Nevada
                
                20-4047619(State
      or other Jurisdiction
                  of
      Incorporation or
                  Organization)
                
                (I.R.S.
      Employer
                  Identification
      No.




2130East Bidwell Street,
Folsom, CA95630




(Address
of Principal Executive Offices) (Zip Code)




Registrant’s
Telephone Number, including Area Code:  (509) 209-3235




Laughlin
Associates, Inc.


2533
N. Carson Street


Carson
City, NV 89706


Telephone
(775) 883-8484  ext 202


(Name,
Address, and Telephone Number of Agent for Service)





Securities
Registered Pursuant to Section 12(g) of the Exchange Act:


Common
Stock, $.001 par value




Indicate
by check mark if the Registrant if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.  Yes  ̈      No
x




Indicate
by check mark if the Registrant is not required to file reports pursuant to
Section 13 or Section 15 (d) of the Exchange Act.    Yes  ̈
    No x




Indicate
by check mark whether the Registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.    Yes x
    No  ̈


Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K($229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.    Yes x
    No  ̈




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





Large
accelerated filer  ̈ Accelerated
filer  ̈ Non-accelerated
filer  ̈ (Do
not check if a smaller reporting company) Smaller reporting company x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  ̈
    No x




The
Company had no revenues in 2008.




The
aggregate market value of the voting and non-voting common equity held by
non-affiliates was $821,643.60 based the average bid and asked price of $.10 on
December 31, 2008.




As of May
11, 2009, the Registrant had 8,923,996 shares outstanding of its common
stock.




DOCUMENTS
INCORPORATED BY REFERENCE




FORM
10-KSB filed with the Securities and Exchange Commission on March 31, 2008, FORM
SB-2 filed with the Securities and Exchange Commission, effective October 3,
2007 are incorporated by reference in Items 1, 1A, 3, 7 and 9A(T).




FORM 8-K
filed with the Securities and Exchange Commission on November 10, 2008 and
FORM 8-K filed with the Securities and Exchange Commission on December 22, 2008
in Item 10.




FORM 8-K
filed with the Securities and Exchange Commission on September 2, 2008 and FORM
S-8 filed with the Securities and Exchange Commission on October 24, 2008
in Item 11.




FORM 8-K
filed with the Securities and Exchange Commission on November 26, 2008 FORM
10-K for the period ended December 31, 2008 filed on March 31, 2008, FORM 10-Q
for the period ended March 31, 2008 filed on May 15, 2008 and the Company’s 10-Q
for the period ended June 30, 2008 filed on August 14, 2008 in Item
1B.







TABLE
OF CONTENTS




Page No.PART I
                              Cautionary
      Note Regarding Forward-Looking Statements
                              4ITEM 1
                              Business
                              6ITEM 1A
                              Risk
      Factors
                              9ITEM 1B
                              Unresolved
      Staff Comments
                              14ITEM 2
                              Properties
                              15ITEM 3
                              Legal
      Proceedings
                              15ITEM 4
                              Submission
      of Matters to a Vote of security Holders
                              15PART IIITEM 5
                              Market
      for Common Equity and Related Stockholder Matters and Small Business
      Issuer Purchases of Equity  Securities
                              15ITEM 6
                              Selected
      Financial Data
                              17ITEM 7
                              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                              17ITEM 7A
                              Quantitative
      and Qualitative Disclosure about Market Risk
                              24ITEM 8
                              Financial
      Statements and Supplementary Data
                              24ITEM 9
                              Changes
      In and Disagreements with Accountants on Accounting and Financial
      Disclosure
                              25ITEM 9A
                              Controls
      and Procedures
                              25ITEM 9A (T)
                              Controls
      and Procedures – Disclosure (SOX)
                              25ITEM 9B
                              OTHER
      INFORMATION
                              28PART IIIITEM 10
                              Directors,
      Executive Officers and Corporate Governance
                              28ITEM 11
                              EXECUTIVE
      COMPENSATION
                              36


2





ITEM12
                    Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                    39ITEM 13
                    CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
                    39ITEM 14
                    PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                    40PART IVITEM 15
                    EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES
                    41SIGNATURES
                    41


3





PART
I




Cautionary
Note Regarding Forward-Looking Statements




This
report contains “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder,
and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule
3b-6 promulgated thereunder, that involve inherent risk and uncertainties.
 Any statements about our expectations, beliefs, plans, objectives,
strategies or future events or performance constitute forward-looking
statements.  These statements are often, but not always, made through the
use of words or phrases such as “anticipate,” “estimate,” “plan,” “project,”
“continuing,” “ongoing,” “expect,” “believe,” “intend” and similar words or
phrases.  Accordingly, these statements involve estimates, assumptions and
uncertainties that could cause actual results to differ materially from those
expressed or implied in them.  All forward-looking statements are qualified
in their entirety by reference to the factors discussed in this report,
including, among others, the following risk factors discussed more fully in Item
1A hereof:





dependence
on commercialization of our Molecularly Imprinted Polymer (MIP)
technology;





our
ability to continue as a “going concern”





our need
and ability to raise sufficient additional capital;





ineffective
internal operational and financial control systems;





our
ability to hire and retain specialized and key personnel;





dependence
on our ability to purchase Float Concentrate at a discount of its gold value in
the marketplace;





our
limited operating history and continued losses;





restrictions
contained in our outstanding convertible notes;





rapid
technological change;





uncertainty
of intellectual property protection;





potential
infringement on the intellectual property rights of others;





factors
affecting our common stock as a “penny stock;”





extreme
price fluctuations in our common stock;





price
decreases due to future sales of our common stock;


4





general
economic and market conditions;





future
shareholder dilution; and





absence
of dividends.





Because
the risk factors referred to above could cause actual results or outcomes to
differ materially from those expressed or implied in any forward-looking
statements made by us or on our behalf, you should not place undue reliance on
any forward-looking statement.  Further, any forward-looking statement
speaks only as of the date on which it is made, and we undertake no obligation
to update any forward-looking statement to reflect events or circumstances after
the date on which the statement is made or to reflect the occurrence of future
events or developments.  New factors emerge from time to time, and it
is not possible for us to predict which factors will arise.  In
addition, we cannot assess the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking
statements.


5


ITEM
1. Business




MIP
Solutions, Inc. (“The Company”) is a Development Stage Nevada corporation
organized on December 19, 2005 that is currently developing molecular imprinting
technology that it licensed from the Johns Hopkins Applied Physics Laboratory
(JHU/APL) in January 2006 as described in the Company’s 2007 FORM 10-KSB
filed with the Securities and Exchange Commission on March 31, 2008 and FORM
SB-2 filed with the Securities and Exchange Commission, effective October 3,
2007.  Both filings can be found at www.sec.org and are
incorporated into this document by reference.  The Company’s principal
place of business is located at 2130 East Bidwell Street, Folsom, CA
95630.




Currently
the Company lacks the necessary funds to proceed with its business operations
over the next twelve months. As of December 31, 2008 the Company had $58.00 of
cash available. These funds have been utilized to maintain administrative
expenses related to corporate fees and expenses since year end.In addition the
Company secured and additional $48,500 in the form of Promissory Notes with 7%
annual interest with interest and principal convertible into common shares
($.001 par value) at $.05 per share at the Note holders discretion as long as
the Note is outstanding during the period between December 31, 2008
and April 30, 2009. These Notes were issued to current shareholders and a
third party that has been acting an independent consultant on a pro bono
basis.




In the
next twelve months the Company plans to raise additional capital through at
least one Private Placement Offering of equity or debt securities to secure
additional financing.  There can be no guarantee or assurance the
Company will be able to sell any of the securities.  The Company’s
business development will likely fail if it is unable to raise proceeds through
the sale of securities. If the Company is unsuccessful in raising adequate funds
through the sale of its securities it would be forced to rely on obtaining loans
from financial institutions or shareholders, of which both are highly unlikely
to appoint any proceeds to the Company. The inability of the Company to secure
such loans or obtain adequate financing would result in business failure and any
investment made into the Company would be lost in its entirety.  As
such the following explanations should be considered forward-looking
statements.




Business
Strategy




The
Company’s market entry strategy is based on the following four part business
strategy which will begin as soon as the Company complete the up-scale and
evaluation of it third generation IXR gold and silver beads currently underway
in the laboratories of a third party custom chemicals manufacturer retained by
the Company in the first quarter of 2009 :


6




1.
            Exploit the Company’s
      IXR gold and silver beads.  During laboratory
      investigations in early 2008 it was discovered that both gold and silver
      could be recovered with a single AuAg MIPTM bead1.  This
      serendipitous discovery has immediate application in the gold mining
      industry as a replacement for the carbon adsorption process2.  Rather
      than continue to focus on an MIP bead specific for a hazardous element
      (e.g., arsenic, mercury, etc.) for waste water remediation, the Company
      decided to immediately pursue gold mining operators with the AuAg MIP bead
      believing it to be a faster path to revenue and
      profitability.  The essential first step will be to up-scale a
      sufficient quantity of MIP beads for gold extraction and then begin
      working with a gold mining operator is to demonstrate the
      process.  The Company intends to do this by constructing a Pilot
      Plant/Model.  The Pilot Plant/Model will be a key marketing tool
      to be used with prospective partners and customers.  It will be
      portable and capable of demonstrating on a real time bases the MIP bead
      technology starting first with AuAg MIP.  By knowing the quality
      of float concentrate (FC) going in and by allowing the mine operator the
      ability to measure the gold concentration remaining in the beads, the
      effectiveness of the MIP process becomes immediately
      known.  Management believes this demonstration will be quite
      convincing.




2.
            Focus on Junior Mining
      Operations.   Junior mining operations often leave
      gold ore unprocessed when it does not have sufficient gold yields (ounces
      of gold/ton or ore).  Gold ore can be purchased as FC (up to 10
      ounces of gold/ton).  According to Management’s estimates, the
      Company can break even at an annual volume of approximately 2,500 tons of
      FC with a minimal gold loading of 6.2
  ounces/ton.




3.
            Develop strategic
      opportunities with existing Major Mining Operators.Large gold and
      silver mine operators are always searching for ways to improve gold
      processing yields and/or decreasing costs.  However, they are
      extremely reticent to allow outsiders access to their
      operations.  Thus, they would welcome the AuAg MIP bead and
      would be open to a product which can be easily inserted into their
      processing operations that improved gold recovery (either by increasing
      yield or decreasing costs).




4.
            Develop other
      important MIP beads and filter products for extracting hazardous
      materials.  The ability to extract specific hazardous
      molecules (elements) offer equally large opportunities for the Company and
      these specific MIP beads will be the focus on continued R&D efforts
      and laboratory demonstrations.  Depending upon available funds,
      the Company anticipates moving into the waste water remediation and
      drinking water safety markets as soon as
  possible.




Improvements
to MIP Technology




This MIP
IX Resin (“IXR”) bead technology as described in the Company’s 2007 FORM 10-KSB
and FORM SB-2 Effective October 3, 2007 which are incorporated into this
document by reference underwent laboratory improvements in 2008 which lead to
breakthroughs in the commercialization of IXR silver and gold extraction
beads.  The fist breakthrough which is a proprietary trade secret
significantly reduced the anticipated costs associated with up-scaling and
producing gold IXR beads and the remaining dealt with increasing the capacity of
the beads to capture targeted silver and gold molecules produced in the cyanide
leaching process commonly used in mining today.  The following results
show the capacity improvements achieved.





1 Specific
MIP beads will be trademarked and branded; for instance, for the AuAg MIP bead
the brand name momentarily chosen is GoldMIPTM.


2 The
carbon absorption process captures valuable metals such as gold and silver;
however, the process also captures other hazardous metals such as mercury and
lead which must be removed by additional processes.


7




In early
2008 in which a near-ideal bead for the selection (e.g., filtering) of gold (Au)
and silver (Ag) was developed.  The table below shows





Relative RatiosElement
                  
                  MIP Au
                    Beads
                  
                  
                  Rohm &
                    Hass
                    Amberlite-
                    400
                  
                  
                  FeedAl
                  
                  
                  0.000
                  
                  
                  
                  0.000
                  
                  
                  
                  0.035Ca
                  
                  
                  0.000
                  
                  
                  
                  0.034
                  
                  
                  
                  16.080Fe
                  
                  
                  0.070
                  
                  
                  
                  1.123
                  
                  
                  
                  6.631Co
                  
                  
                  0.000
                  
                  
                  
                  0.004
                  
                  
                  
                  0.001Ni
                  
                  
                  0.000
                  
                  
                  
                  0.083
                  
                  
                  
                  0.282Cu
                  
                  
                  0.117
                  
                  
                  
                  10.520
                  
                  
                  
                  43.427Zn
                  
                  
                  0.000
                  
                  
                  
                  0.047
                  
                  
                  
                  1.385As
                  
                  
                  0.000
                  
                  
                  
                  0.000
                  
                  
                  
                  0.007Se
                  
                  
                  0.000
                  
                  
                  
                  0.004
                  
                  
                  
                  0.011Mo
                  
                  
                  0.000
                  
                  
                  
                  0.008
                  
                  
                  
                  0.053Ag
                  
                  
                  0.044
                  
                  
                  
                  0.083
                  
                  
                  
                  0.022Ba
                  
                  
                  0.000
                  
                  
                  
                  0.000
                  
                  
                  
                  0.007Au
                  
                  
                  1.000
                  
                  
                  
                  1.000
                  
                  
                  
                  1.000Pb
                  
                  
                  0.000
                  
                  
                  
                  0.000
                  
                  
                  
                  0.028%Au
                  
                  
                  82.553
                  
                  
                  
                  7.748
                  
                  
                  
                  1.450




This
table (which was included in the 2007 10-KSB as the data was derived in the
1st
Q 2008 prior to filing) shows that the Company’s initial IXR beads developed
early in 2008 perform over 10 times better than Amberlite-400, a Rohm and Haas
product currently in use today. Metals (the first column) commonly found along
with gold and silver extracted by cyanide solution3.  Their
mass ratios (in solution) and after cyanide extraction are shown in the far
right column or “feed”.  The “feed” solution was allowed to flow
separately through cartridges of the Company’s IXR beads and the Rohm and Haas
Amberlite-400 beads.  The two sets of beads were then stripped of all
metals and the stripped solution analyzed for the metals found in the “feed”
solution.  As can be seen, the Company’s IXR beads selectively removed
gold from the “feed” solution at a much higher mass ratio than the Amberlite-400
beads, increasing the concentration of gold found by over 10-fold per unit of
feed solution (82.553/7.748).  The Company’s IXR beads allowed the
vast majority of other metals to pass through, where they may be further
processed or discarded. The Amberlite-400 beads absorbed large amounts of the
other undesirable metals, which can only be separated from the gold by tedious
subsequent procedures4.





Bead type
                          
                          Yield
                            (%)
                          
                          
                          Metal loss during
                            polymerization (%)
                          
                          
                          Au capacity
                            (g Au/kg
                            beads)1st
      Generation
                          
                          
                          66
                          
                          
                          
                          36
                          
                          
                          
                          0.252nd
      Generation
                          
                          
                          50
                          
                          
                          
                          10
                          
                          
                          
                          1.533rd
      Generation
                          
                          
                          80
                          
                          
                          
                          2
                          
                          
                          
                          9.31




As work
continued in the Lab, the Company was able to further increase capacity as it
developed second and third generation species as outlined in this
table.







3 In the
gold mining industry, this chemical cocktail or cyanided metal species is
referred to as a pregnant solution.


8




Furthermore,
the Company announced in 2008 that third-party laboratory analyses verified that
the Company’s IXR bead successfully separated gold from a gold cyanide solution
loaded with mercury without also removing mercury.  This is
significant as mercury is often recovered with the gold in the cyanide leaching
process in various gold deposits.  Separating the mercury is often
done using a process known as retorting. Retorting separates mercury from gold
by essentially distilling the mercury. The resulting gaseous mercury can easily
escape from the retort system and ends up in the environment as a deadly toxin.
The EPA currently has a voluntary program for the release of mercury which could
be mandated in the future.  Since the Company’s IXR gold bead has been
shown to selectively isolate gold from mercury it could potentially eliminate
the need for retorting.




Intellectual
Property Ownership and Protection




Through
its License Agreement with JHU/APL outlined in the Company’s 2007 10-KSB and
FORM SB-2 Effective October 3, 2007 which are incorporated into this document by
reference the Company has specific rights to patents that protect its
intellectual property position.  To strengthen its position the
Company applied for and was granted a patent entitled “MOLECULARLY IMPRINTED
PLOYMERS (MIPS) FOR THE SELECTIVE REMOVAL OF INORGANIC CONTAMINANTS FROM
LIQUIDS”.




The
Company was also involved with the filing of a patent application for “STAR
MOLECULARLY IMPRINTED POLYMER BASED ION SELECTIVE ELECTRODES AND ASSOCIATED
METHODS” which relate to sensors that could be used in a closed circuit cyanide
based gold extraction system based on the Company’s IXR gold and silver
beads.




Finally,
to focus on the Company’s core filtration and extraction technology and to
conserve capital the Company chose to let the medical option on the MIP
technology with JHU/APL expire/lapse in conjunction with a payment date in
2008.




Employees




The
Company had two Officers who are also Directors and no employees as of December
31, 2008.




ITEM
1A. RISK
FACTORS




Investors
should carefully consider the following risk factors and all other information
contained in this report.  Our business and our securities involve a high
degree of risk.




The
financial statements enclosed herein contain a going concern footnote which
indicates that the auditors for the Company are concerned that the Company may
not have the resources to continue.




If the
Company is unable to raise additional capital or take other corporate measures,
such as the successful sale of its technology, the Company’s ability to continue
as a going concern is in jeopardy.


9




Dispute
with former president of the Company over ownership of 1,122,500 shares of the
Company’s shares.




The
Company has not heard from Michael Pieniazek, the former president of the
Company, regarding the legal action he and his brother were contemplating
against the Company regarding the cancellation of 1,122,500 shares of the
Company’s common stock issued collectively to them since they responded to the
allegations in a letter prepared by counsel and dated July 3, 2007. Additional
information regarding their allegations can be found in the Company’s SB-2
registration statement filed with the U.S. Securities and Exchange Commission at
www.sec.gov
..




Because
MIPSolutions, Inc. is a start-up/development stage company with no operating
history, an investor cannot assess the Company’s profitability or
performance.




The
Company was formed in December 2005 and concentrated its efforts on developing
its intellectual property and developing a public market for its common stock,
has no operating results and therefore it is impossible for an investor to
assess the performance of the Company or to determine whether the Company will
meet its projected business plan. An investor must rely solely on the Company’s
management’s history and its projected operations.




There
may be competition developing similar technology or even more effective
technology which would undermine the Company’s ability to market its
technology.




There may
be other companies that are developing technologies to extract contaminants from
water similar or even more efficient and cost effective to that being developed
by the Company. It is possible that when the Company tries to market its
technology, it will find such other competitive technologies already in the
market or close to marketability. If such competing technologies are being
developed or marketed, the Company will have a more difficult time selling its
technology.




The
management and its affiliates own enough shares of the Company to influence a
shareholder vote.




The
Company’s executive officers and directors and founders beneficially own
approximately 48% of the Company’s outstanding common stock.  As a
result, these founders, executive officers and directors will be able to
exercise substantial interest over matters requiring shareholder approval,
including the election of directors and the approval of material corporate
matters such as change of control transactions.  In addition former
Officers and Directors hold significant equity positions that could also
influence a vote.




The
Company will need additional financing which could delay the development of the
MIP technology, cause increased debt to the Company, and dilute the existing
shareholders.




Future
events, including problems, delays, expenses and difficulties frequently
encountered by newly formed companies with developing technology may require
that the Company seek additional sources of capital, including an additional
offering of its equity securities, an offering of debt securities or obtaining
financing through a bank or other entity. If the Company needs to obtain
additional financing, there is no assurance that financing will be available,
from any source, or that it will be available on terms acceptable to it, or that
any future offering of securities will be successful.


10




The
Company had to restate its Financial Statements for the period ending December
31, 2008 through June 30, 2008 due to an error in the accounting of amounts due
with regard to its License Agreement with JHU/APL




The
previously issued financial statements for December 31, 2007, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset, and the associated amortization.  The Company failed to
recognize both the license fee payable, the license fee asset and the
amortization.  The effect of the restatement was to increase license
fee payable by $80,000 and to increase license fee by $80,000, increase net loss
by $8,487 and increase the accumulated deficit by $8,487.





The
previously issued financial statements dated March 31, 2008, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset. The Company failed to recognize the license fee payable, the license fee
asset and the amortization.  The effect of the correction was to
increase license fee payable by $10,000 and to increase license fee by $10,000
and increase net loss by $3,139 and increase the accumulated deficit by
$3,139.





The
previously issued financial statements dated June 30, 2008, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset, The Company failed to recognize the license fee payable, the license fee
asset and the amortization. Also, the Company failed to recognize an issuance of
common stock for services. The effect of the restatement was to increase license
fee payable by $10,000, increase license fee by $10,000 increase consulting
expense by $61,000, increase common stock by $100, increase additional paid in
capital by $60,900, and increase the net loss and accumulated deficit by
$64,472.





The
effect of the Company’s previously issued 2007 financial statements for the year
ending December 31, 2007 is summarized as follows:





Previously Reported
                
                
                Increase (Decrease)
                
                
                RestatedCurrent
      assets
                
                
                17,611
                
                
                
                -
                
                
                
                17,611PP&E
                
                
                11,321
                
                
                
                -
                
                
                
                11,321Other
      assets
                
                
                60,218
                
                
                
                71,513
                
                
                
                131,731Total
      assets
                
                
                89,150
                
                
                
                71,513
                
                
                
                160,663Current
      liabilities
                
                
                285,306
                
                
                
                80,000
                
                
                
                365,306Stockholders
      deficit
                
                
                (196,156
                )
                
                
                (8,487
                )
                
                
                (204,643
                )Total
      liabilities &Stockholders
      deficit
                
                
                89,150
                
                
                
                71,513
                
                
                
                160,663


11





The
effect of the Company’s previously issued financial statements for the period
ending March 31, 2008 is summarized as follows:





Previously Reported
                  
                  
                  Increase (Decrease)
                  
                  
                  RestatedCurrent
      assets
                  
                  
                  12,534
                  
                  
                  
                  -
                  
                  
                  
                  12,537PP&E
                  
                  
                  10,631
                  
                  
                  
                  -
                  
                  
                  
                  10,631Other
      assets
                  
                  
                  59,795
                  
                  
                  
                  78,374
                  
                  
                  
                  138,169Total
      assets
                  
                  
                  82,960
                  
                  
                  
                  78,374
                  
                  
                  
                  161,334Current
      liabilities
                  
                  
                  386,342
                  
                  
                  
                  90,000
                  
                  
                  
                  476,342Stockholders
      deficit
                  
                  
                  (303,382
                  )
                  
                  
                  (11,626
                  )
                  
                  
                  (315,008
                  )Total
      liabilities &Stockholders
      deficit
                  
                  
                  82,960
                  
                  
                  
                  78,374
                  
                  
                  
                  161,334





The
effect of the Company’s previously issued financial statements for the period
ending June 30, 2008 is summarized as follows:





Previously Reported
                    
                    
                    Increase (Decrease)
                    
                    
                    RestatedCurrent
      assets
                    
                    
                    10,404
                    
                    
                    
                    -
                    
                    
                    
                    10,404PP&E
                    
                    
                    9,942
                    
                    
                    
                    -
                    
                    
                    
                    9,942Other
      assets
                    
                    
                    59,952
                    
                    
                    
                    84,902
                    
                    
                    
                    144,854Total
      assets
                    
                    
                    80,298
                    
                    
                    
                    84,902
                    
                    
                    
                    165,200Current
      liabilities
                    
                    
                    210,644
                    
                    
                    
                    99,999
                    
                    
                    
                    310,643Stockholders
      deficit
                    
                    
                    (130,346
                    )
                    
                    
                    (15,097
                    )
                    
                    
                    (145,443
                    )Total
      liabilities &Stockholders
      deficit
                    
                    
                    80,298
                    
                    
                    
                    84,902
                    
                    
                    
                    165,200




The
Company’s intellectual property and other proprietary rights are valuable and
any inability to protect them could adversely affect the Company’s projected
business and future operations.




The
Company’s ability to compete effectively is dependent upon its ability to
protect and preserve the intellectual property and other proprietary rights and
materials owned, licensed or otherwise used by the Company. The license
agreement with the Johns Hopkins Laboratory includes two issued patents and two
pending patents. The Company cannot assure an investor that the patent
applications will result in an issued patent, and failure to secure rights under
the patent application may limit the Company’s ability to protect the
intellectual property rights that the application was intended to cover. The
Company cannot assure an investor that its intellectual property may not be
infringed upon or its trade secrets misappropriated. The Company may not have
adequate remedies available for any such infringement or other unauthorized use.
In addition, the Company may itself become subject to claims against it which
require payment of damages or limitation of the Company’s ability to use certain
intellectual property or other proprietary rights found to be in violation of a
third party’s rights. Regardless of outcome, any litigation, whether commenced
by the Company or third parties, could be protracted and costly and would result
in increased expenses.


12




The
Company has commitments to JHU/APL regarding its License Agreement and research
obligations that could put its License Agreement in jeopardy.




The
Company needs to be able to continue to maintain a strong relationship with
JHU/APL in order to maintain its license as it has done in the past as reflected
in various amendments.  In addition, since the Company no longer has
an independent laboratory it will rely of JHU/APL for the bulk of its ongoing
research and development.




The
Company does not intend to pay dividends to its stockholders, so investors will
not receive any return on investment in the Company prior to selling their
interest in it.




The
Company does not project paying dividends but anticipates that it will retain
any future earnings for funding of growth and development of technology.
Therefore, investors should not expect the Company to pay dividends in the
foreseeable future. As a result, investors will not receive any return on their
investment prior to selling their shares in the Company, if and when a market
for such shares develops.




The
Company’s common stock is currently considered a “penny stock” which places it
under additional regulations with respect to its purchase and sale through
registered broker-dealers.




Penny
stocks generally are equity securities with a price of less than $5.00 per share
other than securities registered on national securities exchanges or listed on
the NASDAQ Stock Market, provided that current price and volume information with
respect to transactions in such securities are provided by the exchange or
system. The penny stock rules impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000, or $300,000 together with their
spouse). For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the SEC relating to the penny stock market.
The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Because of these penny stock
rules, broker-dealers may be restricted in their ability to sell the Company’s
common stock. The foregoing required penny stock restrictions will not apply to
the Company’s common stock if such stock reaches and maintains a market price of
$5.00 or greater. At present, however, the Company’s common stock is subject to
these penny stock regulations.


13




SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS




Statements
herein regarding the time period during which the proceeds from the Offering
will fund the Company’s operations constitute forward-looking statements under
the federal securities laws. Such statements are subject to certain risks and
uncertainties that could cause the rate at which the Company incurs expenses and
acquires or develops centers to differ materially from those projected. The
Company’s ability to proceed with its continued development is subject to
certain risks, as discussed under the caption “RISK FACTORS” contained herein,
and the Company’s ability to estimate the time period for which the proceeds of
the Offering will fund the Company’s operations is subject to substantial
uncertainty due to the factors outline under the caption “USE OF PROCEEDS”
contained herein. Undue reliance should not be placed on the dates and time
periods referenced herein. These estimates are based on the current expectations
of the Company’s management team, which may change in the future due to a large
number of unanticipated future developments.




ITEM
1 B. Unresolved
Staff Comments




The
Company received a comment letter dated December 1, 2008 from the Securities and
Exchange Commission related to the 8-K filed on November 26, 2008 which is
incorporated herein by reference with regard to Non-Reliance on Previously
Issued Financial Statements.  The Company responded on February 10,
2009.  On February 24, 2009 the Company received a second comment
letter regarding the matter asking for additional clarification on some of the
items in the Company’s response.  The Company addressed these
additional comments by sending a second response on May 11, 2009.  The
non-reliance on its FINANCIAL STATEMENTS was based an error in the recognition
of a license fee payable and license fee asset which also resulted in the
improper amortization of this asset and an accounting error related to the
issuance of common stock for services.  The errors related to license
fee payable and license fee asset occurred because the Company chose to
recognize the amounts related to an Amendment to its License Agreement with
JHU/APL as a commitment contained in its NOTES TO THE FINANCIAL STATEMENTS
rather than realizing the applicable amounts within its FINANCIAL STATEMENTS in
its 2007 10-KSB.  These errors caused the Company’s 10-KSB for the
period ending December 31, 2007 filed on March 31, 2008, the 10-Q for the period
ended March 31, 2008 filed on May 15, 2008, and the Company’s 10-Q for the
period ended June 30, 2008 filed on August 14, 2008 to be
restated.  These restated financials and notes to the financial
statements will be filed as part of amended 10–Qs for the corresponding
periods.  In addition, the result of the adjustment in amortization of
the license fees related to this error caused the Company to restate its
financials for the period ending September 30, 2008 which were filed on November
19, 2008.  These restated financials and notes to the financial
statements will be filed as part of an amended 10–Q for the period ending
September 30, 2008.




Since the
Company is filing this 10-K for the period ending December 31, 2008 late and
will need to amend the 10-Q filings for the periods ending March 31, 2008, June
30, 2008 and September 30, 2008 the commission may have additional
comments.


14




ITEM
2. Properties




The
Company has no properties and is negotiating with Research Park Associates in
Salt Lake City, UT to exit its existing lease agreement for Laboratory space
without a substantial financial burden.  Since the Company has
research obligations as part of its License Agreement with JHU/APL it has
decided to forgo the expense of the Lab at Research Park and plans to
concentrate its future research and development at the JHU/APL
facilities.




ITEM
3. Legal
Proceedings




There are
no legal proceedings pending against the Company, and, to the knowledge of
management, there was one material legal proceeding threatened by the Company’s
former President, CEO and CFO, Michael T. Pieniazek.  Details of the
threatened litigation are contained herein under Item 1A and in the Company’s
2007 FORM 10-KSB and FORM SB-2 Effective October 3, 2007 which are
incorporated into this document by reference and both of which can be found at
www.sec.gov.




ITEM
4. Submission
of Matters to a Vote of security Holders




The
Company’s 2007 annual meeting of shareholders was held on January 31, 2008,
within one month of Company’s fiscal year end.  At the meeting, the
majority of our shareholders re-elected four directors, including Dale Carlton,
Edward Hunton, Duane Simon and Glen Southard.  One new director, Gary
MacDonald was elected to replace Mark Quinn who did not seek another
term.  All five directors to serve until the next annual meeting of
shareholders or until their termination, resignation or their respective
successors are duly elected and qualified.




PART
II





ITEM
5. Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities





Market
Value





The
Company’s Common Stock is traded on the OTC Bulletin Board (OTC:BB) under the
trading symbol "MSOL".  The following table sets forth, the opening,
high, low and closing prices of its Common Stock on or about the ending period
of each of the four quarters of 2008.  The prices quoted may or may
not reflect actual trades on that day but are based on inter-dealer prices
without retail mark-up, markdown or commission and may not represent actual
transactions.




2008
                  
                  Open
                  
                  
                  High
                  
                  
                  Low
                  
                  
                  CloseFirst
      Quarter
                  
                  
                  .72
                  
                  
                  
                  .80
                  
                  
                  
                  .72
                  
                  
                  
                  .80Second
      Quarter
                  
                  
                  .60
                  
                  
                  
                  .50
                  
                  
                  
                  .60
                  
                  
                  
                  .55Third
      Quarter
                  
                  
                  .45
                  
                  
                  
                  .45
                  
                  
                  
                  .40
                  
                  
                  
                  .40Fourth
      Quarter
                  
                  
                  .10
                  
                  
                  
                  .10
                  
                  
                  
                  .10
                  
                  
                  
                  .10


15





Description of
Securities




The
Company currently has authorized 50,000,000 common shares $0.001 par
value.  The Company’s outstanding common shares consisted of 8,149,436
issued and outstanding shares as of December 31, 2008 and the Company had
approximately 142 shareholders of record.




Dividends




The
Company has never paid or declared any cash dividends.  Future payment of
dividends, if any, will be at the discretion of our board of directors and will
depend, among other criteria, upon our earnings, capital requirements, and
financial condition as well as other relative factors. Management intends to
retain any and all earnings to finance the development of our business, at least
in the foreseeable future.  Such a policy is likely to be maintained as
long as necessary to provide working capital for our operations.




Purchases of Equity
Securities by the Issuer and Affiliated Purchasers




The
Company made no purchases of equity securities during 2008.




Recent Sales of Unregistered
Securities




The
Company relied on Section 4(2) of the Securities Act of 1933 and or Rule 501 of
Regulation D as the basis for an exemption from registration for the following
issuances.




Common
Stock




During
the year ended December 30, 2008, the Company issued 950,834 shares of common
stock for services valued at $555,126, 165,000 “units” for services valued at
$178,748, 67,000 shares of common stock for the exercise of 67,000 warrants and
cash of $33,500, 264,644 “units” for the payment of debt valued at $132,322,
20,400 “units” for the purchase of an asset valued at $10,200, 308,400 “units”
for accrued payroll of $154,200, 100,000 “units” for a license agreement valued
at $50,000, 30,000 units for accounts payable valued at $15,000, 40,358 units
for accrued expenses of $13,065, 100,000 warrants issued for services valued at
$19,371, and 382,000 “units” for $191,000 in cash. Each unit consists of one
share of common stock and one common share purchase warrant, the warrants
entitle the holder to purchase, at a price of $0.50, one common share for a
period of three years.




The
Company issued a Promissory Note on November 8, 2008 in exchange for $25,000.00
in cash to an existing shareholder that included warrants exercisable at $.20
and convertible into shares of common stock.  The number of warrants
is based on the average bid price of the stock for the ten days preceding
November 8, 2008 and the conversion price is based a 20% discount to the average
bid price of the stock for the ten days preceding on the date, if any, that the
Note holder delivers a notice of conversion to the Company.  This note
was converted on March 12, 2009 into 674,530 common shares ($.001 par
value).


16




On
January 12, 2009, the Company issued 100,000 common shares to JHU/APL per
Amendment #5 of the License with regard to minimum royalty
payments.




On March
1, 2009 the Company issued a $10,000 Promissory Note with annual interest of 7%
and a conversion price of $.05 per share to an existing
shareholder.




On March
5, 2009 the Company issued a $40,000 Promissory Note with annual interest of 7%
and a conversion price of $.05 per share to a consultant




ITEM
6. Selected
Financial Data




Not
applicable due to status as a small reporting company.





ITEM
7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations





The
following discussion of our financial condition and results of operations should
be read together with our consolidated financial statements audited by
Williams & Webster, PS an independent registered public accounting firm and
related notes that are included elsewhere in this report.  This discussion
may contain forward-looking statements based upon current expectations that
involve risks and uncertainties.  Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of
various factors, including those set forth under the caption “Risk Factors” or
in other parts of this report.  See “Cautionary Note Regarding
Forward-Looking Statements.”




Critical
Accounting Policies




We
prepare our financial statements in conformity with accounting principles
generally accepted in the United States.  As such, we are required to make
certain estimates, judgments and assumptions that we believe are reasonable
based upon the information available.  These estimates and assumptions
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the periods presented.




Our
accounting policies that are the most important to the portrayal of our
financial condition and results, and which require the highest degree of
management judgment, relate to the continuous need of capital to fund research
and development, administrative expenses, and the maintaining good relationships
with our accounts payable as to avoid being sent to collections.




Executive
Overview




The
Company continues to need additional capital to fund its operating activities,
including the development of our MIP technology.  Since its inception, the
Company has issued a series of unregistered securities, all of which were deemed
to be exempt from securities registration as not involving a public offering.
Summaries of the Company’s private placements from inception through December
31, 2008 outlined in the Company’s 2007 FORM 10-KSB filed with the
Securities and Exchange Commission on March 31, 2008 and FORM SB-2 filed with
the Securities and Exchange Commission, effective October 3, 2007 and are
incorporated into this document by reference.


17




During
the year ended December 30, 2008, the Company issued 950,834 shares of common
stock for services valued at $555,126, 165,000 “units” for services valued at
$178,748, 67,000 shares of common stock for the exercise of 67,000 warrants and
cash of $33,500, 264,644 “units” for the payment of debt valued at $132,322,
20,400 “units” for the purchase of an asset valued at $10,200, 308,400 “units”
for accrued payroll of $154,200, 100,000 “units” for a license agreement valued
at $50,000, 30,000 units for accounts payable valued at $15,000, 40,358 units
for accrued expenses of $13,065, 100,000 warrants issued for services valued at
$19,371, and 382,000 “units” for $191,000 in cash. Each unit consists of one
share of common stock and one common share purchase warrant, the warrants
entitle the holder to purchase, at a price of $0.50, one common share for a
period of three years.




The
Company issued a Promissory Note on November 8, 2008 in exchange for $25,000.00
in cash to an existing shareholder that included warrants exercisable at $.20
and convertible into shares of common stock.  The number of warrants
is based on the average bid price of the stock for the ten days preceding
November 8, 2008 and the conversion price is based a 20% discount to the average
bid price of the stock for the ten days preceding on the date, if any, that the
Note holder delivers a notice of conversion to the Company.  This note
was converted on March 12, 2009 at a conversion price of $.0376 per
share.




Results
of Operations for the Years Ended December 31, 2008 and December 31,
2007




Net
Sales




The
Company is a Development Stage company, has no operations, and no
revenue.




Net Loss




The
Company had a net loss of$1,284,548for the year
ended December 31, 2008 compared to a net loss of $396,472 for the year ended
December 31, 2007. The increase was primarily due to an increase in consulting
expenses, a decrease in research and development expenses, an increase in
License fees and an increase in professional fees as described
below.




Operating
Expenses




The
Company incurred total operating expenses of $1,243,548 for the year ended
December 31, 2008 compared to total operating expenses of $384,665 for the year
ended December 31, 2007.




Research
and development expenses decreased primarily due to lack of funding for
additional research being performed under the open Task# DCQ01 with JHU/APL and
the lack of funds necessary to further research at the Laboratory leased at
Research Park on the University Utah campus.


18


Consulting
expenses increased $804,154 from $11,676 to $815,830primarily due
to consulting contracts entered into for which shares of common stock ($.001 par
value) and warrants were issued to retain and hire new consultants.




Professional
fees increased $70,511 from $36,663 to $107,144 primarily
as a result of the hiring of an addition attorney to work on employment
contracts and the setting up of the Company’s 2008 Stock Option
Plan.  In addition, payments were made on outstanding balances and
there was an increase in accounting and bookkeeping fees.




License
Fees increased primarily as a result of payments made per Amendment #3 with
JHU/APL.




The
Company’s general and administrative expenses increased $43,987 from $58,475 for
the year ended December 31, 2007 to $102,462 for the year ended December 31,
2008.  The increase resulted principally from the hiring of Rocky Arnold as
President and CEO, additional expenses associated with the Company’s second
Private Placement Offering.   In addition there we higher
expenses associated with the Officers cellular phone services and travel
expenses.




Interest
Expense




The
Company recorded an increase in interest expense of $28,598 from interest of
$11,807 in 2007 to $40,405 in 2008.  This interest was primarily due to
accrued interest on Promissory Notes which the Company issued to fund
operations.




Contractual
Obligations




The
following table summarizes the Company’s approximate contractual obligations as
of December 31, 2008:





Payments DueOne
                  Year
                
                
                Years
                  Two and
                  Three
                
                
                Years
                  Four and
                  Five
                  Years
                
                
                After
                  Five
                  Years
                
                
                TotalLong-term
      debt obligations
                
                $
                0
                
                
                $
                0
                
                
                $
                0
                
                
                $
                0
                
                
                $
                0Capital
      lease obligationsOperating
      lease obligations***
                
                $
                0
                
                
                $
                43,342
                
                
                $
                10,270
                
                
                $
                
                
                
                $
                0Purchase
      obligationsOther
      obligations**
                
                $
                323,338
                *
                
                $
                200,000
                
                
                $
                350,000
                
                
                $
                350,000
                
                
                $
                550,000Total
      contractual obligations
                
                $
                323,338
                
                
                $
                243,342
                
                
                $
                360,270
                
                
                $
                350,000
                
                
                $
                550,000


19


*   These
obligations are primarily amounts due on accounts, $100,000 in minimum royalty
payments due JHU/APL in 2009 and the Company’s 2009 research obligation to
JHU/APL.


** These
figures do not  include full royalty payments of 7% of  Net Sales
which are part of the License Agreement with JHU/APL as there is no way of
knowing the exact trigger dates of these events, however minimum royalty
payments are included.  Details of these commitments are located in
our Notes to Financial Statements incorporated in this filing.


*** The
Company is negotiating with RPA to release it from the bulk of this
obligation.





Off-Balance
Sheet Arrangements




The
Company has no off-balance sheet arrangements.




Liquidity
and Capital Resources




At
December 31, 2008, the Company had cash of $58, total current assets of $76,
total current liabilities of $272,434 and total stockholders' deficit of
$118,824 compared to current liabilities of $365,306 and total stockholders'
deficit of $204,634 for the period ending December 31, 2007.




The
Company experienced negative cash flow used in operations during the fiscal year
ended December 31, 2008 of $297,229 compared to negative cash flow used in
operations for the year ended December 31, 2007 of $159,565.  The
negative cash flow was offset by sales of units, comprised of one share of the
Company’s common stock and a warrant to purchase an additional share of our
common stock at $.50 per share, to investors pursuant to a private placement
offering, by the exercise of warrants related to the unit offering, and by
issuance of promissory notes.  The Company expects to continue to
experience negative operating cash flow as long as it continues its technology
development program.




The
Company’s audited financial statements for the year ended December 31, 2008
contain a “going concern” qualification.  As discussed in Note 2 of the
Notes to Financial Statements, the Company has incurred losses and has not
demonstrated the ability to generate cash flows from operations to satisfy its
liabilities and sustain operations.  Because of these conditions, our
independent auditors have raised substantial doubt about our ability to continue
as a going concern.




The
Company plans to raise additional working capital through private placement
offerings of equity and/or debt instruments to the public.




The
Company’s long-term liquidity is dependent upon execution of its business model
which includes the commercialization of its technology and the realization of
revenue associated with it, working capital, as described above, and upon
capital needed for continued development of the MIP technology.
Commercialization and future applications of the MIP technology are expected to
require additional capital estimated to be approximately $1.5 million annually
for the foreseeable future. This estimate will increase or decrease depending on
funds available to us.  The availability of funding will also determine, in
large measure, the timing and introduction of services, products, or new product
applications in the marketplace.  Capital required for additional
applications of the MIP technology is expected to come from internally generated
cash flow from operations once the Company is able to enter the business
associated with the processing of Float Concentrate or from external
financing.


20


To date,
the Company has met its working capital needs through funds received from sales
of our common stock and borrowings in the form of promissory notes described
above.  Until operations become profitable, the Company must continue to
sell equity or find another source of operating capital. There can be no
assurance that the Company will be able to obtain adequate working capital or
additional financing at all or on terms favorable to it.




Recent
Accounting Pronouncements




In
February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
Financial Instruments—an amendment of FASB Statements No. 133 and 140.”
 SFAS 155 amends SFAS 133, “Accounting for Derivative Instruments and
Hedging Activities,” and SFAS 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities.”  SFAS 155 permits
fair value remeasurement for any hybrid financial instrument that contains an
embedded derivative that otherwise would require bifurcation; clarifies which
interest-only strips and principal-only strips are not subject to the
requirements of SFAS 133; establishes a requirement to evaluate interests in
securitized financial assets to identify interests that are freestanding
derivatives or that are hybrid financial instruments that contain an embedded
derivative requiring bifurcation; clarifies that concentrations of credit risk
in the form of subordination are not embedded derivatives; and, amends SFAS 140
to eliminate the prohibition on a qualifying special-purpose entity from holding
a derivative financial instrument that pertains to a beneficial interest other
than another derivative financial instrument.  SFAS 155 is effective for
all financial instruments acquired or issued after December 31, 2006.  The
Company is still evaluating the impact of SFAS 155.




In June
2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48
“Accounting for Uncertainty in Income Taxes (an interpretation of FASB Statement
No. 109)” which is effective for fiscal years beginning after December 15, 2006
with earlier adoption encouraged. This interpretation was issued to clarify the
accounting for uncertainty in income taxes recognized in the financial
statements by prescribing a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. The Company is still evaluating the
potential impact of this interpretation.




In
September 2006, the FASB issued Statement of Financial Accounting Standard No.
157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 addresses how companies
should measure the fair value of assets and liabilities when fair value
recognition or disclosure is required. Additionally, SFAS 157 formally defines
fair value as the amount that the company would receive if it sold an asset or
transferred a liability to another company operating in the same market. The
guidance of SFAS 157 must be applied to the first reporting period beginning
after November 15, 2007. The adoption of SFAS 157 is not expected to have a
material impact on our financial position, results of operations or cash
flows.


21




In
September 2006, the SEC released Staff Accounting Bulletin, No.108 (“SAB 108”),
which provides guidance on the consideration of the effects of prior year
misstatements in quantifying current year misstatements for the purpose of a
materiality assessment. Early application of the guidance is encouraged in any
report for an interim period of the first fiscal year after November 15, 2006,
filed after the publication of SAB 108. SAB 108 is required for fiscal years
ending after November 15, 2006. The Company does not believe that the adoption
of SAB 108 will have a material impact on our financial position, results of
operations or cash flow.
  In
September 2006, the FASB issued Statement of Financial Accounting Standard No.
158, “Employers' Accounting for Defined Benefit Pension and Other Postretirement
Plans”, an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (“SFAS
158”). SFAS 158 requires, among other items, (1) that a company recognize the
funding status of its defined benefit pension plan as an asset or liability on
its balance sheet, (2) recognize in other comprehensive income gains and losses,
net of tax, and prior service costs or credits that are not recognized in the
current period, and (3) measure benefit plan assets and liabilities as of the
company's balance sheet date. The guidance of SFAS 158 must be applied to the
first reporting period ending after December 31, 2006. The Company is still
evaluating the provisions of SFAS 158.
  In
February 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities - Including an amendment of FASB Statement No.
115” (hereinafter “SFAS No. 159”). This statement permits entities to choose to
measure many financial instruments and certain other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings cause by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. This Statement is expected to expand the use of fair
value measurement, which is consistent with the Board’s long-term measurement
objectives for accounting for financial instruments. This statement is effective
as of the beginning of an entity’s first fiscal year that begins after November
15, 2007, although earlier adoption is permitted. Management has not determined
the effect that adopting this statement would have on the Company’s financial
condition for results of operations.
 In
December 2007, the FASB issued Statement of Financial Accounting Standards No.
160 ("SFAS 160"), Noncontrolling interests in Consolidated Financial Statements,
which establishes accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160
is effective for financial statements issued for fiscal years beginning on or
after December 15, 2008, and interim periods within those fiscal
years.  The Company expects SFAS 160 will have an impact on accounting
for noncontrolling interests once adopted but the effect is dependent upon any
future investments, acquisitions and/or the creation of a subsidiary with a
third party which would result in a noncontrolling interest of a
subsidiary.
 
 22
  In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations, or SFAS No. 141R. SFAS No. 141R will change the accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations the Company engages in will be recorded
and disclosed following existing GAAP until January 1, 2009. The Company expects
SFAS No. 141R will have an impact on accounting for business combinations once
adopted but the effect is dependent upon acquisitions at that time.
  In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No. 133”
(“SFAS 161”), which requires enhanced disclosures about an entity’s
derivative and hedging activities and thereby improves the transparency of
financial reporting.  SFAS 161 is effective for fiscal years beginning
after November 15, 2008.  We are currently evaluating the impact of
SFAS 161 on our consolidated financial statements.
  In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”(“SFAS 162”).
 SFAS 162 is intended to improve financial reporting by identifying a
consistent framework, or hierarchy, for selecting accounting principles to be
used in preparing financial statements in conformity with U.S. generally
accepted accounting principles (GAAP) for nongovernmental entities.  The
statement establishes that the GAAP hierarchy should be directed to entities
because it is the entity (not its auditor) that is responsible for selecting
accounting principles for financial statements that are presented in conformity
with GAAP.  This statement is effective 60 days following the SEC’s
approval of the Public Company Accounting Oversight Board Auditing amendments to
AU Section 411, The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting
Principles.  We do not believe implementation of SFAS 162 will have
a material impact on our consolidated financial statements.
 In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts - an interpretation of FASB Statement No. 60” (“SFAS 163”).
 SFAS 163 clarifies how Statement 60 applies to financial guarantee
insurance contracts, including the recognition and measurement of premium
revenue and claim liabilities.  This statement also requires expanded
disclosures about financial guarantee insurance contracts.  SFAS 163 is
effective for fiscal years beginning on or after December 15, 2008, and interim
periods within those fiscal years.  We do not expect that the adoption of
SFAS 163 will have a material impact on our consolidated financial
statements.
 23
 
 In
June 2008, the FASB issued FASB Staff Position Emerging Issues Task
Force (EITF) No. 03-6-1, “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities” (“FSP EITF No.
03-6-1”).  Under FSP EITF No. 03-6-1, unvested share-based payment awards
that contain rights to receive nonforfeitable dividends (whether paid or unpaid)
are participating securities, and should be included in the two-class method of
computing EPS.  FSP EITF No. 03-6-1 is effective for fiscal years beginning
after December 15, 2008, and interim periods within those years, and is not
expected to have a significant impact on our consolidated financial
statements.
 
 In
May 2008, the FASB issued FASB Staff Position APB 14-1, “Accounting for
Convertible Debt Instruments That May Be Settled in Cash Upon Conversion
(including Partial Cash Settlement” (“FSP APB 14-1”).  FSP APB 14-1
clarifies that convertible debt instruments that may be settled in cash upon
conversion are not addressed by APB Opinion No. 14 and specifies that issuers of
such instruments should separately for the liability and equity components in a
matter that will reflect the entity’s nonconvertible debt borrowing rate when
interest cost is recognized in subsequent periods.  FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008, and interim
periods within those years.  We are currently assessing the impact of the
adoption of FSP APB 14-1 on our consolidated financial statements.
 
 In
April 2008, the FASB issued FASB Staff Position No. 142-3,
“Determination of the Useful Life of Intangible Assets” (“FSP No. 142-3”)
to improve the consistency between the useful life of a recognized intangible
asset (under SFAS No. 142) and the period of expected cash flows used to
measure the fair value of the intangible asset (under SFAS No. 141(R)).
 FSP No. 142-3 amends the factors to be considered when developing
renewal or extension assumptions that are used to estimate an intangible asset’s
useful life under SFAS No. 142.  The guidance in the new staff
position is to be applied prospectively to intangible assets acquired after
December 31, 2008.  In addition, FSP No. 142-3 increases the
disclosure requirements related to renewal or extension assumptions.  We
are currently assessing the impact of the adoption of FSP No. 142-3 on our
consolidated financial statements.
 
 The
Company has reviewed all other recently issued, but not yet adopted, accounting
standards in order to determine their effects, if any, on our consolidated
financial statements.  Based on that review, we believe that none of these
pronouncements will have a significant effect on our current or future
consolidated financial statements.
 
 ITEM
7A.     Quantitative and Qualitative Disclosure about
Market Risk
 
 Not
applicable
  ITEM
8.        Financial Statements and
Supplementary Data
 
 The
Financial Statements and the report of Williams & Webster P.S. dated
May 14, 2009 are attached hereto and incorporated herein by
reference.
 
 24
 
 ITEM
9.        Changes In and Disagreements
with Accountants on Accounting and Financial Disclosure
 
 The
Company has had no disagreements with Williams & Webster P.S. as the
Company’s Independent Registered Public Accounting Firm on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.
  ITEM
9A      Controls and Procedures
  Not
Applicable
  ITEM
9A(T).   Controls and Procedures - Disclosure
  Evaluation of Disclosure
Controls and Procedures
  The
Company maintains disclosure controls and procedures as defined in Rule
13a-15(e) of the Securities Exchange Act of 1934, as amended.  Our
disclosure controls and procedures include controls and procedures designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act is accumulated and communicated within
management, including our President and Treasurer, as appropriate to allow
timely decisions regarding required disclosures.  However, management
has had to rely on outside counsel as to what needs to be
disclosed.
  As
required by Rule 13a-15(b) of the Exchange Act, during 2008 we conducted an
evaluation, under the supervision of our President, Treasurer and the Audit
Committee of the effectiveness of the design and operation of our disclosure
controls and procedures which addressed deficiencies of our disclosure controls
and procedures outlined in our 2007 FORM 10-KSB and followed through on
recommendations of the BOD and the Audit Committee following or 2007
review.
  As of
December 31, 2008 the new President and CEO re-evaluated disclosure controls and
procedures based upon the management additions and departures that occurred in
the second half of 2008 and based on this evaluation, our the officers and
directors remaining concluded that our disclosure controls and procedures were
not effective as of December 31, 2008 in alerting them in a timely manner to
material information required to be included in our reports filed under the
Exchange Act.
  As a
result the Company is revising its Internal Control Manual (“ICM”) in 2008
as soon as practicable with regard to the section on Disclosure Controls and
Procedures as well as other sections.  In addition, the Audit Committee
will be revised to reflect the current Board members of the
Company.  All other efforts will be made by the Company to Comply with
and maintain disclosure controls and procedures as defined in Rule 13a-15(e) of
the Securities Exchange Act of 1934, as amended.
 
 25
 
 Important
Considerations
  The
effectiveness of our disclosure controls and procedures and our internal control
over financial reporting is subject to various inherent limitations, including
the size of our Company, the limited number of employees/officers to provide
oversight, cost limitations, judgments used in decision making, assumptions
about the likelihood of future events, the soundness of our systems, the
possibility of human error, and the risk of fraud.  Moreover, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions and the
risk that the degree of compliance with policies or procedures may deteriorate
over time. Because of these limitations, there can be no assurance that any
system of disclosure controls and procedures or internal control over financial
reporting will be successful in preventing all errors or fraud or in making all
material information known in a timely manner to the appropriate levels of
management.
  Management’s Report on
Internal Control over Financial Reporting
  Management
is responsible for establishing and maintaining an adequate system of internal
control over financial reporting, pursuant to Rule 13a-15(c) of the
Securities Exchange Act. This system is intended to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with accounting
principles generally accepted in the United States (“GAAP”).
  A
company’s internal control over financial reporting includes policies and
procedures that: (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company, (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted
in the United States, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company, and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the
company’s assets that could have a material effect on the financial
statements.
  In
accordance with the internal control reporting requirements of the Securities
and Exchange Commission our management completed an assessment of the
effectiveness of our internal control over financial reporting as of
December 31, 2007. In making this assessment, management used the criteria
set forth in the Internal Control—Integrated Framework by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”). The COSO framework
summarizes each of the components of a company’s internal control system,
including the: (i) control environment, (ii) risk assessment,
(iii) information and communication, and (iv) monitoring
(collectively, the “entity-level controls”), as well as a company’s control
activities (“process-level controls”). Management’s evaluation of the design and
operating effectiveness of our internal controls over financial reporting
identified material weaknesses resulting from design and operating deficiencies
in the internal control system. A “material weakness” is defined as a
deficiency, or a combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material
misstatement of the registrant’s annual or interim financial statements will not
be prevented or detected on a timely basis.
 
 26
 
 Management
identified the following material weaknesses in our internal control over
financial reporting as of December 31, 2008:
  Entity-Level
Controls
  As of
December 31, 2008, management had sufficiently documented the Company’s
control environment using the COSO internal control framework but concluded that
such control activities were not appropriately designed and operating
effectively as of December 31, 2008. Management concluded that it did not
maintain a control environment that fully emphasized the establishment of,
adherence to, or adequate communication regarding appropriate internal control
for all aspects of its operations. Specifically, management concluded that the
Company did not have adequate controls with respect to: (i) oversight of
the management and financial reporting by an Audit Committee, (ii) effective and
continuous communication of the Company’s commitment to ethical business
practices and standards, (iii) identification, monitoring and disclosure of
related party relationships, and (iv) adequate segregation of duties and/or
supervisory controls in certain departments. Based on the deficiencies noted in
the design and operating effectiveness of the Company’s control environment,
management determined that the Company had an ineffective control environment.
Additionally, due to the deficiencies noted above management determined that the
monitoring function and dissemination of information and communication did not
operate effectively. These deficiencies constitute a material weakness in the
control environment, monitoring, and information and communication components of
COSO. Each of these deficiencies individually constitutes a material weakness.
These material weaknesses increase the likelihood of potential material errors
in our financial reporting.
 
 Financial
Closing and Reporting Process
 
 Management
concluded that it did not have adequate controls designed and implemented in the
financial close and reporting process to provide reasonable assurance that
material misstatements would be prevented or detected. Specifically, management
concluded that the Company did not have adequate controls in the following areas
for the purposes of identifying, recording and disclosing the Company’s
financial results of operations: (i) formalized accounting policies and
procedures that govern the summarization and resolution of significant
non-routine, unusual or complex accounting matters, (ii) formalized
accounting policies and procedures that govern the identification and disclosure
of related party transactions, (iii) adequate oversight and review of the
Company’s implementation of accounting principles in accordance with generally
accepted accounting principles, and (iv) adequate evaluation and review of
significant estimates and judgments made by management.
 
 During
the 2008 year-end management review and financial statement closing process, we
identified a number of adjustments not previously identified. Given the
adjustments identified, the significance of the financial closing and reporting
process to the preparation of reliable financial statements, and the potential
for errors to significant account balances to occur as of December 31,
2008; our management has concluded that there are a combination of
deficiencies  in our internal controls over financial reporting such
that there is a reasonable possibility that a material misstatement of our
annual or interim financial statements will not be prevented or detected on a
timely basis.
 
 27
  Segregation
of Duties
  Management
identified that based on the concentration of duties on one individual and that
this officer was responsible for the initiating and/or the recording of
transactions with no other officer being delegated oversight, a segregation of
duties weakness continues to exist. This lack of appropriate segregation of
duties increases the risk that material misstatements to the Company’s financial
statements may not be prevented or detected.
  Addressing
the Deficiencies
  The
Company is revising its Internal Control Manual (ICM) in 2008 as soon as
practicable with regard to the section on Disclosure Controls and Procedures as
well as other sections.  The Audit Committee will be revised to reflect the
current Board members of the Company and when new members or other key employees
are added (as finances allow) they will be considered for appointment as well as
to take over key responsibilities to allow for segregation of
duties.
 
 ITEM
9B.    OTHER INFORMATION
 
 None.
  PART
III
  ITEM10.      Directors,
Executive Officers and Corporate Governance
 
 Our
Bylaws permit the Corporation’s Board of Directors to consist of not less than
one (1) nor more than nine (9) directors, unless and until otherwise determined
by vote of a majority of the entire Board of Directors.  Directors are
elected by a plurality of the votes cast by the holders of Common Stock and
serve a one year terms or until their successors have been elected and qualified
or until their earlier resignation or removal.  Currently, there are
two (2) directors.  The Company considers directors “independent” if
they are not an officer, employee, or five (5%) percent shareholder of the
Company.
 
 The Board
of Directors has both Audit and Compensation Committees that were
established in 2008. No incumbent director attended fewer than 100% of the total
number of meetings held by all committees on which such director
served.  Our board currently appoints the members of the
committees.  Our Audit Committee plans to develop a written charter to
be approved by our board.  The board has already approved guidelines
for the Compensation Committee to follow with respect to corporate
officers.  Because of the changes to management and the board that
occurred in the fourth quarter of 2008 both committees are staffed with the
remaining two board members.
 
 The
following table sets forth the names, ages and positions of our executive
officers and directors as of December 31, 2008.
 
 28
 
 
 Name
                        
                        Age
                        
                        Position
                        
                        Date Directorship
                          CommencedJeffery
      Lamberson
                        
                        38
                        
                        Director,
      President
                        
                        December,
      2008Gary
      MacDonald
                        
                        54
                        
                        Director,
      CEO
                        
                        January,
      2008
  Business Experience of
Directors and Executive Officers
  Jeffery Lamberson served as
the President of the Company from January 2007 to August 31, 2008. He was
re-instated as President and became a director in December 2008 after two
officers and four directors left the Company in the fourth quarter of
2008.  Prior to 1998, Mr. Lamberson worked in the investment banking
business and in 1998 he co-founded American Financial Communications providing
investor relation services to public and private companies. In January, 2001, he
founded JML Consulting, Spokane, Washington, to continue his consulting career
as a sole proprietor. Mr. Lamberson continues to do occasional consulting work
through JML Consulting.
  Gary MacDonaldwas elected to the board
on January 31, 2008. Mr. MacDonald currently resides on the board of several
Canadian based public and private Junior Exploration and Mining Companies with
extensive domestic and international projects. Being of fifth generation mining
decent he possesses an inherent knowledge and know-how of current and historical
mining practices. Mr. MacDonald has also worked with several Financial and
Venture Capital organizations over the past 20 years including being a partner
in Obelisk International Ltd. operating in Canada, US, Europe, and Asia which
conducts Investment Management business including Banking, Merger and
Acquisition activities, Institutional Financings, and the implementation of
Corporate/Capital Structuring strategies of which some are Tax
Efficiency.  Mr. MacDonald added the position of CEO in December
2008.
 
 Shareholder
Communications
  Company
shareholders who wish to communicate with the Board of Directors or an
individual director may write to MIPSolutions, Inc., 2130 East Bidwell Street,
Folsom, CA 95630, phone (509) 612-2300 or to the attention of an individual
director.  Your letter should indicate that you are a shareholder and
whether you own your shares in street name.  Letters received will be
retained until the next Board meeting when they will be available to the
addressed director.  Such communications may receive an initial
evaluation to determine, based on the substance and nature of the communication,
a suitable process for internal distribution, review and response or other
appropriate treatment.  There is no assurance that all communications
will receive a response.
 
 29
 
 Reports to
Shareholders
 
 We intend
to voluntarily send annual reports to our shareholders, which will include
audited financial statements.  We are a reporting company, and file
reports with the Securities and Exchange Commission (SEC), including this Form
10-K as well as quarterly reports under Form 10-Q.  The public may
read and copy any materials filed with the SEC at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549.  Information
on the operation of the Public Reference Room may be obtained by calling the SEC
at 1-800-SEC-0330.  The company files its reports electronically and
the SEC maintains an Internet site that contains reports, proxy and information
statements and other information filed by the company with the SEC
electronically.  The address of that site is
http://www.sec.gov.
  Conflict of Interest
Policy
  Our ICM
was put in place to guard against any potential conflicts of
interest.  As the Company grows it will be the job of the audit
committee to decide if additional controls need to be put in place.
 
 Code of
Ethics
  Our ICM
was put in place to ensure a high degree of ethical standards.  As the
Company grows it will be the job of the audit committee to decide if a separate
“Code of Conduct” need to be put in established.
  Certain Provisions of the
Company’s Articles of Incorporation and Nevada Law Relating to Indemnification
of Directors and Officers
 
 Nevada
Law provides that each existing or former director and officer of a corporation
may be indemnified in certain instances against certain liabilities which he or
she may incur, inclusive of fees, costs and other expenses incurred in
connection with such defense, by virtue of his or her relationship with the
corporation or with another entity to the extent that such latter relationship
shall have been undertaken at the request of the corporation; and may have
advanced such expenses incurred in defending against such liabilities upon
undertaking to repay the same in the event an ultimate determination is made
denying entitlement to indemnification. The Company's bylaws incorporate the
statutory form of indemnification by specific reference.
 
 Insofar
as indemnification for liabilities may be invoked to disclaim liability for
damages arising under the Securities Act of 1933, as amended, or the Securities
Act of 1934 (collectively, the "Acts"), as amended, it is the position of the
Securities and Exchange Commission that such indemnification is against public
policy as expressed in the Acts and are therefore, unenforceable.
 
 Section 16(a) Beneficial
Ownership Reporting Compliance
 The
following purchases and sales of securities for officers, directors, and 10%
shareholders were filed in 2008 on Form 4 and Form 3 of the
Securities
 Exchange
Act of 1934:
 
 30
 
 Date
                        
                        Insider
                        
                        Shares
                        
                        Type
                        
                        Transaction
                        
                        Value22-Dec-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Beneficial
      Owner (10% or more)
                        
                        
                        10,000
                        
                        Direct
                        
                        Sale
      at $0.10 per share.
                        
                        $
                        1,00019-Dec-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Beneficial
      Owner (10% or more)
                        
                        
                        10,000
                        
                        Direct
                        
                        Sale
      at $0.08 - $0.09 per share.
                        
                        $
                        84915-Dec-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Beneficial
      Owner (10% or more)
                        
                        
                        6,961
                        
                        Direct
                        
                        Sale
      at $0.09 per share.
                        
                        $
                        6261-Dec-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Beneficial
      Owner (10% or more)
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.15 per share.
                        
                        $
                        7506-Nov-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Beneficial
      Owner (10% or more)
                        
                        
                        10,000
                        
                        Direct
                        
                        Sale
      at $0.32per share.
                        
                        $
                        32006-Nov-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Beneficial
      Owner (10% or more)
                        
                        
                        10,000
                        
                        Direct
                        
                        Sale
      at $0.32 per share.
                        
                        $
                        32005-Nov-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Beneficial
      Owner (10% or more)
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.32 per share.
                        
                        $
                        16004-Nov-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Beneficial
      Owner (10% or more)
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.30per share.
                        
                        $
                        150031-Oct-08
                        
                        LAMBERSON
      JEFFERY M
                          Other
                        
                        
                        200,000
                        
                        Direct
                        
                        Disposition
      (Non Open Market) at $0 per share.
                        
                        
                        N/A6-Oct-08
                        
                        LAMBERSON
      JEFFERY M
                          Other
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.35 per share.
                        
                        $
                        1,7506-Oct-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,078
                        
                        Direct
                        
                        *Sale
      at $0.34 per share.
                        
                        $
                        1,7261-Oct-08
                        
                        ARNOLD
      ROCKY R.
                          Officer
                        
                        
                        12,500
                        
                        Direct
                        
                        Purchase
      at $0.40 per share.
                        
                        $
                        5,00016-Sep-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.46 per share.
                        
                        $
                        2,3004-Sep-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.44 per share.
                        
                        $
                        2,200
 
 31
 
 2-Sep-08
                        
                        ARNOLD
      ROCKY R.
                          Officer
                        
                        
                        138,334
                        
                        Direct
                        
                        Statement
      of Ownership
                        
                        
                        N/A29-Aug-08
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        5,500
                        
                        Direct
                        
                        Sale
      at $0.50 per share.
                        
                        $
                        2,75022-Aug-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.42 per share.
                        
                        $
                        2,1001-Aug-08
                        
                        ARNOLD
      ROCKY R.
                          Officer
                        
                        
                        10,000
                        
                        Direct
                        
                        Purchase
      at $0.50 per share.
                        
                        $
                        5,00029-Jul-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.46 per share.
                        
                        $
                        2,30029-Jul-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.46 per share.
                        
                        $
                        2,30021-Jul-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        10,000
                        
                        Direct
                        
                        Sale
      at $0.43 per share.
                        
                        $
                        4,3002-Jul-08
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.52 per share.
                        
                        $
                        2,6001-Jul-08
                        
                        ARNOLD
      ROCKY R.
                          Officer
                        
                        
                        10,000
                        
                        Direct
                        
                        Purchase
      at $0.50 per share.
                        
                        $
                        5,00019-Jun-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.62 per share.
                        
                        $
                        3,10016-Jun-08
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        92,200
                        
                        Direct
                        
                        Purchase
      at $0.50 per share.
                        
                        $
                        46,10013-Jun-08
                        
                        SOUTHARD
      GLEN E
                          Officer
                        
                        
                        92,200
                        
                        Direct
                        
                        Purchase
      at $0.50 per share.
                        
                        $
                        46,10013-Jun-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        124,000
                        
                        Direct
                        
                        Purchase
      at $0.50 per share.
                        
                        $
                        62,00012-Jun-08
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.61 per share.
                        
                        $
                        3,0505-Jun-08
                        
                        ARNOLD
      ROCKY R.
                          Officer
                        
                        
                        8,334
                        
                        Direct
                        
                        Purchase
      at $0.60 per share.
                        
                        $
                        5,000
 
 32
 
 3-Jun-08
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.62 per share.
                        
                        $
                        3,1002-Jun-08
                        
                        SOUTHARD
      GLEN E
                          Officer
                        
                        
                        7,500
                        
                        Direct
                        
                        Sale
      at $0.59 per share.
                        
                        $
                        4,4253-May-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.54 per share.
                        
                        $
                        2,7001-May-08
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.75 per share.
                        
                        $
                        3,7501-May-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.82 per share.
                        
                        $
                        4,10030-Apr-08
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        2,500
                        
                        Direct
                        
                        Sale
      at $0.75 per share.
                        
                        $
                        1,87530-Apr-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        3,500
                        
                        Direct
                        
                        Sale
      at $0.75 per share.
                        
                        $
                        2,62510-Apr-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        2,500
                        
                        Direct
                        
                        Sale
      at $0.72 per share.
                        
                        $
                        1,8002-Apr-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.60 per share.
                        
                        $
                        3,0002-Apr-08
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        2,500
                        
                        Direct
                        
                        Sale
      at $0.62 per share.
                        
                        $
                        1,5501-Apr-08
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        7,500
                        
                        Direct
                        
                        Sale
      at $0.55 per share.
                        
                        $
                        4,12512-Mar-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        2,500
                        
                        Direct
                        
                        Sale
      at $0.54 per share.
                        
                        $
                        1,35010-Mar-08
                        
                        HUNTON
      EDWARD ANTHONY
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.41 per share.
                        
                        $
                        2,0504-Mar-08
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.71 per share.
                        
                        $
                        3,5505-Aug-07
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        5,000
                        
                        Direct
                        
                        Sale
      at $0.47 per share.
                        
                        $
                        2,35029-Jul-07
                        
                        LAMBERSON
      JEFFERY M
                          Officer
                        
                        
                        10,000
                        
                        Direct
                        
                        Sale
      at $0.49 per share.
                        
                        $
                        4,900
 
 33
 
 Items
in italics in the table above represent late filings per the SEC’s new
electronic filing requirement.
 NOTE:  Jeffery
M. Lamberson sold an additional 25,000 shares during the period between his
resignation on August 31, 2008 and his reinstatement as President on December
18, 2008.
  Board
and Committee Matters
  Audit Committee
Report
 
 The Audit
Committee reviews the financial information that will be provided to the
shareholders and others, the systems of internal controls established by
management and the Board and the independence and performance of the Company’s
audit process.  With the changes in both the management and the board
of directors that occurred in fourth quarter of 2008, management acting as the
audit committee has:
 
 1.
              Reviewed
      and discussed with management the audited financial statements included in
      the Company’s Annual Report and Form
10-K;
 2.
              Discussed
      with Williams & Webster, P.S. the Company’s independent auditors, the
      matters required to be discussed by statement of Auditing Standards No.
      61, as amended, as adopted by the Public Company Accounting Oversight
      Board;
 3.
                Received
      the written disclosures and letter from Williams & Webster, P.S.
      asrequired
      by Independence Standards Board Standard No. 1;
  and
 4.
              Discussed
      with Williams & Webster, P.S. its
  independence.
 
 Based on
these reviews and discussions, the Audit Committee has recommended that the
audited financial statements be included in the Company’s annual report on Form
10-K for the year ended December 31, 2008.  The Audit Committee has
also considered whether the amount and nature of non-audit services provided by
Williams & Webster, P.S. is compatible with the auditor’s
independence.
 
 CompensationCommittee
Report
 
 The
Compensation Committee met twice in 2008.  In August 2008 it approved
an Employment Agreement for Rocky Arnold and in November of 2008 did not approve
Employment Agreements for Glen Southard and Edward Hunton recommended by Rocky
Arnold after he accepted the position of President and CEO.  The
failure of the Compensation Committee to approve Mr. Hunton’s Employment
Agreement led to his resignation in November 2008 which was reported on Form 8-K
filed on November 10, 2008 and is incorporated herein by reference.
 
 34
 
 Board Meetingsand Relative
Matters
  During
2008, the board of directors held sixteen board meetings.  Two of the
five serving directors through November 5, 2008 attended 100% of the board
meetings.  100% of the directors attended the final meeting of the
year.  The board of directors is accountable to our shareholders to build
long-term financial performance and value.  The board of directors’
responsibilities include overseeing the business and affairs of our company,
hiring and evaluating our president who acts as our chief executive officer;
providing guidance, counsel and direction to management in formulating and
evaluating operational strategies; monitoring our company’s performance and
capital requirements; and ensuring adherence to ethical practices and compliance
with federal and state laws, including providing full and fair disclosure to
shareholders pursuant to SEC regulations.  We encourage, but do not
require, directors and director nominees to attend shareholder meetings.
 All of our board members attended our annual meeting of shareholders which
is typically held in January, 2008 but due to changes in management it will be
held following the filing of this Form 10-K.
  During
board meetings held in December 2008 it became apparent that differences of
opinion existed between the Company’s directors and its remaining
officer.  The remaining officer who was a director and two other
directors resigned and Jeff Lamberson was elected to the office of President and
the board and to join the last remaining director Gary MacDonald who became the
Company’s CEO.  These changes to the Company’s management and Board of
Directors were reported on Form 8-K filed on December 22, 2008 and is
incorporated herein by reference.
  None our
current directors are “independent” under the definition of independence in Rule
4200(a)(15) of the FINRA listing standards and the Company will be looking to
add independent directors in the near future.
  When
formulating its recommendations for director nominees, the board of directors
will consider advice and recommendations offered by our executive officers,
shareholders and outside advisors.  All candidates for membership on the
board are evaluated on the basis of business experience, financial acumen,
professional accomplishments and contacts, educational background, ability to
make independent analytical inquiries, understanding of our business environment
and willingness to devote adequate time to board duties.
  We do not
have a formal policy concerning shareholder recommendations of candidates for
board of director membership.  Our board views that such a formal policy is
not necessary at the present time given the board’s willingness to consider
candidates recommended by shareholders.  Shareholders may recommend
candidates by writing to our Secretary at our principal offices: 2130 East
Bidwell Street, Folsom, CA 95630, or phone (509) 612-2300, giving the
candidate’s name, contact information, biographical data and qualifications.
 A written statement from the candidate consenting to be named as a
candidate and, if nominated and elected, to serve as a director should accompany
any such recommendation. Shareholders who wish to nominate a director for
election are generally advised to submit a shareholder proposal no later than
April 30, 2009 for the next annual meeting of shareholders which should take
place in May of 2009.
 
 35
 
 ITEM
11.     EXECUTIVE COMPENSATION
  Officer
and Director Compensation for 2007 and 2008
 
 Officers
and Directors Compensation for 2007
 
 OfficersName
                                    
                                    Position
                                    
                                    Outside
      Director's
                                      Fee
                                    
                                    Inside
                                      Director's
      Fee
                                    
                                    
                                    Salary/FeeDale
      Carlton
                                    
                                    Outside
      Director
                                    
                                    50,000
      Common Shares (2)Edward
      Hunton
                                    
                                    Corp.
      Sec., Treas. & Director
                                    
                                    
                                    
                                    $
                                    0.00
                                    
                                    
                                    $
                                    60,000.00
                                    (1)
      (3)Jeffrey
      Lamberson
                                    
                                    President
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    $
                                    60,000.00
                                    (1)
      (4)Duane
      Simon
                                    
                                    Outside
      Director
                                    
                                    50,000
      Common Shares (2)Glen
      Southard
                                    
                                    Vice
      President & Director
                                    
                                    
                                    
                                    $
                                    0.00
                                    
                                    
                                    $
                                    60,000.00
                                    (1)
      (5)Mark
      Quinn
                                    
                                    Outside
      Director
                                    
                                    50,000
      Common Shares (2)
 
 NOTES
TO COMPENSATION:
 
 (1) 
As the Company is still a Development Stage company it has been paying its
officers a salary in the form of a fee of $5,000 per
month.  Management determines how and when these amounts are paid
based on resources available, otherwise they accrue.
 
 (2) 
Although the Company has no formal policy it has consistently authorized 50,000
shares of common stock, $.001 par value, to each Outside Director when they are
elected to the board.
 
 As of
December 31, 2007 Mr. Hunton had an accrual of $37,000.00 for unpaid
compensation due him for his role as an officer of the Company.
 
 (4) As
of December 31, 2007 Mr. Lamberson had an accrual of $26,000.00 for unpaid
compensation due him for his role as an officer of the Company.
 
 (5) 
As of December 31, 2007 Dr. Southard had an accrual of $42,000.000 for unpaid
compensation due him for his role as an officer of the Company.
 
 36
 
 Officers
and Directors Compensation for 2008
 
 OfficersName
                                
                                Position
                                
                                Outside
      Director's
                                  Fee
                                
                                
                                Inside
      Director's
                                  Fee
                                
                                
                                Salary/FeeDale
      Carlton (10)
                                
                                Outside
      Director
                                
                                $
                                0.00
                                
                                
                                $
                                0.00
                                
                                
                                $
                                0.00Edward
      Hunton
                                
                                Corp.
      Sec., Treas. &
                                  Director
                                
                                $
                                0.00
                                
                                
                                $
                                0.00
                                
                                
                                $
                                50,883.33
                                (1)
      (3) (6)Jeffrey
      Lamberson
                                
                                President
                                
                                $
                                0.00
                                
                                
                                $
                                0.00
                                
                                
                                $
                                40,000.00
                                (1)
      (4) (7) (8)Duane
      Simon (11)
                                
                                Outside
      Director
                                
                                $
                                0.00
                                
                                
                                $
                                0.00
                                
                                
                                $
                                0.00Glen
      Southard
                                
                                Vice
      President &
                                  Director
                                
                                $
                                0.00
                                
                                
                                $
                                0.00
                                
                                
                                $
                                57,741.94
                                (1)
      (5) (9)Garry
      MacDonald
                                
                                Outside
      Director
                                
                                50,000 Common
                                  Shares (2)
                                
                                
                                $
                                0.00
                                
                                
                                $
                                0.00Rocky
      Arnold (12) (13)
                                
                                President
      & CEO
                                  Director
 
 NOTES
TO COMPENSATION:
 
 (1) 
As the Company is still a Development Stage company it has been paying its
officers a salary in the form of a fee of $5,000 per
month.  Management determines how and when these amounts are paid
based on resources available, otherwise they accrue.
 (2) 
Although the Company has no formal policy it has consistently authorized 50,000
shares of common stock, $.001 par value, to each Outside Director when they are
elected to the board.
 (3) 
As of December 31, 2007 Mr. Hunton had an accrual of $13,676.03 for unpaid
compensation due him for his role as an officer of the Company
 (4) As
of December 31, 2007 Mr. Lamberson had an accrual of $1806.33 for unpaid
compensation due him for his role as an officer of the Company
 (5) 
As of December 31, 2007 Dr. Southard had an accrual of $44,641.94 for unpaid
compensation due him for his role as an officer of the Company
 (6)
Resigned on November 6, 2008 and entered into a Consulting Agreement with the
Company on April 20, 2009
 (7)
Resigned on August 31, 2008
 (8)
Reinstated as President on December 18, 2008 and elected to the
board
 (9)
Resigned on December 17, 2008
 (10)
Resigned on December 17, 2008
 (11)
Resigned on December 15, 2008
 (12)
Rocky Arnold was hired on September 1, 2008 November 21, 2008
 (13)
Rocky Arnold resigned on November 21, 2008
  Discussion,
Analysis and Overview of Compensation Program
  The
Company currently has no established compensation program as it is still a
development stage company in need of financing.  The three officers of
the Company each received a monthly payment of $5,000 when cash was available in
the form of a fee payable to them for their services.  When cash was
not available, the amount accrued on the books of the Company.  Since
the resignation of all three officers the board has not voted for any additional
payments to the current officers and directors that took over management of the
Company on December 18, 2008.  Rocky Arnold was hired as President and
CEO on September 1, 2008 and resigned on November 21, 2008.  Prior to
be hired he worked as a consultant for the Company.
 
 37
 
 Compensation Philosophy: Our
general compensation philosophy is designed to link an employee’s total cash
compensation with our performance, the employee’s department goals and
individual performance.  Given our stage of operations and limited capital
resources, we are subject to various financial restraints in our compensation
practices.  As an employee’s level of responsibility increases, there is a
more significant level of variability and compensation at risk. By linking
incentive compensation to the performance of the Company, we believe that it
will create an environment in which our employees are stakeholders in our
success and, thus, benefits all shareholders.  As the Company moves
from a development stage company to a revenue generating company we plan to
bring on employees and develop written employee compensation
guidelines.
  Executive Compensation
Philosophy:  Our executive compensation philosophy will be designed
to establish an appropriate relationship between executive pay and our annual
performance, our long-term growth objectives, individual performance of the
executive officer and our ability to attract and retain qualified executive
officers.  We will attempt to achieve these goals by integrating
competitive annual base salaries with (a) bonuses based on corporate performance
and on the achievement of specified performance objectives, and stock awards
through some form of long term incentive plan.  We believe that cash
compensation in the form of salary and bonus provides our executives with
short-term rewards for success in operations and stock awards will provide long
term incentives.
  In making
compensation decisions, the compensation committee, when re-established as we
add to the board, will compare each element of total compensation against
companies referred to as a “compensation peer group.”  The compensation
peer group will be a group of companies that the compensation committee will
select from readily available information about small companies engaged in
similar businesses and with similar resources.  As the Company moves from a
development stage company to a revenue generating company we plan to bring
develop written executive compensation guidelines.
  Employment
Contracts
  The
Company currently has no employment Contracts.  One contract was
entered into during 2008 with Rocky Arnold who resigned in November 2009 for
personal reasons.  This contract was attached as an Exhibit to Form
8-K filed on September 2, 2008 and is incorporated by reference
herein.
  Stock
Option Plan
  The
Company’s board of directors approved the adoption of the “2008 Stock Plan” on
September 9, 2008, pursuant to which the Company may grant stock options to
employees and consultants, including directors and officers, from time to time.
The Company intends to register the Plan on Form S-8 prior to the grant of any
stock options pursuant to the Plan. The Board of directors of the Company
reserved 2,500,000 shares of Company Common Stock for eventual issuance pursuant
to the exercise of stock options granted under the Plan.  As of
December 31, 2008 the 2008 Stock Option Plan had not been put to a vote of the
shareholders.  The “2008 Stock Plan” was filed through an S-8
Registration filed on October 24, 2008 and is incorporated by reference
herein.
 
 38
  DIRECTOR
COMPENSATION
  We
granted each new Director that came on the board 50,000 restricted shares of our
common stock, $.001 par value prior to the recent change in
management.  No other compensation has been considered to date but the
board plans to address the subject in 2009.
  Item
12.       Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters
 
 The
following table sets forth the beneficial ownership of our common stock at
December 31, 2007 by each director, executive officer, and each person known by
us to own beneficially more than 5% of our common stock.
  Beneficial Owner
                    
                    Beneficial
                      Ownership
                    
                    
                    Percent
                      of ClassJeffrey
      Lamberson
                    
                    
                    726,700
                    
                    
                    
                    9.0
                    %Edward
      A. Hunton (1) (2)
                    
                    
                    1,115,961
                    
                    
                    
                    14
                    %Glen
      Southard (1)
                    
                    
                    1,197,200
                    
                    
                    
                    15
                    %The
      Johns Hopkins Applied Physics Lab
                    
                    
                    550,000
                    
                    
                    
                    7
                    %Gary
      MacDonald*
                    
                    
                    50,000
                    
                    
                    
                    1
                    %
 
 *
Represents less than 1% of our common stock outstanding.
  (1)
Resigned from the Company in 2008
  (2)
Entered into a Consulting Agreement with the Company on April 20,
2009.
 
 Item
13.       Certain Relationships and Related
Transactions and Director Independence
 
 Except as
set forth herein, none of the Company’s directors or officers nor any person who
beneficially owns, directly or indirectly, shares carrying more than 10% of the
voting rights attached to its outstanding shares, nor any relative or spouse of
any of the foregoing persons has any material interest, direct or indirect, in
any transaction in any presently proposed transaction which has or will
materially affect the Company.
 
 39
 
 Item
14.       Principal Accountants Fees and
Services
  Compensation of
Auditors
  The
financial statements of the Company, which are furnished herein as of December
31, 2008, have been audited by Williams & Webster, P.S., Independent
Registered Public Accounting Firm.  Williams & Webster, P.S.
billed the Company an aggregate of $43,417 in fees and expenses for professional
services rendered in connection with the audit of the Company’s financial
statements for the fiscal year ended December 31, 2008 and the reviews of the
financial statements included in each of the Company’s Quarterly Reports on Form
10-QSB during the fiscal year ended December 31, 2008.  Williams &
Webster, P.S. billed the Company an aggregate of $15,224 in fees and expenses
for professional services rendered in connection with the audit of the Company’s
financial statements for the fiscal year ended December 31, 2007 and the reviews
of the financial statements included in each of the Company’s Quarterly Reports
on Form 10-QSB during the fiscal year ended December 31,
2007.  Williams & Webster, P.S. also billed audit related fees,
tax fees, or other fees during the years ended December 31, 2008 and 2007 equal
to $4500 and $2932 respectively.
  In
accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules
and regulations promulgated thereunder, the Audit Committee has adopted an
informal approval policy that it believes will result in an effective and
efficient procedure to pre-approve services performed by the independent
registered public accounting firm.  All fees related to the 2008 audit
were pre-approved.
  Fees for
professional services provided by our current independent auditors for each of
the last three fiscal years, in each of the following categories, are as
follows:
  2008
                      
                      
                      2007Audit
      fees
                      
                      
                      43,417
                      
                      
                      
                      15,224Audit
      related
                      
                      
                      2,752
                      
                      
                      
                      -Tax
                      
                      
                      1,169
                      
                      
                      
                      -All
      other
                      
                      
                      579
                      
                      
                      
                      2,93247,917
                      
                      
                      
                      18,156
  Audit
fees included fees associated with the annual audit and reviews of our annual
and quarterly reports, and registration statements under the Securities Act of
1933, filed with the SEC.
  Tax fees
included fees associated with tax compliance and tax consultations.
 
 40
 
 Part
IV
  Item
15.       Exhibits, Financial Statement
Schedules
 
 Report
      of Independent Registered Public Accounting Firm for the years ended
      December 31, 2008 and December 31, 2007
                    
                    F-1Balance
      Sheets as of December 31, 2008 and December 31, 2007
                    
                    F-2Statements
      of Operations for the years ended December 31, 2008 and December 31, 2007
      and from inception date of December 19, 2005
                    
                    F-3Statements
      of Stockholders’ Equity for the years ended December 31, 2008 and December
      31, 2007 and from inception date of December 19, 2005
                    
                    F-4Statements
      of Cash Flows for the years ended December 31, 2008 and December 31, 2007
      and from inception date of December 19, 2005
                    
                    F-7Notes
      to Financial Statements
                    
                    F-8Certification
      31.1
                    
                    C-1Certification
      32.1
                    
                    C-2
 
 SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
  MIPSolutions,
      Inc.Date:
      May 13, 2009
                /s/ Jeffrey LambersonBy:
       Jeffrey LambersonIts:
       President
  Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
  Date:
      May 13, 2009
                /s/ Jeffrey LambersonBy:
       Jeffrey LambersonIts:
      Director and President(Principal
      Executive Officer)Date:
      May 13, 2009
                /s/ Gary MacDonaldBy:
       Gary MacDonaldIts:
       Director and CEO
 
 41
 
 FINANCIAL
STATEMENTS
 
 REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
 
 We have
audited the accompanying balance sheets of MIPSolutions, Inc. as of December 31,
2008 and 2007, and the related statements of operations, stockholders’ deficit
and cash flows for the years then ended and for the period from December 19,
2005 (Inception) to December 31, 2008.  These financial statements are
the responsibility of the Company’s management.  Our responsibility is
to express an opinion on these financial statements based on our
audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of MIPSolutions, Inc. as of December
31, 2008 and 2007 and the results of its operations and its cash flows for the
years then ended and for the period from December 19, 2005 (Inception) to
December 31, 2008, in conformity with accounting principles generally accepted
in the United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2, the Company has
sustained substantial operating losses since inception and has limited cash
resources. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans regarding those matters also are
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty
 
 /s/Willams
& Webster, P.S.
 
 Williams
& Webster, P.S.
 Certified
Public Accountants
 Spokane,
Washington
 May 14,
2009
 
 F-1
 MIP
      SOLUTIONS, INC.
                                                    (A
      Development Stage Company)
                                                    BALANCE SHEETSDecember31,
                                                  
                                                  
                                                  December31,2008
                                                  
                                                  
                                                  2007(restated)ASSETSCURRENT
      ASSETSCash
                                                  
                                                  $
                                                  58
                                                  
                                                  
                                                  $
                                                  14,816Prepaid
      expenses
                                                  
                                                  
                                                  18
                                                  
                                                  
                                                  
                                                  2,795Total
      Current Assets
                                                  
                                                  
                                                  76
                                                  
                                                  
                                                  
                                                  17,611PROPERTY
      AND EQUIPMENT, NET OF DEPRECIATION
                                                  
                                                  
                                                  8,369
                                                  
                                                  
                                                  
                                                  11,321OTHER
      ASSETSLicense
                                                  
                                                  
                                                  145,550
                                                  
                                                  
                                                  
                                                  125,550Patent
                                                  
                                                  
                                                  29,674
                                                  
                                                  
                                                  
                                                  16,905Accumulated
      amortization
                                                  
                                                  
                                                  (30,059
                                                  )
                                                  
                                                  
                                                  (10,724
                                                  )Total
      Other Assets
                                                  
                                                  
                                                  145,165
                                                  
                                                  
                                                  
                                                  131,731TOTAL
      ASSETS
                                                  
                                                  $
                                                  153,610
                                                  
                                                  
                                                  $
                                                  160,663LIABILITIES
      AND STOCKHOLDERS' (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable
                                                  
                                                  $
                                                  76,793
                                                  
                                                  
                                                  $
                                                  51,650Accrued
      expense
                                                  
                                                  
                                                  45,000
                                                  
                                                  
                                                  
                                                  35,000Accrued
      interest
                                                  
                                                  
                                                  2,223
                                                  
                                                  
                                                  
                                                  9,691Accrued
      payroll
                                                  
                                                  
                                                  60,124
                                                  
                                                  
                                                  
                                                  105,000Note
      payable - net of discount
                                                  
                                                  
                                                  47,044
                                                  
                                                  
                                                  
                                                  67,060Note
      payable - related party
                                                  
                                                  
                                                  205
                                                  
                                                  
                                                  
                                                  16,905License
      fee payable
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  80,000Common
      stock to be issued
                                                  
                                                  
                                                  41,045
                                                  
                                                  
                                                  
                                                  -Total
      Current Liabilities
                                                  
                                                  
                                                  272,434
                                                  
                                                  
                                                  
                                                  365,306COMMITMENTS
      AND CONTINGENCIES
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -STOCKHOLDERS'
      (DEFICIT)Common
      stock, $0.001 par value; 50,000,000 sharesauthorized, 8,216,436
      and 5,887,800 shares issuedand outstanding,
      respectively
                                                  
                                                  
                                                  8,216
                                                  
                                                  
                                                  
                                                  5,888Additional
      paid-in capital
                                                  
                                                  
                                                  2,121,715
                                                  
                                                  
                                                  
                                                  753,640Deficit
      accumulated during the development stage
                                                  
                                                  
                                                  (2,248,755
                                                  )
                                                  
                                                  
                                                  (964,171
                                                  )Total
      Stockholders' Deficit
                                                  
                                                  
                                                  (118,824
                                                  )
                                                  
                                                  
                                                  (204,643
                                                  )TOTAL
      LIABILITIES AND STOCKHOLDERS' (DEFICIT)
                                                  
                                                  $
                                                  153,610
                                                  
                                                  
                                                  $
                                                  160,663
  The
accompanying notes are an integral part of these financial
statements.
  F-2
 
 MIP SOLUTIONS, INC.(A
      Development Stage Company)STATEMENTS OF OPERATIONSYear Ended
                                                  
                                                  
                                                  Year Ended
                                                  
                                                  
                                                  From December 19,December31,
                                                  
                                                  
                                                  December 31,
                                                  
                                                  
                                                  2005 (Inception) to2008
                                                  
                                                  
                                                  2007
                                                  
                                                  
                                                  December 31, 2008(restated)REVENUES
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -OPERATING
      EXPENSESConsulting
                                                  
                                                  
                                                  815,830
                                                  
                                                  
                                                  
                                                  11,676
                                                  
                                                  
                                                  
                                                  1,016,175Depreciation
      and amortization
                                                  
                                                  
                                                  22,068
                                                  
                                                  
                                                  
                                                  12,702
                                                  
                                                  
                                                  
                                                  35,339General
      and administrative
                                                  
                                                  
                                                  102,462
                                                  
                                                  
                                                  
                                                  58,475
                                                  
                                                  
                                                  
                                                  170,784Professional
      fees
                                                  
                                                  
                                                  107,144
                                                  
                                                  
                                                  
                                                  36,633
                                                  
                                                  
                                                  
                                                  331,154Research
      and development
                                                  
                                                  
                                                  15,059
                                                  
                                                  
                                                  
                                                  5,623
                                                  
                                                  
                                                  
                                                  169,970Officers
      and directors fees
                                                  
                                                  
                                                  163,575
                                                  
                                                  
                                                  
                                                  255,000
                                                  
                                                  
                                                  
                                                  418,575Option
      fee
                                                  
                                                  
                                                  2,500
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  5,000Travel
      and meals
                                                  
                                                  
                                                  14,910
                                                  
                                                  
                                                  
                                                  4,556
                                                  
                                                  
                                                  
                                                  41,686TOTAL
      OPERATING EXPENSES
                                                  
                                                  
                                                  1,243,548
                                                  
                                                  
                                                  
                                                  384,665
                                                  
                                                  
                                                  
                                                  2,188,683LOSS
      FROM OPERATIONS
                                                  
                                                  
                                                  (1,243,548
                                                  )
                                                  
                                                  
                                                  (384,665
                                                  )
                                                  
                                                  
                                                  (2,188,683
                                                  )OTHER
      INCOME (EXPENSE)Other
      income
                                                  
                                                  
                                                  100
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  100Interest
      expense
                                                  
                                                  
                                                  (40,405
                                                  )
                                                  
                                                  
                                                  (11,807
                                                  )
                                                  
                                                  
                                                  (52,553
                                                  )Loss
      on disposition of assets
                                                  
                                                  
                                                  (731
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (7,619
                                                  )TOTAL
      OTHER INCOME
                                                  
                                                  
                                                  (41,036
                                                  )
                                                  
                                                  
                                                  (11,807
                                                  )
                                                  
                                                  
                                                  (60,072
                                                  )LOSS
      BEFORE TAXES
                                                  
                                                  
                                                  (1,284,584
                                                  )
                                                  
                                                  
                                                  (396,472
                                                  )
                                                  
                                                  
                                                  (2,248,755
                                                  )INCOME
      TAX EXPENSE
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -NET LOSS
                                                  
                                                  $
                                                  (1,284,584
                                                  )
                                                  
                                                  $
                                                  (396,472
                                                  )
                                                  
                                                  $
                                                  (2,248,755
                                                  )NET
      LOSS PER COMMON SHARE,BASIC AND
      DILUTED
                                                  
                                                  $
                                                  (0.18
                                                  )
                                                  
                                                  $
                                                  (0.07
                                                  )WEIGHTED
      AVERAGE NUMBER OFCOMMON STOCK SHARES OUTSTANDING, BASIC AND
      DILUTED
                                                  
                                                  
                                                  7,275,087
                                                  
                                                  
                                                  
                                                  5,837,467
  The
accompanying notes are an integral part of these financial
statements.
 F-3
 MIP SOLUTIONS, INC.
 (A
Development Stage Company)
 STATEMENT
OF STOCKHOLDERS' DEFICIT
 
 
 Additional
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          TotalCommon
      Stock
                                          
                                          
                                          Paid-in
                                          
                                          
                                          Subscription
                                          
                                          
                                          Accumulated
                                          
                                          
                                          Stockholders'Date
                                          
                                          Shares
                                          
                                          
                                          Amount
                                          
                                          
                                          Capital
                                          
                                          
                                          Receivable
                                          
                                          
                                          Deficit
                                          
                                          
                                          DeficitBalance
      at December 19, 2005 (Inception)
                                          
                                          
                                          
                                          
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -Common
      stock issued as founder's shares at par  for
      patents,
                                          
                                          1/10/2006
                                          
                                          
                                          1,122,000
                                          
                                          
                                          
                                          1,122
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          1,122Common
      stock issued as founder's shares for subscription receivable at
      par
                                          
                                          1/10/2006
                                          
                                          
                                          3,468,000
                                          
                                          
                                          
                                          3,468
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (3,468
                                          )
                                          
                                          
                                          
                                          
                                          
                                          
                                          -Balance,
      December 31, 2005
                                          
                                          
                                          
                                          
                                          4,590,000
                                          
                                          
                                          
                                          4,590
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (3,468
                                          )
                                          
                                          
                                          
                                          
                                          
                                          
                                          1,122Common
      stock issued for license agreement fee at par.
                                          
                                          1/10/2006
                                          
                                          
                                          550,000
                                          
                                          
                                          
                                          550
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          550Common
      stock issued for additional founders at par.
                                          
                                          1/10/2006
                                          
                                          
                                          360,000
                                          
                                          
                                          
                                          360
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          360Common
      stock issued for services at $0.50 per share
                                          
                                          6/1/2006
                                          
                                          
                                          100,000
                                          
                                          
                                          
                                          100
                                          
                                          
                                          
                                          49,900
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          50,000Common
      stock issued for services at $0.50 per share
                                          
                                          11/14/2006
                                          
                                          
                                          100,000
                                          
                                          
                                          
                                          100
                                          
                                          
                                          
                                          49,900
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          50,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          2/14/2006
                                          
                                          
                                          60,000
                                          
                                          
                                          
                                          60
                                          
                                          
                                          
                                          29940
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          30,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          2/28/2006
                                          
                                          
                                          100,000
                                          
                                          
                                          
                                          100
                                          
                                          
                                          
                                          49,900
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          50,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          3/22/2006
                                          
                                          
                                          10,000
                                          
                                          
                                          
                                          10
                                          
                                          
                                          
                                          4,990
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          5,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          4/6/2006
                                          
                                          
                                          52,000
                                          
                                          
                                          
                                          52
                                          
                                          
                                          
                                          25,948
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          26,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          4/7/2008
                                          
                                          
                                          20,000
                                          
                                          
                                          
                                          20
                                          
                                          
                                          
                                          9,980
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          10,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          4/10/2006
                                          
                                          
                                          40,000
                                          
                                          
                                          
                                          40
                                          
                                          
                                          
                                          19,960
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          20,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          4/18/2006
                                          
                                          
                                          40,000
                                          
                                          
                                          
                                          40
                                          
                                          
                                          
                                          19,960
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          20,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          4/26/2006
                                          
                                          
                                          20,000
                                          
                                          
                                          
                                          20
                                          
                                          
                                          
                                          9,980
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          10,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          5/1/2006
                                          
                                          
                                          8,000
                                          
                                          
                                          
                                          8
                                          
                                          
                                          
                                          3,992
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          4,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          5/9/2006
                                          
                                          
                                          20,000
                                          
                                          
                                          
                                          20
                                          
                                          
                                          
                                          9,980
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          10,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          5/12/2006
                                          
                                          
                                          4,000
                                          
                                          
                                          
                                          4
                                          
                                          
                                          
                                          1,996
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          2,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          5/26/2006
                                          
                                          
                                          20,000
                                          
                                          
                                          
                                          20
                                          
                                          
                                          
                                          9,980
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          10,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          7/5/2006
                                          
                                          
                                          8,000
                                          
                                          
                                          
                                          8
                                          
                                          
                                          
                                          3,992
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          4,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          7/17/2006
                                          
                                          
                                          40,000
                                          
                                          
                                          
                                          40
                                          
                                          
                                          
                                          19,960
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          20,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          7/24/2006
                                          
                                          
                                          50,000
                                          
                                          
                                          
                                          50
                                          
                                          
                                          
                                          24,950
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          25,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          8/23/2006
                                          
                                          
                                          22,000
                                          
                                          
                                          
                                          22
                                          
                                          
                                          
                                          10,978
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          11,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          8/24/2006
                                          
                                          
                                          8,000
                                          
                                          
                                          
                                          8
                                          
                                          
                                          
                                          3,992
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          4,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          8/29/2006
                                          
                                          
                                          5,000
                                          
                                          
                                          
                                          5
                                          
                                          
                                          
                                          2,495
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          2,500Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          9/1/2006
                                          
                                          
                                          6,000
                                          
                                          
                                          
                                          6
                                          
                                          
                                          
                                          2,994
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          3,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          9/5/2006
                                          
                                          
                                          30,000
                                          
                                          
                                          
                                          30
                                          
                                          
                                          
                                          14,970
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          15,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          9/14/2006
                                          
                                          
                                          10,000
                                          
                                          
                                          
                                          10
                                          
                                          
                                          
                                          4,990
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          5,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          9/19/2006
                                          
                                          
                                          25,000
                                          
                                          
                                          
                                          25
                                          
                                          
                                          
                                          12,475
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          12,500Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          9/21/2006
                                          
                                          
                                          6,000
                                          
                                          
                                          
                                          6
                                          
                                          
                                          
                                          2,994
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          3,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          9/22/2006
                                          
                                          
                                          30,000
                                          
                                          
                                          
                                          30
                                          
                                          
                                          
                                          14,970
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          15,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          9/26/2006
                                          
                                          
                                          26,000
                                          
                                          
                                          
                                          26
                                          
                                          
                                          
                                          12,974
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          13,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          10/17/2006
                                          
                                          
                                          2,000
                                          
                                          
                                          
                                          2
                                          
                                          
                                          
                                          998
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          1,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          10/20/2006
                                          
                                          
                                          4,000
                                          
                                          
                                          
                                          4
                                          
                                          
                                          
                                          1,996
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          2,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          10/24/2006
                                          
                                          
                                          20,000
                                          
                                          
                                          
                                          20
                                          
                                          
                                          
                                          9,980
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          10,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          12/11/2006
                                          
                                          
                                          70,000
                                          
                                          
                                          
                                          70
                                          
                                          
                                          
                                          34,930
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          35,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          12/15/2006
                                          
                                          
                                          50,000
                                          
                                          
                                          
                                          50
                                          
                                          
                                          
                                          24,950
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          25,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          12/21/2006
                                          
                                          
                                          54,000
                                          
                                          
                                          
                                          54
                                          
                                          
                                          
                                          26,946
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          27,000Common
      stock and warrants issued for cash at $0.50 per share
                                          
                                          12/29/2006
                                          
                                          
                                          20,000
                                          
                                          
                                          
                                          20
                                          
                                          
                                          
                                          9,980
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          10,000Cancelled
      founder's shares
                                          
                                          
                                          
                                          
                                          (1,122,500
                                          )
                                          
                                          
                                          (1,122
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,122Subscriptions
      received
                                          
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          2,346
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          2,346Net
      loss for the year ended December 31, 2006
                                          
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (567,699
                                          )
                                          
                                          
                                          (567,699
                                          )Balance,
      December 31, 2006
                                          
                                          
                                          
                                          
                                          5,457,500
                                          
                                          
                                          $
                                          5,458
                                          
                                          
                                          $
                                          538,920
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          (567,699
                                          )
                                          
                                          $
                                          (23,321
                                          )
  The
accompanying notes are an integral part of these financial
statements.
  F-4
  Common
      stock and warrants issued for payables ar $0.50 per share
                                    
                                    2/18/2007
                                    
                                    
                                    5,000
                                    
                                    
                                    
                                    5
                                    
                                    
                                    
                                    2,495
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    2,500Common
      stock issued for services at $0.50 per share
                                    
                                    1/1/2007
                                    
                                    
                                    150,000
                                    
                                    
                                    
                                    150
                                    
                                    
                                    
                                    74,850
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    75,000Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    1/22/2007
                                    
                                    
                                    4,300
                                    
                                    
                                    
                                    4
                                    
                                    
                                    
                                    2,146
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    2,150Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    1/24/2007
                                    
                                    
                                    25,000
                                    
                                    
                                    
                                    25
                                    
                                    
                                    
                                    12,475
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    12,500Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    1/30/2007
                                    
                                    
                                    42,000
                                    
                                    
                                    
                                    42
                                    
                                    
                                    
                                    20,958
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    21,000Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    2/1/2007
                                    
                                    
                                    20,000
                                    
                                    
                                    
                                    20
                                    
                                    
                                    
                                    9,980
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    10,000Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    2/9/2007
                                    
                                    
                                    20,000
                                    
                                    
                                    
                                    20
                                    
                                    
                                    
                                    9,980
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    10,000Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    2/12/2007
                                    
                                    
                                    50,000
                                    
                                    
                                    
                                    50
                                    
                                    
                                    
                                    24,950
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    25,000Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    2/15/2007
                                    
                                    
                                    9,000
                                    
                                    
                                    
                                    9
                                    
                                    
                                    
                                    4,491
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    4,500Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    2/17/2007
                                    
                                    
                                    10,000
                                    
                                    
                                    
                                    10
                                    
                                    
                                    
                                    4,990
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    5,000Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    3/1/2007
                                    
                                    
                                    5,000
                                    
                                    
                                    
                                    5
                                    
                                    
                                    
                                    2,495
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    2,500Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    3/6/2007
                                    
                                    
                                    5,000
                                    
                                    
                                    
                                    5
                                    
                                    
                                    
                                    2,495
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    2,500Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    3/9/2007
                                    
                                    
                                    45,000
                                    
                                    
                                    
                                    45
                                    
                                    
                                    
                                    22,455
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    22,500Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    3/26/2007
                                    
                                    
                                    10,000
                                    
                                    
                                    
                                    10
                                    
                                    
                                    
                                    4,990
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    5,000Common
      stock issued for exercise of warrants ar $0.50 per share
                                    
                                    11/1/2007
                                    
                                    
                                    5,000
                                    
                                    
                                    
                                    5
                                    
                                    
                                    
                                    2,495
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    2,500Common
      stock issued for exercise of warrants
                                    
                                    11/30/2007
                                    
                                    
                                    25,000
                                    
                                    
                                    
                                    25
                                    
                                    
                                    
                                    12,475
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    12,500Net
      loss for the year ended December 31, 2007
                                    
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (396,472
                                    )
                                    
                                    
                                    (396,472
                                    )Balance,
      December 31, 2007 (restated)
                                    
                                    
                                    
                                    
                                    5,887,800
                                    
                                    
                                    $
                                    5,888
                                    
                                    
                                    $
                                    753,640
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    (964,171
                                    )
                                    
                                    $
                                    (204,643
                                    )Common
      stock issued for services at $0.50 per share
                                    
                                    1/29/2008
                                    
                                    
                                    200,000
                                    
                                    
                                    
                                    200
                                    
                                    
                                    
                                    99,800
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    100,000Common
      stock issued for services at $0.50 per share
                                    
                                    2/8/2008
                                    
                                    
                                    50,000
                                    
                                    
                                    
                                    50
                                    
                                    
                                    
                                    24,950
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    25,000Common
      stock issued for exercise of warrants ar $0.50 per share
                                    
                                    3/3/2008
                                    
                                    
                                    30,000
                                    
                                    
                                    
                                    30
                                    
                                    
                                    
                                    14,970
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    15,000Common
      stock issued for services at $0.60 per share
                                    
                                    3/14/2008
                                    
                                    
                                    125,000
                                    
                                    
                                    
                                    125
                                    
                                    
                                    
                                    74,875
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    75,000Common
      stock issued for services at $0.69 per share
                                    
                                    3/27/2008
                                    
                                    
                                    300,000
                                    
                                    
                                    
                                    300
                                    
                                    
                                    
                                    206,700
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    207,000Common
      stock issued for exercise of warrants ar $0.50 per share
                                    
                                    3/31/2008
                                    
                                    
                                    25,000
                                    
                                    
                                    
                                    25
                                    
                                    
                                    
                                    12,475
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    12,500Exercise
      of warrants at $0.50
                                    
                                    4/21/2008
                                    
                                    
                                    2,000
                                    
                                    
                                    
                                    2
                                    
                                    
                                    
                                    998
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    1,000Common
      stock and warrants issued for note  payable at $0.50 per
      share
                                    
                                    4/23/2008
                                    
                                    
                                    46,000
                                    
                                    
                                    
                                    46
                                    
                                    
                                    
                                    22,954
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    23,000Common
      stock and warrants issued for services at $0.50 per share
                                    
                                    4/25/2008
                                    
                                    
                                    5,000
                                    
                                    
                                    
                                    5
                                    
                                    
                                    
                                    2,495
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    2,500Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    5/2/2008
                                    
                                    
                                    40,000
                                    
                                    
                                    
                                    40
                                    
                                    
                                    
                                    19,960
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    20,000Common
      stock and warrants issued for services at $0.50 per share
                                    
                                    5/5/2008
                                    
                                    
                                    24,000
                                    
                                    
                                    
                                    24
                                    
                                    
                                    
                                    11,976
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    12,000Common
      stock and warrants issued for  note payable at $0.50 per
      share
                                    
                                    5/6/2008
                                    
                                    
                                    100,000
                                    
                                    
                                    
                                    100
                                    
                                    
                                    
                                    49,900
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    50,000Common
      stock and warrants issued for  note payable at $0.50 per
      share
                                    
                                    5/27/2008
                                    
                                    
                                    22,000
                                    
                                    
                                    
                                    22
                                    
                                    
                                    
                                    10,978
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    11,000Common
      stock and 200,000 detached warrants issued  for services at
      $0.61 per share
                                    
                                    6/4/2008
                                    
                                    
                                    75,000
                                    
                                    
                                    
                                    75
                                    
                                    
                                    
                                    133,673
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    133,748Common
      stock issued for servces at $0.61 per share
                                    
                                    6/4/2008
                                    
                                    
                                    100,000
                                    
                                    
                                    
                                    100
                                    
                                    
                                    
                                    60,900
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    61,000Common
      stock  issued for services at $0.60 per share
                                    
                                    6/5/2008
                                    
                                    
                                    8,334
                                    
                                    
                                    
                                    8
                                    
                                    
                                    
                                    4,992
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    5,000Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    6/6/2008
                                    
                                    
                                    20,000
                                    
                                    
                                    
                                    20
                                    
                                    
                                    
                                    9,980
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    10,000Common
      stock and warrants issued for assets at $0.50 per
      share
                                    
                                    6/11/2008
                                    
                                    
                                    20,400
                                    
                                    
                                    
                                    20
                                    
                                    
                                    
                                    10,180
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    10,200Common
      stock and warrants issued for accrued payroll at $0.50 per
      share
                                    
                                    6/13/2008
                                    
                                    
                                    308,400
                                    
                                    
                                    
                                    308
                                    
                                    
                                    
                                    153,892
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    154,200Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    6/19/2008
                                    
                                    
                                    10,000
                                    
                                    
                                    
                                    10
                                    
                                    
                                    
                                    4,990
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    5,000Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    6/23/2008
                                    
                                    
                                    50,000
                                    
                                    
                                    
                                    50
                                    
                                    
                                    
                                    24,950
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    25,000Common
      stock issued for services at $0.63 per share
                                    
                                    6/30/2008
                                    
                                    
                                    25,000
                                    
                                    
                                    
                                    25
                                    
                                    
                                    
                                    15,725
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    15,750Common
      stock and warrants  issued for cash  at $0.50 per
      share
                                    
                                    7/1/2008
                                    
                                    
                                    20,000
                                    
                                    
                                    
                                    20
                                    
                                    
                                    
                                    9,980
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    10,000Common
      stock and warrants issued for license fee at $0.50 per
    share
                                    
                                    7/1/2008
                                    
                                    
                                    100,000
                                    
                                    
                                    
                                    100
                                    
                                    
                                    
                                    49,900
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    50,000Common
      stock issued for services at $0.50 per share
                                    
                                    7/1/2008
                                    
                                    
                                    10,000
                                    
                                    
                                    
                                    10
                                    
                                    
                                    
                                    4,990
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    5,000Common
      stock and warrants issued for cash at $0.50 per share
                                    
                                    7/15/2008
                                    
                                    
                                    40,000
                                    
                                    
                                    
                                    40
                                    
                                    
                                    
                                    19,960
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    20,000Common
      stock and warrants issued for cash  at $0.50 per
      share
                                    
                                    7/16/2008
                                    
                                    
                                    10,000
                                    
                                    
                                    
                                    10
                                    
                                    
                                    
                                    4,990
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    5,000Common
      stock and warrants issued for cash  at $0.50 per
      share
                                    
                                    7/17/2008
                                    
                                    
                                    50,000
                                    
                                    
                                    
                                    50
                                    
                                    
                                    
                                    24,950
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    25,000Common
      stock and warrants issued for cash  at $0.50 per
      share
                                    
                                    7/22/2008
                                    
                                    
                                    20,000
                                    
                                    
                                    
                                    20
                                    
                                    
                                    
                                    9,980
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    10,000Common
      stock issued for services at $0.50 per share
                                    
                                    8/1/2008
                                    
                                    
                                    10,000
                                    
                                    
                                    
                                    10
                                    
                                    
                                    
                                    4,990
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    5,000
  The
accompanying notes are an integral part of these financial
statements.
  F-5
 Common
      stock issued for exercise of warrants at $0.50 per share
                                                                      8/3/2008
                                                                      
                                                                      
                                                                      10,000
                                                                      
                                                                      
                                                                      
                                                                      10
                                                                      
                                                                      
                                                                      
                                                                      4,990
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      5,000Warrants
      issued for services
                                                                      8/4/2008
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      35,000
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      35,000Common
      stock issued for services at $0.51 per share
                                                                      8/5/2008
                                                                      
                                                                      
                                                                      62,500
                                                                      
                                                                      
                                                                      
                                                                      63
                                                                      
                                                                      
                                                                      
                                                                      31,813
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      31,876Common
      stock and warrants issued for cash  at $0.50 per
      share
                                                                      8/6/2008
                                                                      
                                                                      
                                                                      22,000
                                                                      
                                                                      
                                                                      
                                                                      22
                                                                      
                                                                      
                                                                      
                                                                      10,978
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      11,000Common
      stock and warrants issued for services at $0.50 per share
                                                                      8/6/2008
                                                                      
                                                                      
                                                                      20,000
                                                                      
                                                                      
                                                                      
                                                                      20
                                                                      
                                                                      
                                                                      
                                                                      9,980
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      10,000Common
      stock and warrants issued for cash at $0.50 per share
                                                                      8/15/2008
                                                                      
                                                                      
                                                                      50,000
                                                                      
                                                                      
                                                                      
                                                                      50
                                                                      
                                                                      
                                                                      
                                                                      24,950
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      25,000Common
      stock issued for services at $0.50 per share
                                                                      9/1/2008
                                                                      
                                                                      
                                                                      10,000
                                                                      
                                                                      
                                                                      
                                                                      10
                                                                      
                                                                      
                                                                      
                                                                      4,990
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      5,000Common
      stock and warrants issued for cash  at $0.50 per
      share
                                                                      9/10/2008
                                                                      
                                                                      
                                                                      25,000
                                                                      
                                                                      
                                                                      
                                                                      25
                                                                      
                                                                      
                                                                      
                                                                      12,475
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      12,500Common
      stock and warrants issued for cash at $0.50 per share
                                                                      9/22/2008
                                                                      
                                                                      
                                                                      25,000
                                                                      
                                                                      
                                                                      
                                                                      25
                                                                      
                                                                      
                                                                      
                                                                      12,475
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      12,500Issue
      costs
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      (26,351
                                                                      )
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      (26,351
                                                                      )Common
      stock issued for accrued expense at $0.40 per share
                                                                      10/1/2008
                                                                      
                                                                      
                                                                      12,500
                                                                      
                                                                      
                                                                      
                                                                      12
                                                                      
                                                                      
                                                                      
                                                                      4,988
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      5,000Common
      stock and warrants issued for note payable and accrued interest at $0.50
      per shares
                                                                      10/9/2008
                                                                      
                                                                      
                                                                      11,808
                                                                      
                                                                      
                                                                      
                                                                      12
                                                                      
                                                                      
                                                                      
                                                                      5,892
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      5,904Common
      stock issued for note payable and accrued interest at $0.50 per
      share
                                                                      10/9/2008
                                                                      
                                                                      
                                                                      84,836
                                                                      
                                                                      
                                                                      
                                                                      84
                                                                      
                                                                      
                                                                      
                                                                      42,334
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      42,418Common
      stock issued for consulting at $0.39 per share
                                                                      10/13/2009
                                                                      
                                                                      
                                                                      50,000
                                                                      
                                                                      
                                                                      
                                                                      50
                                                                      
                                                                      
                                                                      
                                                                      19,450
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      19,500Common
      stock issued for accrued expense at  $0.39 per
    share
                                                                      10/15/2009
                                                                      
                                                                      
                                                                      7,858
                                                                      
                                                                      
                                                                      
                                                                      8
                                                                      
                                                                      
                                                                      
                                                                      3,057
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      3,065Common
      stock and warrants issued for consulting at $0.50 per
share
                                                                      10/23/2008
                                                                      
                                                                      
                                                                      24,000
                                                                      
                                                                      
                                                                      
                                                                      24
                                                                      
                                                                      
                                                                      
                                                                      11,976
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      12,000Common
      stock and warrants issued for accounts payable at $0.50 per
      share
                                                                      10/28/2008
                                                                      
                                                                      
                                                                      30,000
                                                                      
                                                                      
                                                                      
                                                                      30
                                                                      
                                                                      
                                                                      
                                                                      14,970
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      15,000Common
      stock and warrants issued for consulting at $0.50 per
share
                                                                      10/29/2008
                                                                      
                                                                      
                                                                      17,000
                                                                      
                                                                      
                                                                      
                                                                      17
                                                                      
                                                                      
                                                                      
                                                                      8,483
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      8,500Common
      stock issued for accrued expense at $.25 per share
                                                                      11/1/2008
                                                                      
                                                                      
                                                                      20,000
                                                                      
                                                                      
                                                                      
                                                                      20
                                                                      
                                                                      
                                                                      
                                                                      4,980
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      5,000Warrants
      issued for interest on note payable
                                                                      11/18/2008
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      15,549
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      15,549Discount
      on debt
                                                                      11/18/2008
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      13,043
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      13,043Net
      loss for the year ended December 31,  2008
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      (1,284,584)
                                                                      
                                                                      
                                                                      (1,284,584
                                                                      )Balance,
      December 31, 2008
                                                                      
                                                                      
                                                                      
                                                                      8,216,436
                                                                      
                                                                      
                                                                      $
                                                                      8,216
                                                                      
                                                                      
                                                                      $
                                                                      2,121,715
                                                                      
                                                                      $
                                                                      -
                                                                      
                                                                      $
                                                                      (2,248,755)
                                                                      
                                                                      $
                                                                      (118,824
                                                                      )
  The
accompanying notes are an integral part of these financial
statements.
  F-6
  MIP SOLUTIONS, INC.(A
      Development Stage Company)STATEMENTS OF CASH FLOWSYear
      Ended
                                              
                                              
                                              Year
      Ended
                                              
                                              
                                              From
      December 19,December
      31,
                                              
                                              
                                              December
      31,
                                              
                                              
                                              2005
      (Inception) to2008
                                              
                                              
                                              2007
                                              
                                              
                                              December
      31, 2008(restated)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                              
                                              $
                                              (1,284,584
                                              )
                                              
                                              $
                                              (396,472
                                              )
                                              
                                              $
                                              (2,248,755
                                              )Adjustments
      to reconcile net loss to net cash provided
      (used) by operating activities:Depreciation
      and amortization
                                              
                                              
                                              22,068
                                              
                                              
                                              
                                              12,702
                                              
                                              
                                              
                                              35,339Loss
      on disposition of assets
                                              
                                              
                                              731
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              7,619Common
      stock and warrants issued for services
                                              
                                              
                                              759,704
                                              
                                              
                                              
                                              75,000
                                              
                                              
                                              
                                              934,704Interest
      expense for beneficial conversion feature
                                              
                                              
                                              1,087
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              1,087Common
      stock issued for payables
                                              
                                              
                                              78,032
                                              
                                              
                                              
                                              2,500
                                              
                                              
                                              
                                              80,532Decrease
      (increase) in:Refund
      receivable
                                              
                                              
                                              -
                                              
                                              
                                              
                                              1,139
                                              
                                              
                                              
                                              -Prepaid
      expenses
                                              
                                              
                                              2,777
                                              
                                              
                                              
                                              2,205
                                              
                                              
                                              
                                              (18
                                              )Increase
      (decrease) in:
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              -License
      fee payable
                                              
                                              
                                              (80,000
                                              )
                                              
                                              
                                              
                                              
                                              
                                              
                                              (80,000
                                              )Accounts
      payable
                                              
                                              
                                              25,143
                                              
                                              
                                              
                                              26,735
                                              
                                              
                                              
                                              76,792Accrued
      expense
                                              
                                              
                                              10,000
                                              
                                              
                                              
                                              (15,000
                                              )
                                              
                                              
                                              45,000Accrued
      interest
                                              
                                              
                                              17,911
                                              
                                              
                                              
                                              9,821
                                              
                                              
                                              
                                              28,073Accrued
      payroll
                                              
                                              
                                              109,557
                                              
                                              
                                              
                                              105,000
                                              
                                              
                                              
                                              214,557Related
      party payable
                                              
                                              
                                              (700
                                              )
                                              
                                              
                                              16,805
                                              
                                              
                                              
                                              16,205Common
      stock to be issued
                                              
                                              
                                              41,045
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              41,045Net
      cash provided (used) by operating activities
                                              
                                              
                                              (297,229
                                              )
                                              
                                              
                                              (159,565
                                              )
                                              
                                              
                                              (847,820
                                              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of equipment
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (12,679
                                              )
                                              
                                              
                                              (20,755
                                              )Purchase
      of license
                                              
                                              
                                              (20,000
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (65,000
                                              )Purchase
      of patents
                                              
                                              
                                              (12,769
                                              )
                                              
                                              
                                              (9,339
                                              )
                                              
                                              
                                              (28,552
                                              )Sale
      of asset
                                              
                                              
                                              9,960
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              9,960Net
      cash provided (used) by investing activities
                                              
                                              
                                              (22,809
                                              )
                                              
                                              
                                              (22,018
                                              )
                                              
                                              
                                              (104,347
                                              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Common
      stock and warrants for cash, net of fees
                                              
                                              
                                              207,320
                                              
                                              
                                              
                                              137,650
                                              
                                              
                                              
                                              787,676Warrants
      issued for financing expense
                                              
                                              
                                              15,549
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              15,549Proceeds
      from note payable
                                              
                                              
                                              114,000
                                              
                                              
                                              
                                              46,589
                                              
                                              
                                              
                                              190,089Repayment
      of note payable
                                              
                                              
                                              (31,589
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (41,089
                                              )Net
      cash provided by financing activities
                                              
                                              
                                              305,280
                                              
                                              
                                              
                                              184,239
                                              
                                              
                                              
                                              952,225Net
      increase (decrease) in cash and cash equivalents
                                              
                                              
                                              (14,758
                                              )
                                              
                                              
                                              2,656
                                              
                                              
                                              
                                              58Cash,
      beginning of period
                                              
                                              
                                              14,816
                                              
                                              
                                              
                                              12,160
                                              
                                              
                                              
                                              -Cash,
      end of period
                                              
                                              $
                                              58
                                              
                                              
                                              $
                                              14,816
                                              
                                              
                                              $
                                              58SUPPLEMENTAL
      CASH FLOW INFORMATION:Interest
      paid
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -Income
      taxes paid
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -NON-CASH
      TRANSACTIONS:Common
      stock issued for license
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              550Common
      stock issued for patent
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              1,122Common
      stock issued for note payable & accrued interest
                                              
                                              $
                                              132,322
                                              
                                              
                                              $
                                              
                                              
                                              
                                              $
                                              132,322Common
      stock issued for asset
                                              
                                              $
                                              60,200
                                              
                                              
                                              $
                                              
                                              
                                              
                                              $
                                              60,200Common
      stock issued for officers & directors fees
                                              
                                              $
                                              154,200
                                              
                                              
                                              $
                                              
                                              
                                              
                                              $
                                              154,200
  The
accompanying notes are an integral part of these financial
statements.
 F-7
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 NOTE
1 – DESCRIPTION OF BUSINESS
 
 MIP
Solutions, Inc, was incorporated on December 19, 2005 in the State of Nevada,
and has been in the development stage since its formation.
 
 The
principal business of the Company is the development of Molecularly Imprinted
Polymers (“MIPs”) for various commercial applications including the removal of
targeted molecules from water. The Company has various patents and a license
agreement with The Johns Hopkins University Applied Physics Laboratory (JHU/APL)
and is currently developing applications for the removal of arsenic from
drinking water and for the extraction of precious metals from various mining
operations. The Company’s year end is December 31.
 
 NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
 
 This
summary of significant accounting policies of MIP Solutions, Inc. is presented
to assist in understanding the Company’s financial statements. The financial
statements and notes are representations of the Company’s management, which is
responsible for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United States
of America, and have been consistently applied in the preparation of the
financial statements.
 
 Accounting
Method
 The
Company’s financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
 
 Accounting for Stock Options
and Warrants Granted to Employees and Nonemployees
 In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, “Accounting for Stock Based
Compensations.” (SFAS 123R) This statement supersedes APB Opinion No. 25,
“Accounting for Stock Issued to Employees,” and its related implementation
guidance. This statement establishes standards for the accounting for
transactions in which an entity exchanges its equity instruments for goods or
services. It also addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the fair value of the
entity’s equity instruments or that may be settled by the issuance of those
equity instruments. This statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. This statement does not change the accounting guidance for share
based payment transactions with parties other than employees provided in
Statement of Financial Accounting Standards No. 123(R). This statement does not
address the accounting for employee share ownership plans, which are subject to
AICPA Statement of Position 93-6, “Employers’ Accounting for Employee Stock
Ownership Plans.” The Company has adopted SFAS No. 123(R) which measures
compensation costs based on the estimated fair value of the award and recognizes
cost over the service period. See Note 7.
  F-8
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Cash and Cash
Equivalents
 For
purposes of the statement of cash flows, the Company considers all highly liquid
investments and short-term debt instruments with original maturities of three
months or less to be cash equivalents.
 
 Earnings Per
Share
 The
Company has adopted Statement of Financial Accounting Standards No. 128, which
provides for calculation of "basic" and "diluted" earnings per share. Basic
earnings per share includes no dilution and is computed by dividing net income
(loss) available to common shareholders by the weighted average common shares
outstanding for the period. Diluted earnings per share reflect the potential
dilution of securities that could share in the earnings of an entity similar to
fully diluted earnings per share. There were 2,539,819 and 1,100,300 warrants
outstanding at December 31, 2008 and 2007, respectively, they were not included
in the calculation of earnings per share because they would have been considered
anti-dilutive.
 
 Fair Value of Financial
Instruments
 The
Company's financial instruments as defined by Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments,"
include cash, receivables, accounts payable and accrued expenses. All
instruments are accounted for on a historical cost basis, which, due to the
short maturity of these financial instruments, approximates fair value at
December 31, 2008.
 
 SFAS No.
157, “Fair Value Measurements(“SFAS 157), define fair value, establishes a
framework for measuring fair value in accordance with generally accepted
accounting principles, and expands disclosures about fair value measurements.
SFAS 157 establishes a three-tier fair value hierarchy which prioritizes the
inputs used in measuring fair value as follows:
 Level 1.
Observable inputs such as quoted prices in active markets;
 Level 2.
Inputs, other than the quoted prices in active markets, that are observable
either directly or indirectly; and
 Level 3.
Unobservable inputs in which there is little or no market data, which requires
the reporting entity to develop its own assumptions.
 
 The
Company does not have any assets or liabilities measured at fair value on a
recurring basis at December 31, 2008 and 2007. The Company did not have any fair
value adjustments for assets and liabilities measured at fair value on a
nonrecurring basis during the years ended December 31, 2008 and
2007.
  F-9
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Income
Taxes
 
 Income
taxes are provided based upon the liability method of accounting pursuant to
Statement of Financial Accounting Standards No. 109, “Accounting for Income
Taxes.” Under this approach, deferred income taxes are recorded to reflect the
tax consequences in future years of differences between the tax basis of assets
and liabilities and their financial reporting amounts at each year-end. A
valuation allowance is recorded against deferred tax assets if management does
not believe the Company has met the “more likely than not” standard imposed by
SFAS No. 109 to allow recognition of such an asset.
  At
December 31, 2008 the Company had deferred tax assets calculated at an expected
rate of 34% of approximately $764,600 principally arising from net operating
loss carryforwards for income tax purposes. As management of the Company cannot
determine that it is more likely than not that the Company will realize the
benefit of the deferred tax asset, a valuation allowance equal to the deferred
tax asset has been established at December 31, 2008. The significant components
of the deferred tax asset at December 31, 2008 and December 31, 2007 were as
follows:
 
 December 31,
                        2008
                      
                      
                      December 31,
                        2007Net
      operating loss carryforward
                      
                      $
                      2,248,800
                      
                      
                      $
                      955,000Deferred
      tax asset
                      
                      $
                      764,600
                      
                      
                      $
                      324,800Deferred
      tax asset valuation allowance
                      
                      
                      (764,600
                      )
                      
                      
                      (324,800
                      )Net
      deferred tax asset
                      
                      $
                      -
                      
                      
                      $
                      -
 
 At
December 31, 2008, the Company has net operating loss carryforwards of
approximately $2,248,800 which expire in the years 2026-2028. The change in the
allowance account from December 31, 2007 to December 31, 2008 was
$439,800.
 
 Use of
Estimates
 The
preparation of financial statements in accordance with generally accepted
accounting principles in the United States of America require the use of
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities known to exist as
of the date the financial statements are published, and the reported amounts of
revenues and expenses during the reporting period.  Uncertainties with
respect to such estimates and assumptions are inherent in the preparation of the
Company’s financial statements; accordingly, it is possible that the actual
results could differ from these estimates and assumptions and could have a
material effect on the reported amounts of the Company’s financial position and
results of operations.
  F-10
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Going
Concern
 
 As shown
in the accompanying financial statements, the Company had negative working
capital and an accumulated deficit of $2,248,755 as of December 31, 2008. These
factors raise substantial doubt about the Company’s ability to continue as a
going concern. However, the Company is currently developing technology that, if
successful, will mitigate these factors. The financial statements do not include
any adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event the company cannot continue in existence.
 
 Management
has established plans to develop products which will provide revenue through
sales or revenue sharing arrangements that will allow the Company to decrease
debt and reverse the present deficit. Furthermore, management plans include
negotiations to convert significant portions of existing debt into
equity.
  An
estimated $1 million is believed necessary to continue operations and increase
development through the next fiscal year. Management intends to seek additional
capital from new equity securities offerings that will provide funds needed to
increase liquidity, fund internal growth and fully implement its business
plan.
 
 Restatement
 Financials
statements from prior periods have been restated in the current quarter, See
Note 12.
  Recent Accounting
Pronouncements
 In May,
2008, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 163, “Accounting for Financial Guarantee Insurance
Contracts—an interpretation of FASB Statement No. 60” (SFAS 163). This Statement
requires that an insurance enterprise recognize a claim liability prior to an
event of default (insured event) when there is evidence that credit
deterioration has occurred in an insured financial obligation. This Statement
also clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement to be used to account for
premium revenue and claim liabilities. Those clarifications will increase
comparability in financial reporting of financial guarantee insurance contracts
by insurance enterprises. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. This Statement is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and all
interim periods within those fiscal years, except for some disclosures about the
insurance enterprise’s risk-management activities. This Statement requires that
disclosures about the risk-management activities of the insurance enterprise be
effective for the first period (including interim periods) beginning after
issuance of this Statement. Except for those disclosures, earlier application is
not permitted. The adoption of this statement will have no material effect
on the Company’s financial condition or results of operations.
  F-11
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 In May,
2008, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting
Principles” (SFAS No. 162). This Statement identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). The sources of accounting
principles1 that are generally accepted are categorized in descending order of
authority as follows:
 
 a. FASB
Statements of Financial Accounting Standards and Interpretations, FASB Statement
133 Implementation Issues, FASB Staff Positions, and American Institute of
Certified Public Accountants (AICPA) Accounting Research Bulletins and
Accounting Principles Board Opinions that are not superseded by actions of the
FASB
 
 b. FASB
Technical Bulletins and, if cleared2 by the FASB, AICPA Industry Audit and
Accounting Guides and Statements of Position
 
 c. AICPA
Accounting Standards Executive Committee Practice Bulletins that have been
cleared by the FASB, consensus positions of the FASB Emerging Issues Task Force
(EITF), and the Topics discussed in Appendix D of EITF Abstracts(EITF
D-Topics)
 
 d.
Implementation guides (Q&As) published by the FASB staff, AICPA Accounting
Interpretations, AICPA Industry Audit and Accounting Guides and Statements of
Position not cleared by the FASB, and practices that are widely recognized and
prevalent either generally or in the industry.
 
 The
adoption of this statement will have no material effect on the Company’s
financial condition or results of operations.
 
 In March
2008, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 161, “Disclosures about Derivative Instruments and
Hedging Activities—an amendment of FASB Statement No. 133” (SFAS No. 161). This
statement changes the disclosure requirements for derivative instruments and
hedging activities. The adoption of this statement is will have no material
effect on the Company’s financial condition or results of
operation.
 
 NOTE
3 - PROPERTY AND EQUIPMENT
 
 Property
and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets. The useful
lives of property, plant and equipment for purposes of computing depreciation
are five to forty years. The following is a summary of property, equipment, and
accumulated depreciation:
  F-12
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 December 31,
                              2008
                            
                            
                            December 31,
                              2007Office
      equipment
                            
                            $
                            1,779
                            
                            
                            $
                            2,269Lab
      Equipment
                            
                            
                            11,598
                            
                            
                            
                            11,598Total
      property & equipment
                            
                            
                            13,377
                            
                            
                            
                            13,867Less
      accumulated depreciation
                            
                            
                            (5,008
                            )
                            
                            
                            (2,546
                            )
      )$
                            8,369
                            
                            
                            $
                            11,321
 
 Depreciation
expense for the years ended December 31, 2008 and December 31, 2007 was $3,592
and $2,342, respectively. The Company evaluates the recoverability of property
and equipment when events and circumstances indicate that such assets might be
impaired. The Company determines impairment by comparing the undiscounted future
cash flows estimated to be generated by these assets to their respective
carrying amounts. Maintenance and repairs are expensed as incurred. Replacements
and betterments are capitalized. The cost and related reserves of assets sold or
retired are removed from the accounts, and any resulting gain or loss is
reflected in results of operations.
 
 NOTE
4 – LICENSE AGREEMENT
 
 During
the year ended December 31, 2006 the Company signed an exclusive license
agreement with Johns Hopkins University/Applied Physics Laboratory (herein after
“JHU/APL”) to commercially develop, manufacture, use and distribute products and
process embodying JHU/APL Intellectual Property within the fieled of drinking
water safety, wastewater treatment, and water based mining operations using
filtration, treatment, reclamation, and extraction processes throughout the
world.
 
 The cost
of the License was $95,000 in cash and $50,550 in common stock and warrants if
paid by May 31, 2008.  See Note 8.  The amount is being
amortized over a period of 10 years. At December 31, 2008, accumulated
amortization was $30,059.
 
 NOTE
5 – PATENTS
  Costs
relating to the development and approval of patents, other than research and
development costs which are expensed, are capitalized and amortized using the
straight-line method over ten years.  The Company’s patents
are:
 
 US Patent
No. 6,780,232, issued August 24, 2004 for "Polymer Based Permeable Membrane for
Removal of Ions"
  F-13
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 This
patent describes the preparation of an imprinted polymer membrane for
facilitated transport of a specific chemical species.  The examples
were phosphate, nitrate and iron.  The other membrane disclosures were
collected into the application and the extension below.
 
 US Patent
application No. 10/924,666 filed January 27, 2005, publication no. 2005-0019302
published January 27, 2005, for "Polymer Based Permeable Membrane for Removal of
Ions".
 
 This
application is an extension to the above patent.  These above listed
issued patents and published patent applications contain the following Johns
Hopkins Laboratory Files:
 
 No.
1734-SPL: "Polymer Based Permeable Membrane for Removal of Ions".
 The
disclosure involving the removal of iron.
 
 No.
1744-SPL: "Environmental Phosphate Pollution Removal Using a Selectively
Permeable Molecular Imprinted Polymer Membrane"
 The
disclosure involving the removal of phosphate.
 
 No.
1745-SPL: "Environmental Nitrate Pollution Removal Using a Selectively Permeable
Molecularly Imprinted Polymer Membrane"
 The
disclosure involving the removal of nitrate.
 
 US Patent
application No. 11/127897 filed May 12, 2005, (the Johns Hopkins Laboratory file
no. 2122-1331) "Process for preparing Vinyl Substituted
Beta-Diketones"
 
 This
provisional patent describes the synthesis of polymerizable ligands for removing
metals from water, but not actually providing in what polymeric form the
molecularly imprinted polymer(MIP) would be contained, except for the first
description a MIP porous bead for the removal of copper from water.
 
 US
provisional application No. 60/736376, filed November 14, 2005 (the Johns
Hopkins Laboratory file no. 2292-SPL) "The Preparation of Molecularly Imprinted
Polymer Ion-exchange Resin Beads and Their Use as Sequestering Agents for Toxic
or Economically Useful Ions"
 
 This
provisional patent covers the formation of molecularly imprinted polymer (MIP)
porous beads that are capable of removing inorganic ions from
liquids.  The provisional patent fleshes out the original claim from
the previous patent covering the synthesis of useful beta-diketone
ligands.  The beads are large to encourage high flow rates but also
have large surface areas to quickly capture large amounts of ions, which range
from main group anions and oxyanions to rare earth cations, and transion metal
cations, anions, and oxyanions.
  F-14
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 The
following is a summary of the costs of patents and patents pending:
  Cost
                        
                        
                        Accumulated
                          Amortization
                        
                        
                        Net
                          AmountBalance,
      December 31, 2004
                        
                        $
                        0
                        
                        
                        $
                        0
                        
                        
                        $
                        02005
      Activity
                        
                        
                        1,123
                        
                        
                        
                        0
                        
                        
                        
                        1,123Balance,
      December 31, 2005
                        
                        
                        1,123
                        
                        
                        
                        0
                        
                        
                        
                        1,1232006
      Activity
                        
                        
                        6,444
                        
                        
                        
                        365
                        
                        
                        
                        6,079Balance,
      December 31, 2006
                        
                        
                        7,567
                        
                        
                        
                        365
                        
                        
                        
                        7,2022007
      Activity
                        
                        
                        9,339
                        
                        
                        
                        1,873
                        
                        
                        
                        7,466Balance,
      December 31, 2007
                        
                        
                        16,906
                        
                        
                        
                        2,238
                        
                        
                        
                        14,6682008
      Activity
                        
                        
                        12,769
                        
                        
                        
                        2,276
                        
                        
                        
                        10,493Balance
      December 31, 2008
                        
                        
                        29,675
                        
                        
                        
                        4,514
                        
                        
                        
                        25,161
 
 NOTE
6 - COMMON STOCK AND WARRANTS
 
 Common
Stock
 The
Company is authorized to issue 50,000,000 shares of common stock. All shares
have equal voting rights, are non-assessable and have one vote per share. Voting
rights are not cumulative and, therefore, the holders of more than 50% of the
common stock could, if they choose to do so, elect all of the directors of the
Company.
  In its
initial capitalization in December 2005, the Company issued 4,590,000 shares of
common stock for a total of $1,122 in patents and $3,468 in subscription
receivables. These subscriptions were paid during the year ended December 31,
2006.
 
 During
the year ended December 31, 2006 the Company issued 360,000 additional common
stock shares to the founders at par.
  On
January 23, 2006, the Company issued 550,000 shares of its common stock to The
Johns Hopkins University as partial payment for a license fee at
par.
 
 During
the year ended December 31, 2006, the Company issued 200,000 shares of common
stock for legal services valued at $100,000.
 
 During
the year ended December 31, 2006, the Company cancelled 1,122,500 of the initial
founders shares issued in 2005. These shares were not related to the common
shares issued for patents.
 
 Also
during the year ended December 31, 2006, the Company issued 880,000 “units” to
investors at a price of $0.50 per unit in a private placement. Each unit
consists of one share of common stock and one common share purchase warrant. The
warrants, which entitle the holder to purchase, at a price of $0.50, one common
share for a period of three years.
  F-15
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 During
the year ended December 31, 2007, the Company issued 250,300 “units” to
investors at a price of $0.50 per unit in a private placement. Each unit
consists of one share of common stock and one common share purchase warrant. The
warrants, which entitle the holder to purchase, at a price of $0.50, one common
share for a period of three years.  Also during the year ended
December 31, 2007, the Company issued 150,000 shares for services valued at
$75,000, 5,000 shares for payables valued at $2,500, and 30,000 shares for the
exercise of 30,000 warrants.  The fair value of the warrants was
estimated using the Black Scholes Option Price Calculation. The following
assumptions were made to value the warrants: share price at $.50; risk free
interest rate of 5%; expected life of 3 years; expected volatility of 105%; no
dividends expected to be paid.
 
 During
the year ended December 30, 2008, the Company issued 950,834 shares of common
stock for services valued at $555,126, 165,000 “units” for services valued at
$178,748, 67,000 shares of common stock for the exercise of 67,000 warrants and
cash of $33,500, 264,644 “units” for the payment of debt valued at $132,322,
20,400 “units” for the purchase of an asset valued at $10,200, 308,400 “units”
for accrued payroll of $154,200, 100,000 “units” for a license agreement valued
at $50,000, 30,000 units for accounts payable valued at $15,000, 40,358 units
for accrued expenses of $13,065, 100,000 warrants issued for services valued at
$19,371, and 382,000 “units” for $191,000 in cash. Each unit consists of one
share of common stock and one common share purchase warrant, the warrants
entitle the holder to purchase, at a price of $0.50, one common share for a
period of three years. The fair value of the warrants was estimated using the
Black Scholes Option Price Calculation. The following assumptions were made to
value the warrants: risk free interest rate of 5%; expected life of 3 years;
expected volatility of 111%; no dividends expected to be paid.
 
 NOTE
7 - STOCK OPTION PLAN
 
 The
Company’s board of directors approved the adoption of the “2008 Stock Plan” on
September 9, 2008, pursuant to which the Company may grant stock options to
employees and consultants, including directors and officers, from time to time.
The Company intends to register the Plan on Form S-8 prior to the grant of any
stock options pursuant to the Plan. The Board of directors of the Company
reserved 2,500,000 shares of Company Common Stock for eventual issuance pursuant
to the exercise of stock options granted under the Plan.
  F-16
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 NOTE
8 – COMMITMENTS
 
 JHU/APL Amendment to License
Agreement
 
 During
the year ended December 31, 2008, the Company and JHU/APL signed Amendment #5 to
the License Agreement between the parties regarding the minimum Research and
Development commitment.
 
 Amended:
e. $400,000 Minimum R&D Commitments (includes subcontracts) as
follows:
 
 As set
forth in section 4.1 above, Company will contract with JHU/APL a total of
$400,000 in research projects over five (5) years.  For any and each
subsequent year beginning on the first anniversary date of the effective date
(1/23/07) during which COMPANY does not pay a minimum of $50,000 towards
research projects at JHU/APL, COMPANY shall pay JHU?APL, as a buyout provision,
a cash payment as follows: 2007  - $5,000 (due April 28, 2008); and
for each of the four years beginning 1/23/08-1/23/11 - $18,750 per year wherein
each $18,750 payment represents 25% of the balance of the $100,000 credit
towards the License Execution Fee applied in lieu of the Minimum R&D
commitment for research dollars spent at JHU/APL ($100,000 credit -$25,000
satisfied with 2006 R&D commitment = $75,000 remaining credit/4 years =
$18,750 per year.) provided, however, if JHU/APL is unable to perform the
research proposed for 2008, the COMPANY’s obligation to pay $50,000 minimum
toward research projects or, in liew thereof, a buyout cash payment of $18,750
in 2008 shall be due in 2009 in addition to COMPANY’s obligation previously due
in 2009.  Therefore, in 2009, Company will be required to pay a
minimum $100,000 towards research projects at JHU/APL or, in lieu thereof, a
buyout cash payment of $37,500.  These buyout cash payments will be
paid at the conclusion of the year that is partially or not funded by Company
but the total of these buyout cash payments will in no event exceed a total of
$75,000.
 
 6.5
Minimum Annual Royalty Payments
 
 Company
shall be obligated to make minimum annual royalty payments beginning twelve (12)
months after the first commercial sale of a licensed product(S) or licensed
service(S) but, in any event, beginning no later than three (3) years after the
effective date, such payments to be fully creditable against royalties due for
the previous twelve month period but the excess of the actual royalties received
over and above the minimum royalty paid cannot be carried over to the next
year:
 
 Minimum Annual
Royalty
 Year 1:
$100,000
 -Exercise, at no cost, the 100,000
warrants held by JHU/APL no later than 1/23/09
 -$10,000 payment due no later than
1/23/09
 -$20,000 due no later than
6/23/09
 -$20,000due no later than
11/23/09
 Year 2:
$100,000
 -$30,000 payment due no later than
1/23/10
 -$30,000 due no later than
6/23/10
  F-17
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 -$40,000 due no later than
11/23/10
 Year 3: $200,000
payment due no later than 6/23/11
 Year 4: $200,000
payment due no later than 1/23/12
 Year 5: $300,000
payment due no later than 1/23/13
 
 8.3a
Amended: “Furthermore, if Company fails to make a commercial sale with sixty
(60) months of the effective date, then JHU/APL, in its sole discretion and
without providing the written notice and 60-day cure period set forth above, may
convert the Agreement to a non-exclusive license. If Company fails to make a
commercial sale within one hundred and twenty months (120) of the effective
date, then JHU/APL, in its sole discretion and without providing the written
notice and 60-day cure period set forth above, may terminate this
Agreement.”
 
 Global Media Partners
Consulting Agreement
 On March
17, 2008, the Company signed a consulting agreement with Global Media Partners,
for consulting services the terms being 300,000 shares of the Company’s common
stock, which was issued during the quarter ended June 30, 2008, and $25,000 in
cash to be paid. $10,000 was paid in April 2008, and $15,000 to be invoiced and
paid with in thirty days of receipt. As of September 30, 2008, this contract
expired without the $15,000 being earned or invoiced by the
consultant.   These shares of common stock are deemed to be
restricted securities.
 
 CEO Consulting
Agreement
 During
the quarter ended June 30, 2008 the company entered into a consulting agreement
with an individual for CEO services, with terms of $5,000 per month for a period
of six months. Effective September 1, 2008 the consulting agreement was
cancelled, and an employment agreement was signed with terms of $5,000 per month
until a cumulative investment of $2,000,000 is raised, beginning with the date
of the employment agreement, and 50,000 shares of the Company’s common stock
payable on January 9, 2009. As of November 21, 2008 the individual resigned his
position with the Company.
 
 Lakeman Consulting
Agreement
 On
October 13, the Company entered into a consulting agreement with Russ Lakeman
for consulting services, with terms of $5,000 per month for a period of six
months, and 50,000 shares of common stock valued at $19,500.  The
stock will be held by the Company until the completion of the contract and be
rescinded if Mr, Lakeman resigns or terminates the contract prior to the end of
the six month term.  This contract was terminated on December 3, 2008,
and $5,000 remains owing at December 31, 2008.
  NOTE
9 - NOTES PAYABLE
 
 The
Company issued a promissory note, for a total of $20,000 on October 25, 2006.
The note bears interest at a rate of 1% per month for twelve months, 11⁄2% for the
next six months and then increases by 1⁄2 % every six months thereafter. The note
is payable on demand six months from issuance.  As of September 30,
2008, related interest of $9,504 has been accrued and expensed. This note and
all accrued interest was converted as of October 9, 2008 into 59,468 shares of
common stock.
  F-18
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 The
Company issued a promissory note, for a total of $8,076 on March 9, 2007. The
note bears interest at the rate of 8% per year. As of September 31, 2008,
related interest of $551 has been expensed.  This note was paid in
full as of September 30, 2008.
 
 The
Company issued a promissory note, for a total of $40,000 on December 14, 2007.
The note is due 90 days from the date of the note, with interest of $6,000. On
March 7, 2008, the company negotiated a new note for the outstanding principal
and interest balance, which is due 60 days from the date of the note, with
interest of $4,000. This note was converted into 100,000 “units” as of May 6,
2008.
 
 The
Company issued a promissory note, for a total of $20,000 on January 11, 2008.
The note was due 90 days from the date of the note, with interest of $3,000.
This note was converted into 46,000 “units” as of May 1, 2008.
 
 The
Company issued a promissory note, for a total of $10,000 on January 24, 2008.
The note is due 120 days from the date of the note, with interest of $1,000.
This note was converted to 22,000 “units” on May 27, 2008.
 
 The
Company issued a promissory note, for a total of $5,000 on June 03,
2008.  The note is due 30 days from the date of the note, with
interest of $500.  If the note is not paid within 10 days of the due
date a $100 penalty will be charged, and interest of 1% will begin to accrued on
the principal and accrued interest.  This note was paid on July.28,
2008.
 
 The
Company signed a loan agreement with JHU/APL on July 1, 2008 to satisfy the cash
requirements of Amendment #3 to the License Agreement between the Company and
JHU/APL dated December 26, 2007.  Under the terms of the loan
agreement the Company will make monthly payments as follows:
 
 July
      31, 2008
                      
                      $
                      10,000August
      31, 2008
                      
                      $
                      5,000September
      30, 2008
                      
                      $
                      5,000October
      31, 2008
                      
                      $
                      5,000November
      30, 3008
                      
                      $
                      5,000December
      31, 2008
                      
                      $
                      5,000January
      31, 2009
                      
                      $
                      5,000February
      28, 2009
                      
                      $
                      5,000March
      31, 2009
                      
                      $
                      5,000April
      30, 2009
                      
                      $
                      3,929.18
  F-19
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 The last
payment consists of a $2500 penalty fee and 8% per annum interest.
 
 The
Company has not made payments on this note since October 2008, and is in default
of this note in the amount of $15,000 as of December 31, 2008.
 
 On
November 18, 2008 the Company executed an 18 month 12% Promissory Note in the
amount of $25,000 with a current shareholder.  The note is convertible into
common shares at a 20% discount to the average closing bid price for the ten
days preceding conversion. The note also includes warrants equal to $25,000
based on the average closing price for the ten days preceding the date of the
note, exercisable at $0.20 per share for a period of three years. The note
contained a beneficial conversion feature computed at its intrinsic value, which
was the difference between the conversion price and the fair value of the common
stock into which the debt was convertible on the note issuance date, multiplied
by the number of shares into which the debt was convertible at the commitment
date. The amount attributed to the beneficial conversion feature, or $13,043 was
recorded as a debt discount and a component of equity on the issuance
date.
 
 NOTE
10 - RELATED PARTY TRANSACTIONS
 
 During
the year ended December 31, 2007, the Company advanced to one of its officers a
total of $27,000. Because the transactions occurred while the Company was still
private, it was not subject to the Sarbanes-Oxley Act of 2002, and therefore,
was not prohibited. The officer repaid $12,000 of the loaned amount and the
remaining receivable was fully satisfied through payroll
deductions.
 
 The
Company issued a promissory note to one of its officers, for a total of $5,000
on July 11, 2007. The note bears interest at a rate of 1% per month for twelve
months, 11⁄2% for the next six months and then increases by 1⁄2 % ever six months
thereafter. The note is payable on demand six months from issuance. This note
including accrued interest was converted into 11,808 “units” as of October 9,
2008.
  The
Company issued a promissory note to one of its directors, for a total of $10,000
on August 24, 2007. An additional $1,000 was added to this note on October 18,
2007. The note bears interest at a rate of 1% per month for twelve months, 11⁄2%
for the next six months and then increases by 1⁄2 % ever six months thereafter.
The note is payable on demand six months from issuance. This note including
accrued interest was converted into 25,368 shares of common stock as of October
9, 2008.
  F-20
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 NOTE
11 – CORRECTION OF AN ERROR
 
 The
previously issued financial statements for December 31, 2007, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset, and the associated amortization.  The Company failed to
recognize both the license fee payable, the license fee asset and the
amortization.  The effect of the restatement was to increase license
fee payable by $80,000 and to increase license fee by $80,000, increase net loss
by $8,487 and increase the accumulated deficit by $8,487.
 
 The
previously issued financial statements dated March 31, 2008, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset. The Company failed to recognize the license fee payable, the license fee
asset and the amortization.  The effect of the correction was to
increase license fee payable by $10,000 and to increase license fee by $10,000
and increase net loss by $3,139 and increase the accumulated deficit by
$3,139.
 
 The
previously issued financial statements dated June 30, 2008, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset, The Company failed to recognize the license fee payable, the license fee
asset and the amortization. Also, the Company failed to recognize an issuance of
common stock for services. The effect of the restatement was to increase license
fee payable by $10,000, increase license fee by $10,000 increase consulting
expense by $61,000, increase common stock by $100, increase additional paid in
capital by $60,900, and increase the net loss and accumulated deficit by
$64,472.
 
 The
accompanying financial statements dated September 30, 2008, have been restated
to correct an error in the recognition of amortization associated with the
license fee asset. The Company failed to recognize the
amortization.  The effect of the correction was to increase net loss
by $3,639 and increase the accumulated deficit by $3,639.
 
 The
effect of the Company’s previously issued 2007 financial statements is
summarized as follows:
 
 Previously Reported
                          
                          
                          Increase (Decrease)
                          
                          
                          RestatedCurrent
      assets
                          
                          
                          17,611
                          
                          
                          
                          -
                          
                          
                          
                          17,611PP&E
                          
                          
                          11,321
                          
                          
                          
                          -
                          
                          
                          
                          11,321Other
      assets
                          
                          
                          60,218
                          
                          
                          
                          71,513
                          
                          
                          
                          131,731Total
      assets
                          
                          
                          89,150
                          
                          
                          
                          71,513
                          
                          
                          
                          160,663Current
      liabilities
                          
                          
                          285,306
                          
                          
                          
                          80,000
                          
                          
                          
                          365,306Stockholders
      deficit
                          
                          
                          (196,156
                          )
                          
                          
                          (8,487
                          )
                          
                          
                          (204,643
                          )Total
      liabilities &Stockholders deficit
                          
                          
                          89,150
                          
                          
                          
                          -
                          
                          
                          
                          160,663
  F-21
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO THE FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 NOTE 12 - SUBSEQUENT
EVENTS
 
 On
January 12, 2009, the Company issued 100,000 common shares to JHU/APL per
Amendment #5 of the License in satisfaction of the no cost conversion of
warrants under the minimum royalty payments section.
 
 On
February 9, 2009, the Company signed a letter of engagement with Cymer, LLC
to conduct a series of bench scale experiment of 3 to 7 batches at a cost of
$1,000 per batch.
 
 On March
1, 2009 the Company issued a $10,000 Promissory Note with annual interest of 7%
and a conversion price of $.05 per share to an existing
shareholder.
 
 On March
5, 2009 the Company issued a $40,000 Promissory Note with annual interest of 7%
and a conversion price of $.05 per share to a consultant.
  On March
11, 2009, the Company surrendered laboratory equipment and closed its laboratory
at Research Park at the University of Utah campus.  A liability in the
amount of $ 148,687 was recorded on the balance sheet. The Company will
negotiate with RPA Management on any further obligation  that may
result from the termination of the Lease.
  On March
12, 2009 the Company issued 674,530 common shares to James Marks on for the
conversion of a Promissory Note dated November 25, 2008.
 
 On March
17, 2009, the Company entered into a consulting agreement with William R. Wilson
to develop mining prospects in Nevada, Colorado and Utah for $2,500 per month
plus expenses.
  The
Company entered into a consulting agreement with Edward Hunton, the Company’s
former Treasurer and Corporate Secretary, to assist with the company filings and
other regulatory matters at a cost of $4,000.
 
 On May
14, 2009 the Company issued two $25,000 Promissory Notes with annual interest of
7% and a conversion price of $.05 per share to an existing
shareholder.
  F-22
  FINANCIALS                          Period
Ending December 31, 2008 – Financials and Notes
  CERTIFICATION                    31.1
  CERTIFICATION                    32.1