Document:

Lithium Exploration Group Inc.: Exhibit 10.33 - Filed by newsfilecorp.com

SHARE PURCHASE AGREEMENT 

THIS SHARE PURCHASE AGREEMENT is made and effective as
of March 1, 2014. 

BETWEEN: 

GARRY HOFMANN, an individual, residing in the Hamlet of
Wardlow, 
in the Province of Alberta (hereinafter called the “Vendor”), 

     OF THE FIRST PART 

AND 

ALTA DISPOSAL LTD., a corporation, incorporated pursuant
to the laws 
of the Province of Alberta (hereinafter called the “Purchaser”),

OF THE SECOND PART 

AND

TERO OILFIELD SERVICES LTD., a corporation, incorporated
pursuant to the laws 
of the Province of Alberta (hereinafter called the
“Corporation”), 

OF THE THIRD PART 

RECITALS 

	A. 	
      Whereas the Corporation operates a water well
      drilling and water disposal business located in central Alberta;

	 	 
	B. 	
      And Whereas the Vendor owns 1,000,000 Class “A”
      Voting Common Shares of the Corporation which represents all of the issued
      and outstanding shares of the Corporation;

	 	 
	C. 	
      And Whereas the Vendor wishes to sell and convey
      500,000 of the issued Class “A” Voting Common Shares of the Corporation to
      the Purchaser and the Purchaser wishes to purchase such shares upon the
      terms and conditions hereinafter set forth.

NOW THEREFORE THIS AGREEMENT WITNESSES
THAT in consideration of the mutual covenants contained herein and other
good and valuable consideration (the receipt and sufficiency of which is
acknowledged), the Parties agree as follows: 

- 1 - 

 SECTION ONE
INTERPRETATION

	1.1 	
      Definitions

Whenever used in this Agreement, including the recitals and any
schedules hereto, the following words and phrases shall have the following
meanings unless the context otherwise requires: 

	 	(a) 	
      "Agreement" means this Share Purchase Agreement
      and includes any agreement amending this agreement or any agreement or
      instrument which is supplemental or ancillary thereof, and the expressions
      "above", "below", "herein", "hereto", "hereof" and similar expressions
      refer to this Agreement;

	 	 	 
	 	(b) 	
      "Assets" means all of the Corporation’s right,
      title, estate and interest in and to its property and assets, real and
      personal, moveable and immoveable, tangible and intangible of whatsoever
      nature and kind and wherever situate, including but without limitation,
      all Lands and Leases, Inventory, accounts receivable, cash on hand,
      trucks, pickers, pumps, production assets and miscellaneous equipment as
      more particularly set forth and described in the Financial Statements and
      in Schedule A attached to this Agreement;

	 	 	 
	 	(c) 	
      "Books and Records" means all books, records,
      files and papers of the Corporation, including computer programs
      (including source codes and software programs), computer manuals, computer
      data, financial and tax working papers, financial and tax books and
      records, business reports, business plans and projections, sales and
      advertising materials, sales and purchases records and correspondence,
      trade association files, research and development records, lists of
      present and former customers and suppliers, personnel and employment
      records, minute and share certificate books, and all copies and recordings
      of the foregoing;

	 	 	 
	 	(d) 	
      "Business" means the business currently carried on
      by the Corporation as a water well drilling, water disposal and service
      company as a going concern and the intangible goodwill associated
      therewith and any and all interests of whatsoever kind and nature related
      thereto;

	 	 	 
	 	(e) 	
      "Business Permits" means all licenses, permits and
      similar rights and privileges that are required and necessary under
      applicable legislation, regulations, rules and orders for the Corporation
      to own its Assets and operate its Business or for the status and
      qualification of the Corporation to carry on its Business;

	 	 	 
	 	(f) 	
      "Certificate" means a written certificate of a
      matter or matters of fact which, if required by a corporation, shall be
      made by a duly authorized officer of The Corporation under corporate
      seal;

	 	 	 
	 	(g) 	
      "Closing", "Time of Closing" and similar
      terms means the transfer by Vendor to the Purchaser of the Purchased
      Shares and the payment by the Purchaser to the Vendor of the Purchase
      Price and the completion of all matters incidental hereto;

	 	 	 
	 	(h) 	
      "Closing Date" March 3, 2014 or such other date as
      the Parties agree to in writing;

- 2 - 

	 	(i) 	
      "Counsel" means any barrister, solicitor or
      attorney or a firm thereof retained by the Vendor or Purchaser as the case
      may be;

	 	 	 
	 	(j) 	
      "Current Assets" means the assets of the
      Corporation, which would, in accordance with Canadian generally accepted
      accounting principles, be classified as current assets, but specifically
      excluding Inventory;

	 	 	 
	 	(k) 	
      "Current Liabilities" means the liabilities of the
      Corporation, which would, in accordance with generally accepted accounting
      principles, be classified as current liabilities;

	 	 	 
	 	(l) 	
      "Documents" means all contracts, agreements,
      documents, permits, licenses, certificates, plans, drawings,
      specifications, reports, compilations, analysis, studies, financial
      statements, budgets, market surveys, minute books, corporate records,
      corporate seals and any other documents or information of whatsoever
      nature relating to the Corporation or its Business and any all rights in
      relation thereto;

	 	 	 
	 	(m) 	
      “Disposal Well” means the Class B Disposal Well
      owned and operated by the Vendor which is located on LSD
      11-32-24-12-W4M;

	 	 	 
	 	(n) 	
      "Effective Date" means 8:00 a.m. (Calgary, Alberta
      time), on the March 1, 2014;

	 	 	 
	 	(o) 	
      "Financial Statements" means the review engagement
      financial statements of the Corporation for the fiscal year ended
      September 30, 2012 and the notice to reader Financial Statements of the
      Corporation for the fiscal year ended February 28, 2013, copies of which
      are attached as Schedule C hereto;

	 	 	 
	 	(p) 	
      "Generally Accepted Accounting Principles" or
      "GAAP" means the generally accepted accounting principles from time
      to time approved by the Canadian Institute of Chartered Accountants, or
      any successor institute, applicable as at the date on which date such
      calculation is made or required to be made in accordance with generally
      accepted accounting principles applied on a basis consistent with
      preceding years;

	 	 	 
	 	(q) 	
      “Inventory” means all items the Corporation has
      previously included in its inventory calculation, including items for
      resale and items used on the job sites that require, by their nature,
      replacement from time to time including but not limited to drilling
      bits;

	 	 	 
	 	(r) 	
      “Lands and Leases” means the lands and leases
      owned by the Vendor which are set out and described in Schedule A attached
      hereto.

	 	 	 
	 	(s) 	
      "Lease Agreement" means the lease agreement for
      the Lands and Leases of the Corporation which agreement is more fully
      described in Schedule A attached;

	 	 	 
	 	(t) 	
      "Lithium" means Lithium Exploration Group Inc.,
      the sole shareholder of the Purchaser;

	 	 	 
	 	(u) 	
      "Option Agreement” means the Option Agreement
      between the Vendor and the Purchaser dated effective as of March 1,
      2014;

- 3 - 

	 	(v) 	
      "Party" or "Parties" means a party or
      parties to this Agreement;

	 	 	 
	 	(w) 	
      "Purchaser" means Alta Disposal Ltd.;

	 	 	 
	 	(x) 	
      "Purchase Price" shall have the meaning ascribed
      thereto in Section 2.2 hereof;

	 	 	 
	 	(y) 	
      "Purchased Shares" means 500,000 Class “A” Voting
      Common Share of the Corporation;

	 	 	 
	 	(z) 	
      "Permits" means franchises, licences,
      qualifications, authorizations, consents, certificates, registrations,
      exemptions, waivers, filings, grants, notifications, privileges, rights,
      orders, judgments, rulings, directives, permits and other approvals,
      obtained from or required by a governmental authority;

	 	 	 
	 	(aa) 	
      “Permitted Encumbrances” means the registered
      encumbrances on the title to the Lands and Leases which have been reviewed
      and accepted by the Purchaser;

	 	 	 
	 	(bb) 	
      "Transaction" means the transaction contemplated
      by this Agreement;

	 	 	 
	 	(cc) 	
      "Time of Closing" means 11:00 a.m., Calgary time,
      on the Closing Date when the Closing of the purchase and sale herein
      provided for shall be completed;

	 	 	 
	 	(dd) 	
      "Vendor" means Garry Hofmann;

	 	 	 
	 	(ee) 	
      "Working Capital" means the working capital of the
      Corporation which is calculated as the net book value of the capital
      assets of the Corporation determined pursuant to the Financial Statements
      of the Corporation for the fiscal year ended February 28, 2014, less the
      amount of $500,000 which is due and owing to Smith Group Holdings
    Ltd.

	1.2 	
      Schedules

Appended hereto are the following schedules, which are
incorporated into this Agreement by reference and are deemed to be a part
hereof: 

	 	Schedule A 	Assets of the Corporation 
	 	Schedule B 	Assets to be Removed by the Vendor Prior to
      Closing 
	 	Schedule C 	The Corporation’s Financial Statements 
	 	Schedule D 	Liabilities 
	 	Schedule E 	The Corporation’s Personnel List 
	 	Schedule F 	The Corporation’s Bank Accounts

	1.3 	
      Schedule References

Wherever any provision of any schedule to this Agreement
conflicts with any provision in the body of this Agreement, the provisions of
the body of this Agreement shall prevail. References herein to a schedule shall
mean a reference to a schedule to this Agreement. References in any schedule to
this Agreement shall mean a reference to this Agreement. References in any
schedule to another schedule shall mean a reference to a schedule to this
Agreement. 

- 4 - 

	1.4 	
      Canadian Dollars

All dollar amounts referred to in this Agreement are in
Canadian funds, unless otherwise indicated herein. All payments contemplated
herein shall be by certified cheque or bank draft issued by a Canadian chartered
bank or such other transfer of immediately available funds as may be acceptable
to the Vendor. 

	1.5 	
      Extended Meanings

In this Agreement, words importing the singular number include
the plural and vice versa; words importing the masculine gender include the
feminine and neuter genders; and references to any statute shall extend to and
include orders-in-council or regulations passed under and pursuant thereto, of
any amendment or re-enactment of such statute, orders-in-council or regulations,
or any statute, order-in-council or regulations substantially in replacement
thereof. 

	1.6 	
      Entire Agreement

This Agreement constitutes the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersedes all prior
and contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof, including but without limitation the Letters of Intent
between the Corporation, Lithium and Alta dated August 20, 2013, November 22,
2013 and January 30, 2014. No amendment, supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. 

	1.7 	
      Headings

Section headings are not to be considered part of this
Agreement and are included solely for convenience of reference and are not
intended to be full or accurate descriptions of the contents thereof. 

	1.8 	
      Successors and Assigns

All of the terms and provisions in this Agreement shall be
binding upon and shall enure to the benefit of the parties hereto and their
respective successors and assigns. 

- 5 - 

SECTION TWO 
PURCHASE OF SHARES 

	2.1 	
      Purchase of Securities

Subject to the terms and conditions of this Agreement, the
Vendor hereby sells to the Purchaser and the Purchaser hereby purchases from the
Vendor on the Closing Date, with effect on the Effective Date, the Purchased
Shares for the Purchase Price as set forth and described in Section 2.2 hereof.
The Purchased Shares shall constitute 50% of the issued and outstanding voting
common shares in the capital of the Corporation, free and clear of all liens and
encumbrances, except for permitted encumbrances.

	2.2 	
      Assets to be Removed Prior to
  Closing

Subject to the terms and conditions of this Agreement, the
Parties agree that the Vendor shall be entitled and shall convey and transfer
those assets set forth and described in Schedule B attached out of the
Corporation to the Vendor or parties designated by him immediately prior to
Closing. On February 22, 2014, the Corporation declared a dividend in the amount
of $307,104, payable to the Vendor by way of a promissory note assigned by the
Corporation to the Vendor.

	2.3 	
      Adjustments

The following adjustments shall have been made effective as of
February 28, 2014, prior to the Closing of the transaction contemplated by
Agreement: 

	(a)  	
      If the retained earnings of the Corporation as determined
      pursuant to the Financial Statements of the Corporation for the fiscal
      year ended February 28, 2014 are greater than the Working Capital, then a
      dividend shall be declared to the Vendor for the difference between those
      amounts; and

	 	 
	(b)  	
      If the retained earnings of the Corporation as described
      above are less that the Working Capital, then the Vendor shall owe and be
      required to pay within 30 days, the amount that is the difference between
      the amounts to the Corporation.

	2.4 	
      Purchase Price

Subject to the terms and conditions of this Agreement, the
Purchase Price to be paid by the Purchaser to the Vendor for the Purchased
Shares shall be an aggregate of $1,000,000 (Cdn.). The Parties acknowledge that
Lithium on behalf of the Purchaser previously paid to the Vendor a
non-refundable deposit of $50,000 which will be credited against the Purchase
Price.

	2.5 	
      Payment of the Purchase
Price

The Purchaser shall pay and satisfy the Purchase Price by
payment of cash in the sum of $950,000 CDN on the Closing Date by certified
cheque or bank draft.

- 6 - 

	2.6 	
      Option Agreement

At the Closing, the Vendor shall provide and deliver to the
Purchaser an Option Agreement satisfactory to both Parties which shall entitle
the Purchaser to purchase up to an additional 25% of the issued Voting Common
Shares of the Corporation from the Vendor exercisable at a price of $500,000 for
a period of one year from the Closing Date.

	2.7 	
      Limited Liability

The Purchaser does not agree to accept or assume, and shall not
by this Agreement be deemed to have accepted or assumed, any obligation or
responsibility for the payment of any debt, obligation, liability, claim or
demand absolute or contingent, of whatsoever nature of or against the Vendor,
except for payment of the Purchase Price and except as otherwise specifically
set forth herein. 

	2.8 	
      Delivery of Shares

Subject to the fulfilment of all of the terms and conditions
hereof (unless waived as herein provided), at the Time of Closing, the Vendor
shall deliver (or make arrangements to deliver) to the Purchaser all share
certificates representing the Purchased Shares duly endorsed for transfer to the
Purchaser, together with such other documentation as contemplated in Section 5.1
hereof. 

	2.9 	
      Effective Date of Transfer

For accounting, title and tax purposes, the transfer and
assignment of the Purchased Shares from the Vendor to the Purchaser shall be
effective as of the Effective Date.

SECTION THREE 
REPRESENTATIONS AND WARRANTIES OF
THE VENDOR AND THE CORPORATION

	3.1 	
      Representations and Warranties of the Vendor and the
      Corporation

To induce the Purchaser to enter into this Agreement and
complete the transactions contemplated hereby the Vendor and the Corporation,
jointly and severally, represent and warrant to and in favour of the Purchaser
now as provided in this Section Three in respect of the Corporation and the
Purchased Shares as follows.

	3.2 	
      Purchased Shares

	 	(a) 	
      The Vendor has or will have on the Closing Date good,
      marketable, beneficial and/or recorded title to the Purchased Shares, and
      such Purchased Shares are free of all mortgages, charges, liens, pledges,
      claims, security interests and agreements and other encumbrances of
      whatsoever nature and no person, firm or corporation has any agreement or
      option or right capable of becoming an agreement or option for the
      purchase from the Vendor of any of the Purchased Shares except as provided
      herein, and the Vendor has good right, full power and absolute authority
      to sell and assign the Purchased Shares to the Purchaser for the purpose
      and in the manner as provided in this Agreement. The Shares are not
      subject to any shareholder, pooling, escrow or similar
  agreements.

- 7 - 

	 	(b) 	
      No consents of, filings with or approval of any
      governmental or regulatory body or authority is required by the Vendor for
      the Vendor's sale and transfer of the Purchased Shares to the Purchaser,
      other than those presently held or obtained by the Vendor which are in
      full force and effect.

	 	 	 
	 	(c) 	
      The Vendor is not obligated to obtain the written consent
      of any person to the Transaction.

	3.3 	
      Due Incorporation and
  Capitalization

	 	(a) 	
      The Corporation has been duly incorporated and organized
      under the laws of the Province of Alberta and is in good standing with
      respect to filing of annual returns required in the Province of
      Alberta.

	 	 	 
	 	(b) 	
      As at the date hereof, the authorized share capital of
      the Corporation consists of an unlimited number of Common Shares and an
      unlimited number of Preferred Shares, and 1,000,000 Class “A” Common
      Shares are issued and outstanding as fully paid and non-assessable
      shares.

	 	 	 
	 	(c) 	
      On the Closing Date, there are not and will not be, any
      outstanding subscriptions, options, stock options, rights, warrants or
      other agreements or commitments obligating the Corporation to sell or
      issue any additional shares or securities of any class of the Corporation
      or any securities convertible into any shares of any class of the
      Corporation.

	3.4 	
      Subsidiaries and
Securities

The Corporation has no subsidiary corporations and owns no
shares or securities of any other entity and there are no agreements of any
nature to acquire any subsidiary or business or to acquire howsoever any other
business. 

	3.5 	
      Dividends

The Corporation has not paid, declared or authorized any
distribution on or in respect of any of its shares by way of dividend,
redemption, purchase, return of capital or otherwise other than as disclosed in
the Financial Statements attached hereto as Schedule C or as permitted in this
Agreement.

	3.6 	
      Business

	 	(a) 	
      The Business of the Corporation has been and will
      continue to be until the Closing Date carried on in the ordinary and
      normal course subject to the terms hereof.

	 	 	 
	 	(b) 	
      The Corporation has the corporate power to own its Assets
      and to carry on the Business presently carried on by it.

	 	 	 
	 	(c) 	
      The Corporation is duly qualified to do business and is
      in good standing in each jurisdiction in which the nature of the Business
      conducted by it or the property owned or leased by it makes such
      qualification necessary, which includes the Province of Alberta. No such
      jurisdiction is outside of Canada.

- 8 - 

	 	(d) 	
      The Corporation is not a party to any current lease or
      agreement in the nature of a lease in regard to real or personal property
      whether as lessor or as lessee, except for the Lease Agreement, attached
      as Schedule A.

	 	 	 	 
	 	(e) 	
      The Corporation holds all Business Permits necessary to
      operate the Business and the present status of the Corporation does not
      violate the terms of such Business Permits.

	 	 	 	 
	 	(f) 	
      The Corporation is not in breach of any provision, nor
      has it received current notice and is not otherwise aware of, any existing
      default under any Document, to which the Corporation is a party.

	 	 	 	 
	 	(g) 	
      Each contract to which the Corporation is a party to are
      in full force and effect in accordance with the terms thereof and, to the
      best of the Corporation's and Vendor's knowledge, information and belief,
      the Corporation is not in default under any contract related to the
      Corporation, there is no outstanding notice of cancellation or termination
      in connection therewith, nor, to the best of the Corporation's and
      Vendor's knowledge, information and belief does there exist any event or
      circumstance which through the passage of time or which as a result of a
      notice by a third party would become a default by the Corporation under
      any contract relating to the Corporation, except as disclosed in the
      Financial Statements.

	 	 	 	 
	 	(h) 	
      To the best of the Corporation’s and the Vendor’s
      knowledge, information and belief:

	 	 	 	 
	 		(i) 	
      the Business of the Corporation as currently conducted
      does not violate any applicable law or regulation relating to air, water,
      or noise pollution, or the production, storage, labelling or disposition
      of wastes or hazardous or toxic substances and the Corporation is in
      compliance with all applicable regulatory and environmental legislation
      governing the Business;

	 	 	 	 
	 		(ii) 	
      The Corporation has obtained all required approvals and
      permits under any such applicable laws or regulations;

	 	 	 	 
	 		(iii) 	
      neither the Corporation nor any person acting for or on
      behalf of the Corporation or with the Corporation's permission has placed,
      stored, buried, dumped or disposed of any chemicals produced by, or
      resulting from, any business, commercial or industrial activities,
      operations or processes on, beneath, or about any of the properties owned
      or leased for such purpose by the Corporation, except for inventories of
      such chemicals to be used, and wastes generated therefrom, in the Business
      (which inventories and wastes, if any, were stored or disposed of in
      accordance with applicable laws and regulations and in a manner such that
      there was no release of any such chemicals into the environment which
      could cause the incurrence of material clean-up or other response costs
      under applicable laws or regulations);

	 	 	 	 
	 		(iv) 	
      The Corporation has not received any notice from Alberta
      Environment or any governmental agency or private or public entity
      advising the Corporation that it is responsible for or potentially
      responsible for response costs with respect to a
release, a threatened release or clean-up of chemicals produced by, or resulting
from any business, commercial or industrial activities, operations or processes; 

- 9 - 

	 	 	(v) 	
      to the best of the Corporation 's and the Vendor’s
      knowledge, information and belief, no properties of the Corporation have
      been used as a site for storage, treatment or disposal of hazardous waste,
      except the property that is the subject of the Lease Agreement;

	 	 	 	 
	 	 	(vi) 	
      to the best of the Corporation’s and the Vendor’s
      knowledge, information and belief, no pollutants or other toxic or
      hazardous substances (including any solid, liquid, gaseous or thermal
      irritant or contaminant) are present in any form on, or have been
      discharged, dispersed, released, stored, treated, generated, disposed or
      allowed to escape on any properties of The Corporation since its
      incorporation or, insofar as the Corporation and Vendor are aware, in the
      adjoining property, which could result in any obligation, order or
      liability under any applicable federal, provincial, municipal or other
      law, regulation or requirement;

	 	 	 	 
	 	 	(vii) 	
      to the best of the Corporation 's and the Vendor's
      knowledge, information and belief, no underground storage tanks are
      located on any properties of the Corporation, or were located on any
      properties of the Corporation and subsequently removed or filled, except
      the property that is the subject of the Lease Agreement; and

	 	 	 	 
	 	 	(viii) 	
      the Corporation is not subject to any control orders,
      stop orders or request for compliance by any governmental authority or any
      other applicable federal, provincial, municipal or other law, regulation
      or requirement.

	 	(i) 	
      The Assets owned or leased by the Corporation are
      adequate for the conduct of its Business as usually conducted in
      accordance with good industry practices.

	 	 	 
	 	(j) 	
      Schedule A is a true list of the Assets including some of
      the items of machinery, equipment, furniture, motor vehicles, rolling
      stock, heavy duty equipment, and other personal property owned or leased
      by the Corporation (including those in possession of third parties) which
      had a book value in the accounting records of the Corporation determined
      in accordance with generally accepted accounting principles, at the date
      of the Corporation's most recently completed Financial Statements and also
      includes the Lands and Leases and the Lease Agreement.

	 	 	 
	 	(k) 	
      The Corporation is not a party to any contract or
      commitment that would limit the freedom of the Corporation to compete in
      any line of business or with any person or in any geographical area or
      otherwise to conduct its Business as currently conducted and as proposed
      to be conducted. To the best of the Corporation and the Vendor’s
      knowledge, information and belief, there exists no facts or circumstances
      which could materially and adversely affect the ability of the Corporation
      to continue its Business substantially as presently conducted following
      the completion of the transaction contemplated by this
Agreement.

	 	 	 
	 	(l) 	
      All accounts receivable are bona fide and good and
      have been incurred in the ordinary course. The accounts receivable,
      subject to an allowance for doubtful accounts, are collectible at their
full face value in the ordinary course without set-off or counterclaim.

- 10 - 

	3.7 	
      Severance Payments

There are no amounts to be paid to officers, directors,
employees, consultants or shareholders of the Corporation at or after Closing or
pursuant to this Agreement or any ancillary document thereto for severance or
termination of employment. 

	3.8 	
      Capital Expenditures

Except as disclosed in the Financial Statements or disclosed to
the Purchaser in writing, no capital expenditures have been made or authorized
or are required to be paid by The Corporation. 

	3.9 	
      Employees, Officers, Directors, Managers,
      Consultants

As of the date of this Agreement, the Corporation has
approximately 5 employees, officers, directors, managers or consultants all of
which are described in Schedule E attached hereto. 

	3.10 	
      Benefit Plans

The Corporation is not a party to any bonus, pension, profit
sharing, deferred compensation, retirement, hospitalization insurance, medical
insurance or similar plan or practice, formal and informal, in effect with
respect to any employees or others and no bonuses of any type, cash or
otherwise, are payable to any director, officer, employee, consultant, or
shareholder of the Corporation on the Effective Date.

	3.11 	
      Employment Contracts

	 	 	 
		(a) 	
      The Corporation is not a party to any written contracts
      of employment, service agreements, management agreements, collective
      bargaining agreements, labour agreements or employee association
      agreements; and the Corporation is not now conducting any negotiations
      with any labour union or employee association with respect to employees of
      the Corporation and the Corporation does not have any agreements or
      understandings relative to any increase in salary, compensation, or term
      of service to any employees or contractors.

	 	 	 
		(b) 	
      The Corporation is not a party to any written management
      contract or employment agreement, including, but without limitation, any
      written contract which provides for the payment of severance in lieu of
      notice upon termination thereof.

	 	 	 
		(c) 	
      To the knowledge of the Vendor, no claims exist or are
      threatened against The Corporation in respect of worker's compensation
      legislation, any applicable labour or employment legislation, health and
      safety or human right's legislation or pursuant to either the Unemployment
      Insurance Act, Canada, or the Canada Pension Plan Act, Canada.

	 	 	 
		(d) 	
      The Corporation has no employees on short or long term
      disability or who have been absent from work for more than three
      consecutive months.

- 11 - 

	 	(e) 	
      All accruals for unpaid vacation pay, premiums for
      unemployment insurance, health premiums, Canada pension plan premiums,
      accrued wages, salaries and commissions and employee benefit plan payments
      have been reflected and accrued in the books and records of the
      Corporation.

	3.12 	
      Litigation

	 	 	 
		(a) 	
      There are no judgments unsatisfied against the
      Corporation or any consent decrees or injunctions to which the Corporation
      or the Vendor are subject or bound and there are no actions, suits or
      proceedings (whether or not purportedly on behalf of the Corporation)
      pending or, to the best of the Corporation’s or the Vendor's, information
      and belief, threatened against or affecting the Corporation at law or in
      equity or before or by any federal, provincial, municipal or other
      governmental department, commission, board, bureau, agency or
      instrumentality, domestic or foreign, which action, suit or proceeding
      involves the possibility of any judgment against or liability of the
      Corporation. the Corporation or the Vendor are not aware of any existing
      ground on which any such action, suit or proceeding might be commenced
      with any reasonable likelihood of success.

	 	 	 
		(b) 	
      The Corporation or the Vendor are not subject to any
      judgement, order, writ, injunction or decree of any court or government
      body which would prevent the carrying out of this Agreement or
      consummation of the transactions herein
contemplated.

	3.13 	
      Financial Statements

	 	 	 
		(a) 	
      The Corporation’s Financial Statements for the fiscal
      years ended September 30, 2012 and February 28, 2013 have been prepared in
      accordance with GAAP and truly and fairly present the assets and
      liabilities of the Corporation and its financial position as at the dates
      thereof and the results of its operations for the fiscal periods reported
      on, and, in particular, without limiting the generality of the foregoing,
      include all liabilities or obligations of any nature, whether accrued,
      contingent or otherwise, and whether due or to become due as at the dates
      of those statements. Since the dates thereof, other than what has been
      disclosed to the Purchaser, there has not been any material adverse change
      in the financial position of the Corporation, computed on a basis
      consistent with that used in the preparation of the balance sheet included
      in such Financial Statements.

	 	 	 
		(b) 	
      All accounts receivable, book debts and other debts
      disclosed by the Vendor to the Purchaser as due or accruing due, are good
      and collectable.

	 	 	 
		(c) 	
      To the best of the Vendor's knowledge, information and
      belief, there are no liabilities for income taxes under the Income Tax
      Act, Canada or under similar legislation of any other jurisdiction or for
      other taxes due or to become due for any period prior to the date of the
      Financial Statements.

	3.14 	
      No Change in and Title to Assets

	 	 	 
		(a) 	
      There has been no change in the legal and beneficial
      ownership of the Assets of the Corporation except in the ordinary course
      of business.

- 12 - 

	 	(b) 	
      To the best of the Corporation's or the Vendor's
      knowledge, information and belief, on the Closing Date, the Corporation
      has or will have good, marketable and beneficial title and ownership to
      all of its Assets, free of all liens, mortgages, charges, pledges or
      encumbrances of whatsoever nature and as may be registered by the Vendor
      pursuant to this Agreement and by the Purchaser’s
  lenders.

	3.15 	
      Records and Data

	 	 	 
		(a) 	
      The Vendor shall cause the Corporation to make available,
      and by the Time of Closing will have made available, to the Purchaser or
      Purchaser’s representative for inspection, all Documents which the
      Purchaser shall reasonably require and which to the knowledge of the
      Vendor are in the possession and control of the Corporation and the Vendor
      or the Corporation pertaining to or affecting the Corporation or the
      Assets of the Corporation and the title of the Corporation thereto, and
      the Vendor nor the Corporation will knowingly not make available any
      Documents or information reasonably required to make not misleading the
      Documents and information so made available to the Purchaser.

	 	 	 
		(b) 	
      All information, records and data furnished to the
      Purchaser, their representatives and counsel pursuant to Sections 5.1 (c),
      5.1 (d) and 8.1 hereof, is, to the best of the Corporation's and the
      Vendor's knowledge, information and belief, accurate in all material
      respects.

	 	 	 
		(c) 	
      The financial books and records of the Corporation fairly
      and correctly set out and disclose in all material respects, in accordance
      with generally accepted accounting principles, the financial position of
      the Corporation as at the date thereof and all material financial
      transactions have been accurately recorded in such books and
    records.

	3.16 	
      Indebtedness and Guarantees

	 	 	 
		(a) 	
      The Corporation is not a party to any agreement of
      guarantee, indemnification or assumption of the obligations of a third
      party, or other like commitment, contingent or otherwise, including
      endorsements or other contingent liabilities, except as reflected in the
      Financial Statements.

	 	 	 
		(b) 	
      The Corporation does not have outstanding any bonds,
      debentures, mortgages, promissory notes or other evidence of indebtedness
      and the Corporation is not bound under any agreement to create or issue
      any bonds, debentures, mortgages, promissory notes or other indebtedness,
      except as reflected in the Financial Statements.

- 13 - 

	3.17 	
      Bank Accounts and Powers of
  Attorney

At the Time of Closing the Corporation shall have no bank
accounts, term deposits or safety deposit boxes, nor shall any person, firm or
corporation hold any general or specific power of attorney from the Corporation
regarding same, with the exception of those described in Schedule F.
Schedule F is a true, accurate and complete list of the bank accounts and
safety deposit boxes of the Corporation and of persons holding general or
special powers of attorney from the Corporation and sets out the name of each
bank, trust company or similar institution in which the Corporation has accounts
or safety deposit boxes, the number or designation of each such account and
safety deposit box and the names of all Persons authorized to draw thereon or to
have access thereto. 

	3.18 	
      Taxes

	 	 	 
		(a) 	
      The Corporation has paid all taxes eligible from it or
      for the collection of which it is responsible under the laws of Canada or
      any other jurisdiction, in the case of taxes on income, in respect of all
      fiscal years ended on or prior to September 30, 2012 and February 28,
      2013, and, in the case of all other taxes, in respect of all periods ended
      prior to the Effective Date, for which such taxes were due and payable
      prior to the Effective Date.

	 	 	 
		(b) 	
      To the best of the Corporation's and the Vendor’s
      knowledge, information and belief, there are no taxes, assessments,
      re-assessments, or levies of whatsoever nature which the Corporation is
      required or will or could be required by law to withhold, collect or pay
      and for which the Purchaser could become liable, including but without
      limitation, unemployment insurance, pension plan payments, non-resident
      withholding tax or similar assessments.

	 	 	 
		(c) 	
      As at the Closing Date, all taxes, assessments, levies
      and source deductions which the Corporation is required by law to withhold
      or to collect, including unemployment insurance and pension plan payments
      and non-resident withholding tax have been duly withheld or collected, and
      have been paid over to the proper governmental authorities, or held by the
      Corporation or on behalf of the Corporation and such withholdings and
      collections and all other payments due in connection therewith are duly
      reflected in the Financial Statements to the date as of which they were
      prepared and since that date will be duly entered in the accounts of the
      Corporation.

- 14 - 

	3.19 	
      Tax Returns

	 	 	 
		(a) 	
      As of the Effective Date, the Corporation has or will
      have duly and timely filed all tax returns required to be filed by it, has
      paid all taxes shown to be due and payable on such returns, and has paid
      all assessments and re-assessments, and all other taxes, governmental
      charges, penalties, interest and fines due and payable by it on or before
      the date hereof and which are claimed by any governmental authority to be
      due and owing and adequate provision has been made on the books of the
      Corporation for taxes payable for the current period for which tax returns
      are not yet required to be filed; there are no agreements, waivers or
      other arrangements providing for any extension of time with respect to the
      filing of any tax returns by, or payment of any tax, governmental charge
      or deficiency against the Corporation, and, to the best of the
      Corporation's and Vendor's knowledge, information and belief, there are no
      actions, suits, proceedings, investigations or claims now threatened or
      pending against the Corporation with respect to taxes, governmental
      charges or assessments, or any other matters under discussion with any
      governmental authority, relating to taxes, governmental charges or
      assessments asserted by any such authority and the Corporation has
      withheld from payments made to any of its respective officers, directors,
      former directors and employees, creditors and shareholders, the amount of
      all taxes, including but not limited to income tax, and other deductions
      required to be withheld therefrom and have paid the same to the proper tax
      or other receiving offices within the time required under any applicable
      tax legislation.

	 	 	 
		(b) 	
      On or before the Effective Date, all returns of the
      Corporation for capital, excise, manufacturing, sales or use tax required
      to be filed by the Corporation before the Effective Date shall be fully
      prepared and filed before the Effective Date and all such taxes of every
      kind and description due or payable against or payable by the Corporation
      prior to the Effective Date in respect of the Corporation shall have been
      paid in full on or before the Effective Date.

	 	 	 
		(c) 	
      Since February 28, 2013, the Corporation has not made any
      tax elections, entered into any tax agreements, filed any tax consents, or
      entered into any agreements with any federal, provincial, local or other
      tax authorities with respect to the Corporation or the securities, Assets
      or revenues of the Corporation.

	3.20 	
      Regulatory Matters

	 	 	 
		(a) 	
      The Corporation has not received notice of any defaults
      under any of the provisions of the Securities Act (Alberta) or any
      other applicable securities legislation in Canada or the United States of
      America.

	 	 	 
		(b) 	
      The Corporation is not a "reporting issuer" as defined by
      the Securities Act (Alberta) in any province in
  Canada.

	3.21 	
      Execution and Delivery of Agreement

	 	 	 
		(a) 	
      The execution and delivery of this Agreement by the
      Vendor and the consummation of the transactions contemplated thereby do
      not constitute a breach or a default under the terms of the articles,
      bylaws or other constating documents of the Corporation, nor under any
      agreement to which the Vendor or the Corporation are a party or by which
      any of them is bound.

- 15 - 

	 	(b) 	
      This Agreement has been duly executed and delivered by
      the Vendor or its duly appointed power of attorney and representative and
      the Corporation and all documents required hereunder to be executed and
      delivered by the Vendor and the Corporation shall have been duly executed
      and delivered by the Vendor and this Agreement does and such documents and
      instruments shall, constitute legal, valid and binding obligations of the
      Vendor and the Corporation enforceable in accordance with their respective
      terms.

	3.22 	
      Residency of Vendor

The Vendor is a resident of Canada within the meaning of the
Income Tax Act, Canada. 

	3.23 	
      Broker's Fees

The Vendor has not incurred any obligation or liability,
contingent or otherwise for broker's or finder's fees in respect of the
transaction herein provided for which the Purchaser shall have any obligation
and liability to pay. 

	3.24 	
      Insurance

The Corporation has in place all appropriate insurance policies
necessary to operate the Business. 

	3.25 	
      Bankruptcy and Insolvency Matters

	 	 	 
		(a) 	
      No action or proceeding has been commenced or filed by or
      against the Corporation or which seeks or may lead to receivership or the
      Corporation the adjustment, compromise or composition of claims against
      them or the appointment of a trustee, receiver, liquidator, custodian, or
      other similar officer for the Corporation or any portion of their assets.
      No such action or proceeding has been authorized or is being considered by
      or on the Corporation and no creditor or equity security holder the
      Corporation has threatened to commence or advise that it may commence, any
      such action or proceeding.

	 	 	 
		(b) 	
      To the best of the Corporation's and the Vendor’s
      knowledge, information and belief, the Corporation has not made nor is it
      presently considering making an assignment for the benefit of its
      creditors, and has not requested nor is it currently considering
      requesting a meeting of its creditors to seek a reduction, compromise,
      composition, or other accommodation with respect to its
    indebtedness.

	 	 	 
		(c) 	
      The Vendor has not entered into this Agreement with
      actual intent to hinder, delay or defraud present or future creditors of
      the Vendor.

	3.26 	
      Environmental Matters

	 	 	 
		(a) 	
      The Corporation has been and is in compliance with all
      applicable laws, including orders, directives and decisions rendered by
      any ministry, department or administrative or regulatory agency (the
      "Environmental Laws") relating to the protection of the environment,
      occupational health and safety or the manufacture, processing,
      distribution, use, treatment, storage, disposal, discharge, transport or
      handling of any deleterious substances or good, hazardous, corrosive or
      toxic substances or materials, special wastes, wastes or any other
      substances, the storage, disposal, discharge, treatment, remediation or
      release into the environment of which is prohibited, controlled or
  regulated ("Hazardous Substances").

- 16 - 

	 	(b) 	
      The Corporation has obtained all Permits under
      Environmental Laws (the "Environmental Permits") required for the
      operation of the Business. Each Environmental Permit is valid, subsisting
      and in good standing and the Corporation is not in default or breach of
      any Environmental Permit and no proceeding is, to the knowledge of the
      Corporation and the Vendor's, pending or threatened, to revoke or limit
      any Environmental Permit.

	 	 	 
	 	(c) 	
      The Corporation has not used or permitted to be used,
      except in compliance with all Environmental Laws, any of the Assets or
      facilities or any property or facility that it has at any time owned,
      occupied, managed, or controlled or in which it has at any time had a
      legal or beneficial interest to generate, manufacture, process,
      distribute, use, treat, store, dispose of, transport or handle any
      Hazardous Substance.

	 	 	 
	 	(d) 	
      The Corporation has never received any notice of, nor
      been prosecuted for an offence alleging non-compliance with any
      Environmental Laws, and neither the Vendor nor the Corporation has settled
      any allegation of non-compliance short of prosecution. There are no orders
      or directions relating to environmental matters requiring any work,
      repairs, construction or capital expenditures with respect to the Business
      or any of the Assets, nor has the Corporation received notice of any of
      such orders or directions.

	 	 	 
	 	(e) 	
      To the knowledge of the Corporation and the Vendor, there
      are no pending or proposed changes to Environmental Laws that would render
      illegal or restrict or make more costly the drilling services provided by
      the Corporation.

	 	 	 
	 	(f) 	
      The Corporation has not caused or permitted, and the
      Vendor does not have any knowledge of, the release, in any manner
      whatsoever, of any Hazardous Substance on or from any of the Assets or any
      property or facility that the Corporation previously owned or leased,
      except in accordance with Environmental Laws, or any such release on or
      from a facility owned or operated by third parties but with respect to
      which the Corporation is or may reasonably be alleged to have liability.
      All Hazardous Substances and all other wastes and other materials and
      substances used in whole or in part by the Corporation or resulting from
      the Business have been disposed of, treated and stored in compliance with
      all Environmental Laws.

	 	 	 
	 	(g) 	
      The Corporation has not received any notice that it is
      potentially responsible for any clean-up or corrective action under any
      Environmental Laws at any site. The Corporation has not received any
      request for information in connection with any federal, provincial,
      municipal or local inquiries as to disposal sites.

	 	 	 
	 	(h) 	
      True, accurate and complete copies of all documents,
      including any certificates or reports, issued, filed or registered,
      pursuant to applicable contaminated sites legislation with respect to the
      Business or the Assets have been provided to the
  Purchaser.

- 17 - 

	 	(i) 	
      The Corporation has not conducted any environmental
      audits, evaluations, assessments, studies or tests relating to the
      Corporation or to any facility or property which the Corporation has at
      any time owned, occupied, leased, managed or controlled or in which it has
      at any time had a legal or beneficial
interest.

	3.27 	
      Representations and Warranties Surviving Closing
      Date

	 	 	 
		(a) 	
      The covenants, representations and warranties of the
      Corporation and the Vendor contained in Section Three hereof and elsewhere
      in this Agreement, and in any certificate or other material delivered
      under this Agreement are accurate and complete, do not contain any untrue
      statement of a material fact or, considered in the context in which
      presented, omit to state a material fact necessary in order to make the
      statements and information contained herein or therein not
    misleading.

	 	 	 
		(b) 	
      The covenants, representations and warranties of the
      Corporation and the Vendor contained in Section Three hereof and elsewhere
      in this Agreement, shall either be set forth in or, if not, shall be
      deemed to apply to all assignments, transfers, conveyances or other
      documents conveying the Purchased Shares hereunder, and there shall not be
      any merger of any covenant, representation or warranty in such
      assignments, transfers, conveyances or documents, any rule or law, in
      equity or in statute to the contrary notwithstanding.

	 	 	 
		(c) 	
      Any claims against the Corporation or the Vendor by the
      Purchaser pursuant to the terms hereof shall not be enforceable against
      the Vendor unless notice thereof shall have been given in writing to the
      Corporation and the Vendor within two (2) years from the Closing
    Date.

	 	 	 
		(d) 	
      The representations and warranties set out in Section 3
      relating to tax matters (and the corresponding tax representations and
      warranties set out in the closing certificates executed by the Vendor)
      shall survive Closing and continue in full force and effect until, but not
      beyond, the 180th day following the expiration of the period, if any,
      during which an assessment, reassessment or other form of recognized
      document assessing liability for taxes under applicable tax legislation in
      respect of any taxation year to which those representations and warranties
      extend could be issued under that tax legislation to the Corporation,
      provided the Corporation did not file any waiver or other document
      extending that period.

SECTION FOUR 
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER 

	4.1 	
      Representations and
Warranties

To induce the Vendor to enter into this Agreement and complete
the transactions contemplated thereby, the Purchaser represents and warrants to
and in favour of the Vendor now as provided in this Section Four. 

- 18 - 

	4.2 	
      Execution and Delivery of Agreement

	 	 	 
		(a) 	
      The execution and delivery of this Agreement by the
      Purchaser and the consummation of the transactions contemplated hereby do
      not constitute a breach of a default under the terms of the articles,
      by-laws or other constating documents of the Purchaser, nor under any
      agreement to which the Purchaser is a party or by which it is
  bound.

	 	 	 
		(b) 	
      This Agreement has been duly executed and delivered by
      the Purchaser or its duly appointed power of attorney and representative,
      and all documents required hereunder to be executed and delivered by the
      Purchaser shall have been duly executed and delivered by the Purchaser,
      and this Agreement does, and such documents and instruments shall,
      constitute legal, valid and binding obligations of the Purchaser and is
      enforceable in accordance with their respective
terms.

	4.3 	
      Organization and Authority

The Purchaser has been duly incorporated and organized under
the laws of the Province of Alberta and is in good standing with respect to
filing of annual returns required in the Province of Alberta. The Purchaser has
good right, full power and absolute authority to purchase the Purchased Share on
the terms described herein and in the manner contemplated by this Agreement.
Further, the Purchaser has good right, full power, and absolute authority to
execute the Debenture and all security associated therewith. 

	4.4 	
      Income Tax

The Purchaser is a resident of Canada within the meaning of the
Income Tax Act. 

	4.5 	
      Investment Canada Act

The Purchaser is not a "non-Canadian" within the meaning of the
Investment Canada Act. 

	4.6 	
      Consents

	 	 	 
		(a) 	
      No consents of, filings with or approval of any
      governmental or regulatory body or authority is required by the Purchaser
      to purchase the Purchased Shares from the Vendor.

	 	 	 
		(b) 	
      The Purchaser is not obligated to obtain the written
      consent of any person to the transaction contemplated by this Agreement,
      other than those persons from whom consent has, or prior to the Time of
      Closing, will be obtained.

	4.7 	
      Broker's Fees

The Purchaser has not incurred any obligation or liability,
contingent or otherwise for broker's or finder's fees in respect to the
transaction herein provided for which the Vendor shall be obligated to pay.

- 19 - 

	4.8 	
      Regulatory Matters

	 	 	 
		(a) 	
      The Purchaser has not received notice of any defaults
      under any of the provisions of the Securities Act (Alberta) or any
      other applicable securities legislation in Canada or the United States of
      America.

	 	 	 
		(b) 	
      The Purchaser is not a "reporting issuer" as defined by
      the Securities Act (Alberta) in any Canadian jurisdiction or
      foreign jurisdiction and its common shares are not listed or posted for
      trading on any stock exchange or trading
platform.

	4.9 	
      Representations and Warranties Surviving Closing
      Date

	 	 	 
		(a) 	
      The covenants, representations and warranties of the
      Purchaser contained in Section Four hereof and elsewhere in this
      Agreement, and in certificate or other material delivered under this
      Agreement are accurate and complete, do not contain any untrue statement
      of any material facts or, considered in the context in which presented,
      omit to state a material fact necessary in order to make the statements
      and information contained herein and therein misleading.

	 	 	 
		(b) 	
      Any claims against the Purchaser by the Vendor pursuant
      to the terms hereof shall not be enforceable against the Purchaser unless
      notice thereof shall have been given in writing to the Purchaser within
      two (2) years from the Closing Date.

	 	 	 
		(c) 	
      Each and every right, remedy and power granted to the
      Vendor hereunder pursuant to Section Four or under any documents or
      instruments delivered pursuant to the terms and conditions hereof, shall
      be cumulative and shall be in addition to any other right, remedy or power
      herein or therein specifically granted or hereinafter existing in equity
      at law, by virtue or statue or otherwise and every such right, remedy and
      power may be exercised by the Vendor from time to time concurrently or
      independently and as often and in such order as the Purchaser may deem
      expedient.

	 	 	 
		(d) 	
      Notwithstanding Section 4.9 (c), a claim for any breach
      of any of the representations and warranties contained in this Agreement
      or in any contract, agreement, instrument, certificate or other document
      executed or delivered pursuant hereto involving fraud or fraudulent
      misrepresentations may be made at any time following the Closing Date,
      subject only to applicable limitation periods imposed by applicable
      law.

SECTION FIVE 
COMPLETION OF PURCHASE

	5.1 	
      Purchaser’s
  Conditions

The obligation of the Purchaser to complete the purchase of the
Purchased Shares contemplated herein, is subject to the fulfilment of each of
the following conditions precedent, unless waived in writing by the Purchaser.

- 20 - 

	 	(a) 	
      The Corporation's and Vendor's Representations,
      Warranties and Covenants. At the Time of Closing, the Corporation and
      the Vendor shall have executed, delivered and performed all agreements and
      documents on their part to be performed hereunder; all representations and
      warranties contained in Section Three shall be true at the Time of
      Closing, except where a different date is otherwise specified therein, and
      in such case, at the date specified, with the same effect as if made on
      and as of such date and The Corporation and the Vendor shall deliver a
      Certificate executed as of the Time of Closing certifying that all
      representations and warranties of the Corporation and the Vendor as
      contained herein are true and correct as of such date, except where a
      different date is otherwise specified therein, and in such case, at the
      date specified.

	 	 	 
	 	(b) 	
      No Material Change. Except for the removal of
      certain assets from the Corporation prior to Closing and the payment of
      the dividend to the Vendor at Closing pursuant to Sections 2.2 and 2.3, at
      the Time of Closing, there shall not have been any material adverse change
      in the condition (financial or otherwise) of the Assets, liabilities,
      capitalization or Business of the Corporation from that as set forth in
      the Financial Statements.

	 	 	 
	 	(c) 	
      Inspection of Financial Books and Records. Until
      and including the Time of Closing, the Vendor shall cause the Corporation
      to make available to the representatives of the Purchaser all material
      books, accounts, records and other financial and accounting data of the
      Corporation (including all available audited and unaudited financial
      statements) in order to enable such representatives to make an examination
      of the same and shall cause the accountants of the Corporation to give all
      such material information concerning the affairs of same to such
      representatives as such representatives may reasonably request.

	 	 	 
	 	(d) 	
      Inspection of Non-Financial Books and Records. The
      Vendor shall have caused the Corporation to make available to Counsel for
      the Purchaser all Documents, minute books and other corporate records and
      all documents of title and related records and other material data of the
      Corporation in order to enable such Counsel to make an examination of the
      same.

	 	 	 
	 	(e) 	
      Approvals. At the Time of Closing, there shall
      have been obtained the written consents or approvals, in form and
      substance satisfactory to the Purchaser, acting reasonably, of any
      governmental or regulatory agency or person whose consent to the
      transactions contemplated hereby is required, including, but without
      limitation the approval by the board of directors of the
    Corporation.

	 	 	 
	 	(f) 	
      No Litigation. At the Time of Closing, no
      litigation or proceeding shall be pending or threatened to restrain, set
      aside or invalidate the transactions contemplated by, or to obtain
      substantial damages in respect of, this Agreement or the Vendor's
      ownership of the Purchased Shares or operation of the Business of the
      Corporation.

	 	 	 
	 	(g) 	
      Corporate Proceedings. At the Time of Closing, all
      necessary steps and corporate proceedings, as approved by Counsel for the
      Purchaser, shall have been taken to permit the Purchased Shares to be duly
      and regularly transferred to the Purchaser.

- 21 - 

	 	(h) 	
      Tax Matters. Until and including the Effective
      Date, the Vendor shall cause the Corporation to file duly and timely all
      tax returns required to be filed by it and to promptly pay all taxes and
      assessments due and owing; not to permit the Corporation to enter into an
      agreement, waiver or other arrangement providing for an extension of time
      with respect to the filing of any tax return, or the payment or assessment
      of any tax, governmental charge or deficiency.

	 	 	 	 
	 	(i) 	
      Closing Documents. The Corporation shall have
      executed and delivered to the Purchaser all documents as the Purchaser or
      the Purchaser’s Counsel may reasonably request for the purposes of
      effecting the transfer and delivery of the Purchased Shares in accordance
      with the terms of this Agreement, including the following:

	 	 	 	 
	 		(i) 	
      Certificate representing the Purchased Shares,
      accompanied by stock transfer powers duly executed in blank or duly
      executed instruments of transfer, and all such other assurances, consents
      and other documents as the Purchaser may reasonably request to effectively
      transfer to the Purchaser title to the Purchased Shares free and clear of
      all encumbrances;

	 	 	 	 
	 		(ii) 	
      Original share registers, share transfer ledgers, minute
      books and corporate seals (if any) of the Corporation;

	 	 	 	 
	 		(iii) 	
      All other Books and Records;

	 	 	 	 
	 		(iv) 	
      A certified copy of a resolution of the board of
      directors of the Corporation consenting to the transfer of the Purchased
      Shares from the Vendor to the Purchaser as contemplated by this Agreement
      and authorizing the execution, delivery and performance of all contracts,
      agreements, instruments, certificates and other documents required by this
      Agreement to be delivered by the Corporation;

	 	 	 	 
	 		(v) 	
      Consent of two directors appointed by the Purchaser to
      the board of directors of the Corporation;

	 	 	 	 
	 		(vi) 	
      A certificate of status or its equivalent of the
      Corporation under the laws of the jurisdiction of its incorporation;
      and

	 	 	 	 
	 		(vii) 	
      A certificate of incumbency of the Corporation
..

	 	 	 	 
	 	(j) 	
      Delivery of Documents. The Corporation shall
      deliver to the Purchaser, or make arrangements satisfactory to the
      Purchaser, to deliver, in organized form all Documents relating to the
      Corporation as are in the possession of the Corporation at the Closing
      Date.

	 	 	 	 
	 	(l) 	
      Due Diligence. Completion by the Purchaser of
      satisfactory due diligence on the Corporation and its Assets.

	 	 	 	 
	 	(m) 	
      Financing. The Purchaser shall have secured the
      necessary financing to satisfy the cash requirements of the Purchase Price
      referred to in Section 2.4 herein, on terms and conditions satisfactory to
      the Purchaser.

- 22 - 

	 	(n) 	
      Financial Statements. The review to the sole
      satisfaction of the Purchaser of the Financial Statements of the
      Corporation.

If any such conditions shall not be fulfilled or waived in
writing by the Purchaser at or prior to the Time of Closing, the Purchaser may
rescind this Agreement by written notice to the Vendor and, in such event, the
Purchaser and the Vendor shall be released from all obligations hereunder.
Notwithstanding the foregoing, the Purchaser acknowledges that the $50,000
deposit is non-refundable to the Purchaser. 

	5.2 	
      Vendor's Conditions

The obligation of the Vendor to complete the sale of the
Purchased Shares contemplated herein, is subject to the fulfilment of the
following conditions precedent, unless waived in writing by the Vendor. 

	 	(a) 	
      Purchaser’s Representations, Warranties
      and Covenants. At the Time of Closing, the Purchaser shall have
      executed, delivered and performed all agreements and documents on its part
      to be performed hereunder; all representations and warranties contained in
      Section Four shall be true at the Time of Closing, with the same effect as
      if made on and as of such date and the Purchaser shall deliver a
      Certificate executed as of the Time of Closing certifying that all
      representations and warranties of the Purchaser as contained herein are
      true and correct as of such date.

	 	 	 
	 	(b) 	
      Approvals. At the Time of Closing, there shall
      have been obtained the written consents or approvals, in form and
      substance satisfactory to the Vendor, acting reasonably, of any
      governmental or regulatory agency or person whose consent to the
      transactions contemplated hereby is required, including, but without
      limitation, approval by the board of directors of the Purchaser.

	 	 	 
	 	(c) 	
      Purchase Price. The Purchaser shall tender the
      Purchase Price payable by the Purchaser to the Vendor pursuant to Section
      2.4 hereof.

	 	 	 
	 	(d) 	
      Due Diligence. Completion by the Corporation of a
      satisfactory due diligence on the Purchaser.

	 	 	 
	 	(e) 	
      No Litigation. At the Time of Closing, no
      litigation or proceeding shall be pending or threatened to restrain, set
      aside or invalidate the transactions contemplated by, or to obtain
      substantial damages in respect of, this Agreement or operation of the
      Business of the Purchaser.

	 	 	 
	 	(f) 	
      Closing Documents. The Purchaser shall have
      executed and delivered to the Corporation and the Vendor all documents as
      the Corporation and the Vendor may reasonably request for the purposes of
      effecting the payment of the Purchase Price.

If any such conditions shall not be fulfilled or waived in
writing by the Vendor at or prior to the Time of Closing, the Vendor may rescind
this Agreement by written notice to the Purchaser and, in such event, the
Purchaser, the Vendor and the Corporation shall be released from all obligations
hereunder. 

- 23 - 

	5.3 	
      Rescission and Termination

	 	 	 
		(a) 	
      Satisfaction of Conditions. All of the Parties
      covenant and agree with the other Parties to use all reasonable efforts
      until the Closing Date to take or refrain from taking any actions with the
      intent that the conditions precedent, as set forth in Section Five hereof,
      shall be satisfied and all covenants and agreements herein made by them
      shall have been performed. The Purchaser shall have the sole and exclusive
      right to terminate the transaction if the Closing has not occurred by
      March 31, 2014.

	 	 	 
		(b) 	
      Consequences of Rescission. In the event this
      Agreement is rescinded and terminated pursuant to the provisions of
      Section 5.1 or Section 5.2 hereof, each Party shall be released from all
      obligations hereunder and each Party shall take all reasonable actions to
      return the other Parties to the position relative to the Purchase Shares
      which such Party occupied prior to the execution
hereof.

SECTION SIX 
INDEMNIFICATION 

	6.1 	
      Mutual Indemnifications for Breaches of Warranties,
      Etc.

The Corporation and the Vendor hereby covenant and agree with
the Purchaser and the Purchaser hereby covenants and agrees with the Corporation
and the Vendor (the party or parties so covenanting and agreeing to indemnify
another party or parties hereinafter in this Section referred to as the
"Indemnifying Party" and the party or parties so to be indemnified being
hereinafter called the "Indemnified Party") to indemnify and save harmless the
Indemnified Party, effective as and from the Time of Closing, from and against
any claims, demands, actions, causes of action, damages, loss, costs, liability
or expense (hereinafter in this Section called "Claims") which may be made or
brought against the indemnified Party and/or which it may suffer or incur as a
result of, in respect of, or arising out of any nonfulfillment of any covenant
or agreement on the part of the Indemnifying Party under this Agreement or any
incorrectness in or breach of any representation or warranty or covenant of the
Indemnifying Party contained herein or in any certificate or other document
furnished by the Indemnifying Party pursuant hereto.

	6.2 	
      Liability Cap and
Threshold

The Corporation and the Vendor will have no liability under
Section 6.1 until the aggregate amount of all losses incurred by the Purchaser
as a result of any breaches of the covenants, representations and warranties in
this Agreement by the Corporation and the Vendor equals or exceeds Fifty
Thousand ($50,000) Dollars (the “Indemnity Threshold”). Once the total of
all

Claims with respect to any of such matters exceeds the
Indemnity Threshold, the Purchaser shall be entitled to make an indemnity claim
for all Claims that exceed the Indemnity Threshold but may not claim the amount
of the Indemnity Threshold. The aggregate maximum amount that may be claimed by
the Purchaser against the Corporation and the Vendor, is the amount of funds
actually paid to the Vendor by the Purchaser pursuant to this Agreement.

- 24 - 

SECTION SEVEN 
CLOSING 

	7.1 	
      Closing and Closing Date

The Closing of the sale and purchase herein contemplated shall
take place at the offices of Sander van der Wissel in Calgary, Alberta, on the
Closing Date or upon such earlier or later time and date as may be agreed upon
between the Parties.

SECTION EIGHT
RECORDS 

	8.1 	
      Access to Premises and
Records

Up to and including the Closing Date, the Purchaser’s, the
Vendor’s and the Corporation’s respective counsel, accountants, appraisers and
other advisors shall have full and complete access, during normal business
hours, to the premises, books, Documents and other records of the Corporation or
the Purchaser, as the case may be, for the purpose of investigating the Business
and affairs of the Corporation or the Purchaser. 

SECTION NINE 
GENERAL 

	9.1 	
      Expenses

All Parties shall be responsible for their own legal and audit
fees and other charges and expenses incurred in connection with the purchase and
sale of the Purchased Shares, the preparation of this Agreement and all
negotiations between the Parties. 

	9.2 	
      Commissions, Etc.

The Corporation agrees to indemnify and save harmless the
Purchaser from and against any claims whatsoever for any commission or other
remuneration payable or alleged to be payable to any broker, agent or other
intermediary who has acted for the Corporation or the Vendor in connection with
the sale of the Purchased Shares. 

	9.3 	
      Documents and Information
  Confidential

Until immediately after the Time of Closing, all Documents and
information received by the Purchaser from the Vendor and the Corporation or
vice versa, and their respective accountants and Counsel, shall be treated by
the Purchaser or the Vendor, as the case may be, as confidential information and
will not be disclosed to others by the Purchaser, except to its Counsel,
accountants and bankers. 

	9.4 	
      Time of the Essence

Time shall be of the essence of this Agreement. 

	9.5 	
      Governing Law

This Agreement shall be construed in accordance with the laws
of the Province of Alberta, and the parties hereto attorn to the courts of such
jurisdiction. 

- 25 - 

	9.6 	
      Counterparts

This Agreement may be executed in several counterparts, each of
which so executed shall be deemed to be an original, and such counterparts
together shall constitute one and the same instrument and, notwithstanding their
date of execution, shall be deemed to bear the date as of the date above
written. 

	10.7 	
      Notices

Any notice required or permitted to be given by a Party to the
other shall be given in writing and addressed: 

	 	(a) 	
      if to the Corporation or the Vendor
at:

Tero Oilfield Services Ltd.
c/o Van
Der Wissel Law Firm 
200, 638 – 11th Ave. S.W. 
Calgary,
Alberta T2S 0J7 
Telephone: (403) 537-9935 
Email: svanderwissel@vdwlaw.ca

	 	(b) 	
      if to Alta or Lithium at:

Alta Disposal Ltd. 
Suite 300, 840
– 6 Avenue SW 
Calgary, Alberta T2P 3E5 
Attention: Alex Walsh, President

Telephone: (403) 930-1925 
Email: aw@lithiumexplorationgroup.com 

Any such notice shall be delivered, or mailed by prepaid
registered post. Any notice delivered as aforesaid shall be deemed to have been
received by the Party to which it is so delivered at the time on the date of its
being so delivered. Any notice mailed as aforesaid shall be deemed to have been
received by the Party to which it is so mailed on the third business day next
following the time on the date of it being so mailed. Any Party may change its
address for notice by giving notice to that effect. 

	10.8 	
      Enurement

This Agreement shall enure to the benefit of the Parties, their
respective heirs, successors and permitted assigns. 

	10.9 	
      Further Assurances

The Vendor and the Corporation will from time to time, on and
after the Closing Date, at the request and expense of the Purchaser, execute and
deliver all such other additional instruments, notices, releases, acquittances
and other documents and shall do all such other acts and things as may be
reasonably necessary to more fully convey the Purchased Shares to the Purchaser.

- 26 - 

	10.10 	
      Public Announcements

	 	 	 
		(a) 	
      The Corporation and the Vendor acknowledge that, as the
      Purchaser is a wholly owned subsidiary of a reporting issuer, that the
      Purchaser and its parent company are required to give public disclosure
      with respect to the transaction contemplated by the Agreement and any
      ongoing matters with respect to the Corporation and the Corporation and
      the Vendor hereby consent to any such disclosure required to satisfy the
      Purchaser’s reporting requirements.

	 	 	 
		(b) 	
      Notwithstanding the foregoing, the Parties may disclose
      any information required to be disclosed to any federal, provincial, state
      or local government or governmental agency or regulatory body, branch,
      board, agency or necessary to comply with relevant timely disclosure laws
      or the requirements of regulatory authorities, including stock exchange,
      having jurisdiction in respect of the securities of the
  Parties.

	10.11 	
      Severability

If, in any jurisdiction, any provision of this Agreement or its
application to any Party or circumstance is restricted, prohibited or
unenforceable, that provision shall, as to that jurisdiction, be ineffective
only to the extent of that restriction, prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, without affecting the
validity or enforceability of that provision in any other jurisdiction and, if
applicable, without affecting its application to the other parties or
circumstances. The Parties shall engage in good faith negotiations to replace
any provision which is so restricted, prohibited or unenforceable with an
unrestricted and enforceable provision, the economic effect of which comes as
close as possible to that of the restricted, prohibited or unenforceable
provision which it replaces. 

- 27 - 

 

SCHEDULE A 

ASSETS, LANDS AND LEASES AND LEASE AGREEMENT

PART I – ASSETS OF THE CORPORATION 

PART II – LANDS AND LEASES 

PART III – LEASE AGREEMENT 

SCHEDULE B 

ASSETS TO BE REMOVED BY VENDOR PRIOR TO CLOSING 

	  	Description 	Market Value 
	 	 	 
	1. 	2007 Hurricane Vac Unit – serial no.
      1D9BV15267W048052 	$35,000.00 
	 	 	 
	2. 	2000 Alta Fab 56 Ft. Skid Double Ended 	$48,000.00 
	 	 	 
	  	Wellsite – serial no. 001256-S-3336-WSM-B 	  
	 	 	 
	3. 	2012 GMC Sierra – serial no. 3GTP2VE73CG229171
    	$14,000.00 
	 	 	 
	4. 	2000 Dex Stock Trailer – serial no.
      2D9TL6275Y1053462 	$1,500.00 
	 	 	 
	5. 	2007 H&H Speedloader Trailer – serial no.
      4J6MX18237B088971 	$750.00 
	 	 	 
	6. 	2008 S185 Skid Steer Loader (Bobcat) – serial
      no. 530321438 	$21,000.00 
	 	 	 
	7. 	Plan 8610093 Block 3 Lot 1 	$58,260.00 
	 	 	 
	8. 	Plan 8610093 Block 3 Lot 2 	$103,360.00 
	 	 	 
	9. 	Plan 8610093 Block 3 Lot 3 	$3,260.00 
	 	 	 
	10. 	Plan 8610093 Block 4 Lot 1 	$3,660.00 
	 	 	 
	11. 	Plan 8610093 Block 4 Lot 2 	$3,690.00 

 

	 	Total 	$292,480.00 
	 	 	 
	 	Plus GST 	$14,624.00 
	 	 	 
	 	Total with GST 	$307,104.00 

SCHEDULE C 

THE CORPORATION’S FINANCIAL STATEMENTS FOR THE
FISCAL YEARS ENDED SEPTEMBER 30, 2012 AND FEBRUARY 28, 2013. 

 

 

TERO OILFIELD SERVICES LTD.

 Financial Statements 

Year Ended September 30,2012 

(Unaudited) 

 

	TERO OILFIELD SERVICES LTD. 
	Index to Financial Statements 
	Year Ended September 30,2012 
	(Unaudited) 
	 

	  	Page 
	REVIEW ENGAGEMENT REPORT 	1 
	 	 
	FINANCIAL STATEMENTS 	  
	     Balance Sheet 	2-3 
	 	 
	     Statement of Loss 	4 
	 	 
	     Statement of Retained Eamings 	5 
	 	 
	     Statement of Cash Flows 	6 
	 	 
	     Notes to Financial Statements
    	7 - 15 

 

	
    
	6620 Crowchild Trail SW 
	Calgary, Alberta T3E 5R8 
	Telephone: (403) 217-5925 
	Facsimile: (403) 217-5934 
	Email: info@dlaUp.com 
	www.dlaUp.com 

	 
	REVIEW
      ENGAGEMENT REPORT 

To the Shareholders of Tero Oilfield Services Ltd. 

We have reviewed the balance sheet of Tero Oilfield Services
Ltd. (the "Company") as at September 30, 2012 and the statements of loss,
retained earnings and cash flows for the year then ended. Our review was made in
accordance with Canadian generally accepted standards for review engagements
and, accordingly, consisted primarily of inquiry, analytical procedures and
discussion related to information supplied to us by the Company. 

A review does not constitute an audit and, consequently, we do
not express an audit opinion on these financial statements. 

Based on our review, nothing has come to our attention that
causes us to believe that these financial statements are not, in all material
respects, in accordance with Canadian accounting standards for private
enterprises. 

We draw attention to Note 2 to the financial statements which
describes that Tero Oilfield Services Ltd. adopted Canadian accounting standards
for private enterprises on October 1, 2011 with a transition date of October 1,
2010. These standards were applied retrospectively by management to the
comparative information in these financial statements, including the balance
sheets as at September 30, 2011 and October 1, 2010 and the statements of loss,
retained earnings and cash flows for the year ended September 30, 2011 and
related disclosures. We were not engaged to report on the restated comparative
information, and as such, it is neither audited nor reviewed. 

 

Calgary, AB 
April3,2013 

CHARTERED
ACCOUNTANTS                     

 

1 

	TERO OILFIELD SERVICES LTD. 
	Balance Sheet 
	September 30,2012 
	(Unaudited) 
	 

	  	 	September 30 	 	 	September 30 	 	 	October 1 	 
	  	 	2012 	 	 	2011 	 	 	2010 	 
	  	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 
	ASSETS 	 	  	 	 	  	 	 	  	 
	CURRENT 	 	  	 	 	  	 	 	  	 
	     
       Cash and equivalents (Note 4) 	$	 225,018 	 	$	 191,163
	 	$	 80,666 	 
	       Accounts
      receivable 	 	209,459 	 	 	328,463 	 	 	208,503 	 
	     
       Accounts receivable from employees 	 	18,380
	 	 	15,321 	 	 	6,023 	 
	       Income taxes
      recoverable 	 	- 	 	 	- 	 	 	9,246 	 
	     
       Interest receivable 	 	1,289 	 	 	827 	 	 	- 	 
	       Goods and services
      tax recoverable 	 	42 	 	 	  	 	 	- 	 
	     
       Prepaid expenses 	 	9,060 	 	 	10,264 	 	 	10,805 	 
	  	 	  	 	 	  	 	 	  	 
	  	 	463,248
    	 	 	546,038 	 	 	315,243 	 
	  	 	  	 	 	  	 	 	  	 
	PROPERTY AND EQUIPMENT
      (Note 5) 	 	715,695 	 	 	652,174 	 	 	773,699 	 
	  	 	  	 	 	  	 	 	  	 
	  	$	 1,178,943 	 	$	 1,198,212 	 	$	 1,088,942 	 

	See notes to financial statements 	  
	DAUNHEIMER LYNCH ANDERSON LLP 	2 

	TERO OILFIELD SERVICES LTD. 
	Balance Sheet 
	September 30, 2012 
	(Unaudited) 
	 

	  	 	September 30 	 	 	September 30 	 	 	October 1 	 
	  	 	2012 	 	 	2011 	 	 	2010 	 
	  	 	  	 	 	  	 	 	  	 
	LIABILITIES AND SHAREHOLDERS'
      EQUITY 	 	  	 	 	  	 	 	  	 
	CURRENT 	 	  	 	 	  	 	 	  	 
	     
       Accounts payable and accrued liabilities 	$	 36,829 	 	$	 51,153 	 	$	 48,235 	 
	       Income taxes
      payable 	 	1,173 	 	 	28,709 	 	 	- 	 
	     
       Current portion of long term debt 	 	- 	 	 	- 	 	 	39,202 	 
	       Goods and services
      tax payable 	 	- 	 	 	14,472 	 	 	7,399 	 
	     
       Employee deductions payable 	 	- 	 	 	2,132 	 	 	2,146 	 
	       Current portion of
      capital lease (Note 7) 	 	19,436 	 	 	  	 	 	24,409 	 
	  	 	57,438 	 	 	96,466 	 	 	121,391 	 
	  	 	  	 	 	  	 	 	  	 
	OBLIGATIONS UNDER CAPITAL
      LEASE (Note 7) 	 	49,975 	 	 	- 	 	 	- 	 
	FUTURE INCOME TAXES 	 	1,708 	 	 	1,354 	 	 	2,075 	 
	ASSET RETIREMENT OBLIGATION
      (Note 8) 	 	220,074 	 	 	205,237 	 	 	191,401 	 
	  	 	271,757 	 	 	206,591 	 	 	193,476 	 
	  	 	329,195 	 	 	303,057 	 	 	314,867 	 
	SHAREHOLDERS' EQUITY 	 	  	 	 	  	 	 	  	 
	     
       Share capital (Note 10) 	 	10 	 	 	10 	 	 	10 	 
	       Retained earnings
    	 	849,738 	 	 	895,145 	 	 	774,065 	 
	  	 	849,748 	 	 	895,155 	 	 	774,075 	 
	  	$	 1,178,943 	 	$	 1,198,212 	 	$	 1,088,942 	 

CONTINGENT LIABILITY (Note 12) 

 

ON BEHALF OF THE BOARD 

____________________________Director 

____________________________Director 

	See notes to financial statements 	  
	DAUNHEIMER LYNCH ANDERSON LLP 	3 

	TERO OILFIELD SERVICES LTD. 
	Statement of Loss 
	Year Ended September 30,2012 
	(Unaudited) 
	 

	  	 	2012 	 	 	2011 	 
	  	 	  	 	 	  	 
	DISPOSAL WELL REVENUES 	$	 844,124 	 	$	 983,620 	 
	  	 	 	 	 	  	 
	  	 	  	 	 	  	 
	EXPENSES 	 	  	 	 	  	 
	     
       Salaries and benefits 	 	255,913 	 	 	214,963 	 
	       Repairs and
      maintenance 	 	120,903 	 	 	74,828 	 
	     
       Solids disposals 	 	112,435 	 	 	171,059 	 
	       Fuel and oil 	 	72,807 	 	 	55,513 	 
	     
       Insurance 	 	45,744 	 	 	32,825 	 
	       Utilities 	 	37,469 	 	 	45,782 	 
	     
       Sub-contracts 	 	23,832 	 	 	26,838 	 
	       Property taxes 	 	11,324 	 	 	11,700 	 
	     
       Advertising and promotion 	 	10,357 	 	 	12,383 	 
	       Office 	 	9,869 	 	 	6,888 	 
	     
       Professional fees 	 	9,550 	 	 	9,634 	 
	       Telephone 	 	9,526 	 	 	10,444 	 
	     
       Interest and bank charges 	 	6,159 	 	 	8,943 	 
	       Bad debts
      (recovery) 	 	5,759 	 	 	(3,176	) 
	     
       Travel 	 	5,250 	 	 	5,086 	 
	       Interest on
      capital lease obligations 	 	4,490 	 	 	- 	 
	     
       Business taxes and licences 	 	2,946 	 	 	4,293 	 
	       Rental 	 	2,700 	 	 	2,700 	 
	     
       Interest on long term debt 	 	1,620 	 	 	1,670 	 
	       Accretion 	 	14,837 	 	 	13,836 	 
	     
       Amortization 	 	126 411 	 	 	129,315 	 
	  	 	  	 	 	  	 
	  	 	889,901 	 	 	835,524 	 
	  	 	  	 	 	  	 
	INCOME (LOSS) FROM OPERATIONS
    	 	(45,777) 	 	 	148,096 	 
	  	 	  	 	 	  	 
	OTHER INCOME 	 	  	 	 	  	 
	       Interest income
	 	1,897 	 	 	1,061 	 
	     
       Loss on disposal of eqUipment 	 	- 	 	 	(89} 	 
	  	 	  	 	 	  	 
	  	 	1,897 	 	 	972 	 
	  	 	  	 	 	  	 
	INCOME (LOSS) BEFORE INCOME
      TAXES 	 	(43,880} 	 	 	149,068 	 
	  	 	  	 	 	  	 
	INCOME TAXES 	 	  	 	 	  	 
	       Current 	 	1,173 	 	 	28,709 	 
	     
       Future (Recovery) 	 	354 	 	 	(721) 	 
	  	 	  	 	 	  	 
	  	 	1,527 	 	 	27,988 	 
	  	 	  	 	 	  	 
	NET INCOME (LOSS) 	$	(45,4071) 	 	$	 121,080 	 

	See notes to financial statements 	  
	DAUNHEIMER LYNCH ANDERSON LLP 	4 

	TERO OILFIELD SERVICES LTD. 
	Statement of Retained Earnings 
	Year Ended September 30,2012 
	(Unaudited) 
	 

	  	 	2012 	 	 	2011 	 
	 	 	 	 	 	 	 
	RETAINED EARNINGS - BEGINNING
      OF YEAR 	$	 895,145
	 	$	 774,065
	 
	NET INCOME (LOSS) FOR THE YEAR 	 	(45,407	) 	 	121,080 	 
	RETAINED EARNINGS - END OF
      YEAR 	$	 849,738 	 	$	 895,145 	 

 

	See notes to financial statements 	  
	DAUNHEIMER LYNCH ANDERSON LLP 	5 

	TERO OILFIELD SERVICES LTD. 
	Statement of Cash Flows 
	Year Ended September 30, 2012 
	(Unaudited) 
	 

	  	 	2012 	 	 	2011 	 
	  	 	  	 	 	  	 
	OPERATING ACTIVITIES 	 	  	 	 	  	 
	       Net income (loss)
    	$	 (45,407	) 	$	 121,080 	 
	     
       Items not affecting cash: 	 	 	 	 	  	 
	           
         Amortization of property and equipment 	 	126,411 	 	 	129,315 	 
	       
             Loss on disposal of equipment 	 	- 	 	 	89 	 
	           
         Future income taxes 	 	354 	 	 	(721	) 
	       
             Accretion 	 	14,837 	 	 	13,836 	 
	  	 	  	 	 	  	 
	  	 	96,195 	 	 	263,599 	 
	  	 	  	 	 	  	 
	     
       Changes in non-cash working capital: 	 	  	 	 	  	 
	           
         Accounts receivable 	 	119,004 	 	 	(119,960	) 
	       
             Accounts receivable from employees 	 	(3,059	) 	 	(9,298	) 
	           
         Interest receivable 	 	(462	) 	 	(827	) 
	       
             Accounts payable and accrued liabilities 	 	(14,320	) 	 	2,915 	 
	           
         Income taxes payable 	 	(27,536	) 	 	37,955 	 
	       
             Prepaid expenses 	 	1,204 	 	 	541 	 
	           
         GST payable (receivable) 	 	(14,514	) 	 	7,073 	 
	       
             Employee deductions payable 	 	(2,132) 	 	 	(14	) 
	  	 	  	 	 	  	 
	  	 	58,185 	 	 	(81 ,615	) 
	  	 	  	 	 	  	 
	     
       Cash flow from operating activities 	 	154,380 	 	 	181,984 	 
	  	 	  	 	 	  	 
	INVESTING ACTIVITY 	 	  	 	 	  	 
	           
         Purchase of property and eqUipment 	 	(105,579) 	 	 	(7,876) 	 
	  	 	  	 	 	  	 
	FINANCING ACTIVITIES 	 	  	 	 	  	 
	       
             Repayment of long term debt 	 	- 	 	 	(39,202	) 
	           
         Repayment of obligations under capital lease 	 	(14,946) 	 	 	(24,409	) 
	  	 	  	 	 	  	 
	       Cash flow used by
      financing activities 	 	(14,946) 	 	 	(63,611 	) 
	  	 	  	 	 	  	 
	INCREASE IN CASH FLOW 	 	33,855 	 	 	110,497 	 
	  	 	  	 	 	  	 
	Cash - beginning of year 	 	191,163 	 	 	80,666 	 
	  	 	  	 	 	  	 
	CASH - END OF YEAR 	$	 225,018 	 	$	 191,163 	 
	  	 	  	 	 	  	 
	CASH CONSISTS OF: 	 	  	 	 	  	 
	Cash 	$	-	 	$	 27,779 	 
	Term deposits 	 	234,900 	 	 	163,384 	 
	Bank indebtedness 	 	(9,882	) 	 	- 	 
	  	 	  	 	 	  	 
	  	$	 225,018 	 	$	 191,163 	 

	See notes to financial statements 	  
	DAUNHEIMER LYNCH ANDERSON LLP 	6 

	TERO OILFIELD SERVICES LTD. 
	Notes to Financial Statements 
	Year Ended September 30,2012 
	(Unaudited) 
	 

	1. 	
      DESCRIPTION OF OPERATIONS

Tero Oilfield Services Ltd. is a
privately owned company incorporated under the Alberta Business Corporations Act
and operates a disposal well. 

	2. 	FIRST TIME ADOPTION OF ACCOUNTING STANDARDS FOR
      PRIVATE ENTERPRISES 

Effective October 1, 2011 the Company
adopted the requirements of the Canadian Institute of Chartered Accountants
(CICA) Handbook - Accounting, electing to adopt the new accounting framework:
Canadian Accounting Standards for Private Enterprises (ASPE). These are the
Company's first financial statements prepared in accordance with ASPE and the
transitional provisions of Section 1500, First-time Adoption have been applied.
Section 1500 requires retrospective application of the accounting standards with
certain elective exemptions and limited retrospective exceptions. The accounting
policies set out in the significant accounting policy note have been applied in
preparing the financial statements for the year ended September 30,2012, the
comparative information for the year ended September 30, 2011 and the opening
ASPE balance sheet at October 1, 2010 (the Company's date of transition). 

The Company has made elective
exemptions permissible under Section 1500, First Time Adoption as noted below
with respect to the balance sheet at the date of transition and the comparative
statements of income, retained earnings and cash flows. The Company has elected
to: 

	 	• 	Not retrospectively apply Section 3840, Related
      Party Transactions for related party transactions that occurred prior to the
      date of transition. Accordingly, there is no adjustment to the assets or
      liabilities recognized in a previous related party transaction. Applying this
      elective exemption has resulted in no change to assets, liabilities and equity
    accounts at the date of transition. 

	 	 	 
	 	• 	Not retrospectively apply Section 3856, Financial
      Instruments for non-derivative financial instruments if the financial asset or
      financial liability has been derecognized prior to the date of transition.
      Accordingly, there is no adjustment to the assets or liabilities recognized in
      previous transactions involving a non-derivative financial instrument that
      does not exist at the date of transition. Applying this elective exemption has
      resulted in no change to assets, liabilities and equity accounts at the date
      of transition. 

    
	 	 	 
	 	• 	Not retrospectively apply Section 3110, Asset
      Retirement Obligation Transactions for asset retirement obligation
      transactions that occurred prior to the date of transition. Accordingly, there
      is no adjustment to the assets or liabilities recognized in a previous asset
      retirement obligation transaction. Applying this elective exemption has
      resulted in no change to assets, liabilities and equity accounts at the date
    of transition. 

The Company issued financial statements
for the year ended September, 2011 using generally accepted accounting
prinCiples prescribed by CICA Handbook - Accounting XFI. The adoption of ASPE
had no impact on the previously reported assets, liabilities and equity of the
Company, and accordingly, no adjustments have been recorded in the comparative
balance sheet, income statement, statement of retained earnings and cash flow
statement Certain of the Company's disclosures included in these financial
statements reflect the new disclosure requirements of ASPE. 

	DAUNHEIMER LYNCH ANDERSON LLP 	7 

	TERO OILFIELD SERVICES LTD. 
	Notes to Financial Statements 
	Year Ended September 30,2012 
	(Unaudited) 
	 

	3. 	
      SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES

Basis of presentation 

The financial statements were prepared
in accordance with Canadian accounting standards for private enterprises. 

Financial instruments policy

Measurement of financial
instruments 

The Company initially measures its
financial assets and liabilities at fair value, except for certain non-arm's
length transactions. 

The Company subsequently measures all
its financial assets and financial liabilities at amortized cost, except for
investments in equity instruments that are quoted in an active market, which are
measured at fair value. Changes in fair value are recognized in net income. 

Financial assets measured at amortized
cost include accounts receivable, payroll advances and interest receivable. 

Financial liabilities measured at
amortized cost include bank indebtedness, accounts payable and accrued
liabilities and capital leases. 

Impairment 

Financial assets measured at amortized
cost are tested for impairment when there are indicators of impairment. The
amount of the write-down is recognized in net income. Previously recognized
impairment losses may be reversed to the extent of the improvement, directly or
by adjusting the allowance account, provided it is no greater than the amount
that would have been reported at the date of the reversal had the impairment not
been recognized previously. The amount of the reversal is recognized in net
income. 

Cash equivalents 

Cash equivalents includes short term
investments in cashable Guaranteed Investment Certificates with a major
chartered bank and are valued at cost plus accrued interest. 

The Company also considers their bank
indebtedness to be a cash equivalent as it is an integral part of the cash
management of the Company. 

Accounts receivable and allowance
for doubtful accounts 

Management reviews its accounts
receivable annually to determine if any of the accounts outstanding at the year
end are uncollectable. Those accounts specifically identified as un collectable
are recorded as bad debts and included in the allowance for doubtful accounts.
In the event that any of the accounts are subsequently collected they are
recorded. as bad debts recovered in the year they are received. 

	(continues)
      

	DAUNHEIMER LYNCH ANDERSON LLP 	8 

	TERO OILFIELD SERVICES LTO. 
	Notes to Financial Statements 
	Year Ended September 30, 2012 
	(Unaudited) 
	 

	3. 	
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)

Equipment 

Equipment is stated at cost less
accumulated amortization. Amortization is provided at various rates designed to
amortize the assets over their estimated useful lives. The amortization rates
are as follows: 

	 	Buildings 	4% 	 	declining balance method 
	 	Equipment 	20 - 25% 	 	declining balance method 
	 	Contractors moveable 	30% 	 	declining balance method 
	 	Computer equipment 	30% 	 	declining balance method 
	 	Disposal well 	10% 	 	declining balance method
  

Only one half of these rates is used in
the year of acquisition. No amortization is taken in the year of disposal. The
Company regularly reviews its property and equipment to eliminate obsolete
items. 

Leases 

A lease that transfers substantially
all of the benefits and risks of ownership is classified as a capital lease. At
the inception of a capital lease, an asset and a payment obligation are recorded
at an amount equal to the lesser of the present value of the minimum lease
payments and the property's fair market value. Assets under capital leases are
amortized on a declining balance over their estimated useful lives. All other
leases are accounted for as operating leases and rental payments are expensed as
incurred. 

Measurement uncertainty 

When preparing financial statements
according to Canadian accounting standards for private enterprises, management
makes estimates and assumptions relating to: 

	 	• 	reported amounts of revenues and expenses 

	 	 	 
	 	• 	reported amounts of assets and liabilities 

        
	 	 	 
	 	• 	disclosure of contingent assets and liabilities. 

Estimates are based on a number of
factors including historical experience, current events and actions that the
Company may undertake in the future, and other assumptions that management
believes are reasonable under the circumstances. By their nature, these
estimates are subject to measurement uncertainty and actual results could
differ. In particular, estimates are used in accounting for certain items such
as revenues, allowance for doubtful accounts, useful lives of capital assets,
asset impairments, asset retirement obligation, legal and tax contingencies and
income taxes. 

	(continues)
      

 

	DAUNHEIMER LYNCH ANDERSON LLP 	9 

	TERO OILFIELD SERVICES LTD. 
	Notes to Financial Statements 
	Year Ended September 30, 2012 
	(Unaudited) 

	3. 	
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)

Future income taxes 

Income taxes are reported using the tax
liability method, as follows: current income tax expense is the estimated income
taxes payable for the current year after any refunds or the use of losses
incurred in previous years, and future income taxes reflect: 

	 	• 	the temporary differences between the carrying
  amounts of assets and liabilities for accounting purposes and the amounts used
  for tax purposes; 

	 	 	 
	 	• 	the benefit of unutilized tax losses that will more
  likely than not be realized and carried forward to future years to reduce
  income taxes . 

        

Future income taxes are estimated using
the rates enacted by tax law and those substantively enacted for the years in
which future income taxes assets are likely to be realized, or future income tax
liabilities settled. The effect of a change in tax rates on future income tax
assets and liabilities is included in earnings in the period when the change is
substantively enacted. 

Asset retirement obligation 

The liability for the fair value of
environmental and site restoration obligations is recorded when the obligations
are incurred and the fair value can be reasonably estimated. The obligations are
normally incurred at the time the related assets are brought into production.
The fair value of the obligation is based on the estimated cash flows required
to settle the obligations discounted using an estimate of the Company's
finanCing rate. The fair value of the obligations is recorded as a liability
with the same amount recorded as an increase in capitalized costs. The amounts
included in capitalized costs are amortized using an amortization rate of 10%.
The liability is adjusted for accretion expense representing the increase in the
fair value of the obligations due to the passage of time. 

Revenue recognition 

The Company recognizes revenues when
they are earned, specifically when all the following conditions are met: 

	 	• 	services are provided or products are delivered to
            customers
    

	 	 	 
	 	• 	there is clear evidence that an arrangement exists 

        
	 	 	 
	 	• 	amounts are fixed or can be determined 

	 	 	 
	 	• 	the ability to collect is reasonably assured.

	 	 
	4. 	CASH AND EQUIVALENTS 

	 	  	 	2012 	 	 	2011 	 
	 	  	 	  	 	 	  	 
	 	Bank Indebtedness 	$	 (9,882	) 	$	-	 
	 	Cash 	 	- 	 	 	27,779 	 
	 	Short term investments 	 	234,900 	 	 	163,384 	 
	 	  	 	  	 	 	  	 
	 	  	$	 225,018 	 	$	 191,163 	 

	 	 
	 	 
	DAUNHEIMER LYNCH ANDERSON LLP 	10 

	TERO OILFIELD SERVICES LTD. 
	Notes to Financial Statements 
	Year Ended September 30,2012 
	(Unaudited) 
	 

	5. 	
      PROPERTY AND EQUIPMENT

	 	  	 	  	 	 	  	 	 	2012 	 	 	2011 	 
	 	  	 	Cost 	 	 	Accumulated 	 	 	Net book 	 	 	Net book 	 
	 	  	 	  	 	 	amortization 	 	 	value 	 	 	value 	 
	 	  	 	  	 	 	  	 	 	  	 	 	  	 
	 	Land 	$	 36,120 	 	$	-	 	$	 36,120 	 	$	 36,120 	 
	 	Buildings 	 	159,385 	 	 	55,538 	 	 	103,847 	 	 	108,174 	 
	 	Equipment 	 	1,060,748 	 	 	839,004 	 	 	221,744
    	 	 	210,461 	 
	 	Contractors moveable 	 	443,628 	 	 	280,128 	 	 	163,500 	 	 	85,286 	 
	 	Computer equipment 	 	5,409 	 	 	3,884 	 	 	1,525 	 	 	2,178 	 
	 	Disposal well 	 	554,512 	 	 	365,553 	 	 	188,959 	 	 	209,955 	 
	 	  	 	  	 	 	  	 	 	  	 	 	  	 
	 	  	$	 2,259,802 	 	$	 1,544,107 	 	$	 715,695 	 	$	 652,174 	 

	 	Included in contractors moveable
equipment are assets under capital lease with a cost of $84,356 and a net a book
value $71 ,703. Amortization expense includes an amount for the amortization of
assets under capital lease in the amount of $12,653. 
	 	 
	 	 
	6 . 	BANK INDEBTEDNESS 

The Company has available a revolving
demand bank loan to a maximum of $400,000 (2011 -$400,000), which is due on
demand, subject to an annual review and bears interest at a chartered bank's
prime rate plus 0.5% (2011 - 0.5%) per annum. Security for the operating loan is
as follows: 

- general security agreement; 
-
limited liability guarantee from the corporate shareholder limited to
$1,000,000; 
- assignment and postponement of claim from the corporate
shareholder. 

Under its Demand Operating Facility
Agreement the Company must meet the following ratio: Maintain a debt service
ratio of not less than 1.25:1 at the end of each fiscal year. As of September
30, 2012 the ratio was in compliance. 

	 	 
	 	 
	DAUNHEIMER LYNCH ANDERSON LLP 	11 

	TERO OILFIELD SERVICES LTD. 
	Notes to Financial Statements 
	Year Ended September 30, 2012 
	(Unaudited) 
	 

	7. 	
      OBLIGATIONS UNDER CAPITAL
LEASE

	 	  	 	 	2012 	 	 	2011 	 
	 	  	 	 	  	 	 	  	 
	 	Capital lease obligation
      bears interest at 5.76% per annum and is repayable in monthly blended
      payments of $1,620. The loan matures on August 25, 2016 and is secured by
      equipment having a net book value of $71 ,703. 	 	$	69,411 		$	-	
	 	Amounts payable within one year 	 	 	(19,436 	)	 	- 	 
	 	  	 	 	  	 	 	  	 
	 	  	 	$	 49,975 	 	$	-	 

Future minimum capital lease payments
are approximately: 

	       
                         
           2013 	$	 19,436 	 
	           
                         
       2014 	 	19,436 	 
	       
                         
           2015 	 	19,436 	 
	           
                         
       2016 	 	19,636 	 
	Total minimum lease payments
    	 	77,944 	 
	Less: amount representing interest at 5.79%
    	 	8,533 	 
	Present value of minimum
      lease payments 	 	69,411 	 
	Less: current portion 	 	19,436 	 
	  	$	 49,975 	 

	 	 
	8. 	ASSET RETIREMENT OBLIGATION

	 	  	 	2012 	 	 	2011 	 
	 	Asset retirement obligation,
      beginning of year 	$	 205,237
	 	$	 191,401
	 
	 	Accretion expense 	 	14,837 	 	 	13,836 	 
	 	Asset retirement obligation,
      end of year 	$	 220,074 	 	$	 205,237 	 

As at September 30, 2012, the estimated
total undiscounted amount required to settle the asset retirement obligation was
$220,074 (2011 - $205,237) and these costs are expected to be settled over the
useful life of the underlying asset, which is currently determined to be 7 - 10
years. The estimated cash flow has been discounted at a credit-adjusted risk
free rate of7.0% per annum. 

In accordance with provincial
regulations, $220,074 (2011 - $205,237) in letters of credit have been issued by
the Company's bank in favour of a provincial authority. 

	 	 
	 	 
	DAUNHEIMER LYNCH ANDERSON LLP 	12 

	TERO OILFIELD SERVICES LTD. 
	Notes to Financial Statements 
	Year Ended September 30,2012 
	(Unaudited) 
	 

	9. 	
      RELATED PARTY TRANSACTIONS

During the year the Company entered
into the following transactions: 

The Company incurred expenses from
companies, related by way of common shareholders and/or common management, in
the amount of $28,432 (2011 - $19,501). 

The Company has provided a loan
guarantee to the Corporate shareholder's bank and no fee has been charged for
this guarantee. 

The Corporate shareholder has provided
a loan guarantee to the Company's bank and has not charged a fee for this
guarantee. 

The related party transactions are
recorded at the exchange amount which is the amount of consideration established
and agreed to by the parties. 

	 	 
	10. 	SHARE CAPITAL 

	 	  	 	  	 	2012 	 	 	2011 	 
	 	  	 	  	 	  	 	 	  	 
	 	Authorized:
    	 	  	 	  	 	 	  	 
	 	Unlimited 	 	Class "A" Common
      Voting shares 	 	  	 	 	  	 
	 	Unlimited 	 	Class "8" Common Voting shares 	 	  	 	 	  	 
	 	Unlimited 	 	Class "C" Common
      Voting shares 	 	  	 	 	  	 
	 	Unlimited 	 	Class "0" Common Voting shares 	 	  	 	 	  	 
	 	Unlimited 	 	Class "E" Common
      Non-voting shares 	 	  	 	 	  	 
	 	Unlimited 	 	Class "F" Preferred Non-voting shares 	 	  	 	 	  	 
	 	  	 	  	 	  	 	 	  	 
	 	Issued: 	 	  	 	  	 	 	  	 
	 	50 	 	Class A Common
      shares 	$	 5 	 	$	 5 	 
	 	50 	 	Class 8 Common shares 	 	5 	 	 	5 	 
	 	  	 	  	 	  	 	 	  	 
	 	  	 	  	$	 10 	 	$	 10 	 

	 	 
	 	 
	DAUNHEIMER LYNCH ANDERSON LLP 	13 

	TERO OILFIELD SERViCES LTD. 
	Notes to Financial Statements 
	Year Ended September 30,2012 
	(Unaudited) 
	 

	11 	
      FINANCIAL INSTRUMENTS

The Company's financial instruments
consist of cash, short term investments, accounts receivable, accounts payable
and accrued liabilities, long-term debt and obligations under capital lease.
Unless otherwise noted, it is management's opinion that the Company is not
exposed to significant interest, currency or credit risks arising from these
financial instruments. The fair value of these financial instruments approximate
their carrying values, unless otherwise noted. 

Credit Risk 

Credit risk arises from the potential
that a counter party will fail to perform its obligations. The Company is
exposed to credit risk from customers. In order to reduce its credit risk, the
Company has adopted credit pOlicies which include the analysis of the financial
position of its customers and the regular review of their credit limits. An
allowance for doubtful accounts is established based upon factors surrounding
the credit risk of speCific acounts, historical trends and other information.

Interest Rate 

Interest rate risk is the risk that the
value of a financial instrument might be adversely affected by a change in the
interest rates. In seeking to minimize the risks from interest rate
fluctuations, the Company manages exposure through its normal financing
activities. The Company is exposed to interest rate risk primarily through its
floating interest rate bank indebtedness and credit facilities. 

	 	 
	12. 	CONTINGENT LIABILITY 

The Company is contingently liable for
a guarantee provided to the bank of the Corporate Shareholder. The guarantee is
in the amount of $350,000 and is supported by a general security agreement
covering aI/ property and a floating charge on land. It is not possible to
determine the amount of the liability, if any that may result from the
obligation of the Company to make repayments. The Company does not have any
recourse from these guarantees if this loan guarantee is exercised. Any losses
resulting from these guarantees will be charged against earnings in the year
incurred. No liability has been accrued as no payments are expected to be made
at this time. 

	 	 
	13. 	NON-CASH TRANSACTIONS 

During the year, equipment costing
$84,356 (2011 - $Nil) was acquired through a capital lease. 

	 	 
	14. 	SUBSEQUENT EVENTS 

The following events occurred
subsequent to the fiscal year end: 

Redemption of shares 

On March 1,2013, the Company redeemed
50 Class A common shares for a total consideration of $800,000. The
consideration given was $300,000 cash and a $500,000 promissory note for a 5
year term bearing interest at 2% per annum. 

Sale of Property 

On March 2, 2013, the Company sold some
of its land and buildings for $170,000 to the shareholder and a relative of the
shareholder. 

	 	 
	 	 
	DAUNHEIMER LYNCH ANDERSON LLP 	14 

	TERO OILFIELD SERVICES LTD. 
	Notes to Financial Statements 
	Year Ended September 30, 2012 
	(Unaudited) 
	 
	 

	15. 	
      COMPARATIVE FIGURES

Some of the comparative figures have
been reclassified to conform to the current year's presentation. 

	 	 
	DAUNHEIMER LYNCH ANDERSON LLP 	15 

 

 

 TERO OILFIELD SERVICES LTO. 
Financial Statements

Five Month Period Ended February 28, 2013 
(Unaudited -
See Notice To Reader) 

 

 

	
	6620 Crowchild Trail SW 
	Calgary, Alberta T3E 5R8 
	Telephone: (403) 217-5925 
	Facsimile: (403) 217-5934 
	Email: info@dlallp.com 
	www.dlallp.com 

	 
	NOTICE
      TO READER 

On the basis of information provided by management, we have
compiled the balance sheet of Tero Oilfield Services Ltd. as at February 28,
2013 and the statement of income and retained earnings for the five month period
then ended. 

We have not performed an audit or a review engagement in
respect of these financial statements and, accordingly, we express no assurance
thereon. 

Readers are cautioned that these statements may not be
appropriate for their purposes. 

 

Calgary, AS 
June 25, 2013 

CHARTERED
ACCOUNTANTS                     

1 

	TERO OILFIELD SERVICES LTO. 
	Balance Sheet 
	February 28, 2013 
	(Unaudited - See Notice To Reader)
    
	 
	 

	  	 	February 28 	 	 	September 30 	 
	  	 	2013 	 	 	2012 	 
	  	 	  	 	 	  	 
	  	 	  	 	 	  	 
	ASSETS 	 	  	 	 	  	 
	CURRENT 	 	  	 	 	  	 
	     
       Cash 	$	44,700 	 	$	- 	 
	       Term deposits 	 	69,285 	 	 	234,900 	 
	     
       Accounts receivable 	 	221,670 	 	 	209,459 	 
	       Accounts
      receivable from employees 	 	17,523 	 	 	18,380 	 
	     
       Interest receivable 	 	497 	 	 	1,289 	 
	       Goods and services
      tax recoverable 	 	- 	 	 	42 	 
	     
       Prepaid expenses 	 	- 	 	 	9,060 	 
	       Deposit on share
      repurchase 	 	300,000 	 	 	- 	 
	  	 	 	 	 	  	 
	  	 	  	 	 	  	 
	  	 	653,675 	 	 	473,130 	 
	  	 	  	 	 	  	 
	PROPERTY AND EQUIPMENT
      (Net of accumulated amortization) 	 	664,591 	 	 	715,695 	 
	  	 	 	 	 	  	 
	  	 	  	 	 	  	 
	  	$	 1,318,286 	 	$	 1,188,825 	 
	  	 	  	 	 	  	 
	  	 	  	 	 	  	 
	LIABILITIES AND SHAREHOLDERS'
      EQUITY 	 	  	 	 	  	 
	CURRENT 	 	  	 	 	  	 
	     
       Bank indebtedness 	$	- 	 	$	9,882 	 
	       Accounts payable
      and accrued liabilities 	 	30,149 	 	 	36,829 	 
	     
       Income taxes payable 	 	10,733 	 	 	1,173 	 
	       Goods and services
      tax payable 	 	2,065 	 	 	- 	 
	     
       Due to shareholder 	 	100,000 	 	 	- 	 
	       Current portion of
      capital lease 	 	16,220 	 	 	19,436 	 
	  	 	 	 	 	 	 
	  	 	159,167 	 	 	67,320 	 
	  	 	  	 	 	 	 
	  	 	  	 	 	  	 
	OBLIGATIONS UNDER CAPITAL
      LEASE 	 	46,704 	 	 	49,975 	 
	  	 	  	 	 	  	 
	FUTURE INCOME TAXES 	 	- 	 	 	1,708 	 
	  	 	  	 	 	  	 
	ASSET RETIREMENT OBLIGATION
    	 	- 	 	 	220,074 	 
	  	 	  	 	 	 	 
	  	 	46,704 	 	 	271,757 	 
	  	 	  	 	 	  	 
	  	 	205,871 	 	 	339,077	 
	  	 	 	 	 	  	 
	SHAREHOLDERS' EQUITY 	 	  	 	 	  	 
	       Share capital 	 	10 	 	 	10 	 
	     
       Retained earnings 	 	1,112,385 	 	 	849,738 	 
	  	 	 	 	 	 	 
	  	 	1,112,395 	 	 	849,748 	 
	  	 	  	 	 	  	 
	  	$	 1,318,266 	 	$	 1,188,825 	 
	  	 	 	 	 	 	 

	DAUNHEIMER LYNCH ANDERSON LLP 	2 

	TERO OILFIELD SERVICES LTO. 
	Statement of Income and Retained Earnings 
	Five Month Period Ended February 28, 2013 
	(Unaudited - See Notice To Reader) 
	 

	  	 	February2B 	 	 	September 30 	 
	  	 	2013 	 	 	2012 	 
	  	 	(5 months)	 	 	  	 
	  	 	  	 	 	  	 
	  	 	  	 	 	  	 
	DISPOSAL WELL REVENUES 	$	415,394 	 	$	 844,124 	 
	  	 	  	 	 	  	 
	EXPENSES 	 	  	 	 	  	 
	       Salaries and
      benefits 	 	121,747 	 	 	255,913 	 
	     
       Sub-contracts 	 	42,341 	 	 	23,832 	 
	       Repairs and
      maintenance 	 	35,451 	 	 	120,903 	 
	     
       Solids disposals 	 	31,289 	 	 	112,435 	 
	       Utilities 	 	22,143 	 	 	37,469 	 
	     
       Insurance 	 	17,000 	 	 	45,744 	 
	       Fuel and oil 	 	12,511 	 	 	72,807 	 
	     
       Advertising and promotion 	 	7,091 	 	 	10,357 	 
	       Telephone 	 	5,949 	 	 	9,526 	 
	     
       Professional fees 	 	5,000 	 	 	9,550 	 
	       Office 	 	3,043 	 	 	9,869 	 
	     
       Rental 	 	2,700 	 	 	2,700 	 
	       Business taxes and
      licences 	 	1,796 	 	 	2,946 	 
	     
       Travel 	 	1,660 	 	 	5,250 	 
	       Interest on
      capital lease obligations 	 	1,612 	 	 	4,490 	 
	     
       Interest on long term debt 	 	1,345 	 	 	1,620 	 
	       Property taxes 	 	1,341 	 	 	11,324 	 
	     
       Interest and bank charges 	 	813 	 	 	6,159 	 
	       Bad debts 	 	- 	 	 	5,759 	 
	     
       Amortization 	 	51,104 	 	 	126,411 	 
	       Accretion 	 	- 	 	 	14,837 	 
	  	 	  	 	 	  	 
	  	 	365,936 	 	 	889,901 	 
	  	 	  	 	 	  	 
	INCOME (LOSS) FROM OPERATIONS 	 	49,458 	 	 	(45,l77	) 
	  	 	 	 	 	  	 
	OTHER INCOME 	 	  	 	 	  	 
	     
       Asset retirement obligation recovery 	 	220,074 	 	 	- 	 
	       Interest income	 	967 	 	 	1,897 	 
	  	 	221,041 	 	 	1,897 	 
	  	 	  	 	 	  	 
	INCOME (LOSS) BEFORE INCOME
      TAXES 	 	270,499 	 	 	(43,880} 	 
	  	 	 	 	 	 	 
	INCOME TAXES 	 	  	 	 	  	 
	       Current 	 	9,560 	 	 	1,173 	 
	     
       Future 	 	(1,708 	)	 	354 	 
	  	 	  	 	 	  	 
	  	 	7,852 	 	 	1,527 	 
	  	 	  	 	 	  	 
	NET INCOME (LOSS) 	 	262,647 	 	 	(45,407	) 
	  	 	  	 	 	  	 
	RETAINED EARNINGS - BEGINNING
      OF PERIOD 	 	849,738 	 	 	895,145 	 
	  	 	 	 	 	 	 
	  	 	  	 	 	  	 
	RETAINED EARNINGS - END OF PERIOD 	$	 1,112,385 	 	$	 849,738 	 

	DAUNHEIMER LYNCH ANDERSON LLP 	3 

SCHEDULE D 

LIABILITIES OF THE CORPORATION 

As at the Closing Date, Tero has the following material
liabilities: 

	1. 	
      Promissory Note to Smith Holdings Group Ltd. in the
      amount of $500,000.

	2. 	
      LLR liability to Energy Department of Alberta in the
      amount of $270,000 which is secured by an LC.

SCHEDULE E 

THE CORPORATION’S PERSONNEL LIST 

	1. 	
      Garry Hofmann

	 	 
	2. 	
      Natel Hofmann

	 	 
	3. 	
      Timothy Lewandoski

	 	 
	4. 	
      Mickey Barca

	 	 
	5. 	
      John Beute

SCHEDULE F 

THE CORPORATION’S BANK ACCOUNTS 

Royal Bank of Canada chequing account: Transit # 01439, Account
#1012970 

Royal Bank of Canada business loan (line of credit): Account #
03009-82525387-001Exhibit 10.6 Form of Eight Percent Convertible Debenture

Exhibit 10.6

			
	US$__________

	 
	Debenture Class:  ______ 2012

	Date:  _________

	 
	Maturity Date:  _________, 2015

FRESH MEDICAL LABORATORIES, INC.

EIGHT PERCENT (8%) CONVERTIBLE DEBENTURE

THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER THE ACT OR THE LAWS OF THE APPLICABLE STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND SUCH STATE STATUTES.

THIS DEBENTURE (the “Debenture”) is a duly authorized issue of an Eight Percent (8%) Convertible Debentures of Fresh Medical Laboratories, Inc., a Delaware corporation (the “Company”). This Debenture is issued in part pursuant to and in accordance with the exemption from securities registration afforded by Regulation D promulgated under the Securities Act of 1933, as amended. 

FOR VALUE RECEIVED, the Company promises to pay to __________________________or the permitted registered holder hereof (the “Holder”), the principal sum of US$____________(_____________) (the “Initial Principal Amount”) or such lesser principal amount following the conversion or conversions of this Debenture in accordance with Paragraph 2 (the “Outstanding Principal Amount”). The Maturity Date of the Debenture is 36 months from the first date of the month following the signing of the Debenture by the Company.

Accrual of interest shall commence on the first day to occur after the date hereof until repayment in full of the principal sum has been made or duly provided for. Accrued and unpaid interest shall bear interest at the same rate until paid. The principal of this Debenture is payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts, at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time. 

The Company will pay the principal of this Debenture on the maturity date, free of any withholding or deduction of any kind (subject to the provisions of paragraph 2 below), to the Holder as of the maturity date and addressed to the Holder at the address appearing on the Debenture Register.

The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check.

This Debenture is subject to the following additional provisions:

1.

Conversion of Debentures.  The Holder of this Debenture is entitled, at its option, to convert all or any lesser portion of the Initial Principal Amount into restricted shares of common stock at a conversion price (the “Conversion Price”) for each share of common stock equal to the greater of $0.80 per common share or 85% of the closing price for the previous ten trading days prior to the conversion. In the event that the common stock of the Company is not publically traded, for purposes of conversion, the price shall be determined to be the average of the three (3) prior private stock purchases of the Company’s Common Stock for cash.    In the event of any stock split, dividend, combination or similar event occurring after a Conversion Date and prior to the issuance of the respective stock certificates, the Conversion Price will be subject to appropriate adjustment.  Conversion of this Debenture into restricted shares of common stock shall be effectuated by surrendering the Debenture to be converted to the Company, with the form of Notice of Conversion attached to the Debenture as Exhibit A, executed by the Holder of the Debenture evidencing such Holder’s intention to convert the Debenture.  The Notice of Conversion must be given to the Company as provided below not less than thirty (30) days prior to the Maturity Date.  Interest accrued or accruing from the date of issuance to the Conversion Date (but not previously paid) on the amounts so converted shall be paid on the Maturity Date.

No fractional shares or scrip representing fractions of shares of restricted shares of common stock will be issued on conversion, but the number of restricted shares of common stock issuable shall be rounded to the nearest whole share. The date on which a Notice of Conversion is given shall be deemed to be the date on which the Holder notifies the Company of its intention to so convert by delivery, by facsimile transmission or otherwise, of a copy of the Notice of Conversion.  Notice of Conversion may be given by facsimile to the Company at (801) 204-9623, Attention: President or, if by physical delivery of the Notice of Conversion to the Company, at the address for the Company contained in the Subscription Agreement. Upon conversion of the entire outstanding principal amount of this Debenture, the Holder shall submit this original Debenture to the Company for cancellation.

Upon the delivery by the Holder of a Notice of Conversion in the form attached hereto as Exhibit A, properly completed and duly executed by the Holder, the Company shall issue and, within five (5) business days after actual delivery to the Company of the Notice of Conversion (the “Deadline”), deliver to or upon the order of the Holder one or more certificates (the “Certificates”) representing that number of shares of restricted shares of common stock into which the portion of the Debenture converted is convertible, as shall be determined in accordance herewith.

The number of shares of common stock to be issued upon each conversion of this Debenture shall be determined by dividing that portion of the principal amount of the Debenture to be converted at such time by the Conversion Price in effect on the date the Notice of Conversion is delivered via facsimile to the Company by the Holder divided by .85.

2.

Waiver of Demand and Presentment.  The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereon, regardless of and without notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder.

3.

Payment of Costs.  If one or more of the “Events of Default” as described in Paragraph 5 shall occur, the Company agrees to pay all costs and expenses, including reasonable attorney’s fees, which may be incurred by the Holder in collecting amount due under, or enforcing any terms of, this Debenture.

4.

Events of Default.  If more than one of the following described “Events of Default” shall occur:

(a)

The Company shall default in the timely payment of principal or interest; or

(b)

Any of the representations or warranties made by the Company herein, or in any certificate or financial or other document heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Debenture, shall be false or misleading any material respect at the time made; or

(c)

The Company shall fail to perform or observe any other covenant, provision, condition, agreement or obligation of the Company under this Debenture and such failure shall continue uncured for a period of thirty (30) days after notice from the Holder of such failure; or 

(d)

The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (4) apply for or consent to the appointment of a trustee, liquidator or receiver for it or for a substantial part of its property or business; or

(e)

 (e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or

(f)

 (f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within thirty (30) days thereafter; or

(g)

Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and if instituted against the Company, shall not be dismissed, stayed or bonded within sixty (60) days after such institution or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding;

Then, or at any time thereafter, and in each and in every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default), the Holder may consider this Debenture immediately due or payable, without presentment, demand, protest or notice of any kind, all of which are expressly waived, anything herein or in any Debenture or other instruments contained to the contrary notwithstanding, and the Holder may immediately demand without expiration of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or any other rights or remedies afforded by law. 

 

5.

Conversion Requirements.  Notwithstanding anything to the contrary contained herein, and in addition to any other requirements reasonably requested by the Company to comply with state of federal securities laws, each Notice of Conversion shall contain representations to the effect that (i) the Holder is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D promulgated by the SEC under the 1933 Act, and (ii) the Conversion Shares are being acquired for the Holder’s own account and not as a nominee for any other party.

6.

Transfer Restrictions.  The Holder may, subject to compliance with the provisions of Regulation D under the Securities Act of 1933, as amended (the 1933 Act”), without notice, transfer, assign, mortgage or encumber this Debenture, any interest herein or any part hereof in minimum amount of $25,000 or the entire outstanding balance to an “accredited investor” as defined in the 1933 Act that will be acquiring the Debenture or interest herein for its account for the purpose of investment and not with a view to or for sale in connection with any distribution hereof and, each assignee, transferee or mortgage (which may include any affiliate of the Holder) shall have the right to transfer or assign its interest subject to the same limitations.   Each such assignee, transferee and mortgagee shall have all of the rights of the Holder under this Debenture.  The Company may condition registrations of transfers on the receipt of a certificate from the assignee, transferee of mortgagee in a form acceptable to the Company that contains representations and warranties similar to those of the Holder contained in the Subscription Agreement, and IRS Form W-9 or an equivalent certification under penalty of perjury in compliance with the Internal Revenue Code of 1986, as amended from time to time.

7.

Covenants of the Company.  The Company covenants that until all amounts due under this Debenture have been paid in full, by conversion or otherwise, unless the Holder or subsequent Holder waives compliance in writing, the Company shall:

(a)

give prompt written notice to the Holder of any Event of Default or of any other matter which has resulted in, or could reasonably be expected to result in a materially adverse change in its financial condition or operations;

(b)

at all times reserve and keep available out of its authorized but unissued restricted common stock, for the purpose of effecting the conversion of this Debenture into restricted shares of common stock, such number of its duly authorized shares of restricted shares of common stock as shall from time to time be sufficient to effect the conversion of the outstanding principal balance of this Debenture into restricted shares of common stock. 

(c)

Upon receipt by the Company of evidence from the Holder reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture,

(i)

in the case of loss, theft or destruction, upon provision of indemnity reasonably satisfactory to it and/or its transfer agent, or

(ii)

in the case of mutilation, upon surrender and cancellation of this Debenture, then the Company at its expense will execute and deliver to the Holder a new Debenture, dated the date of the lost, stolen, destroyed or mutilated Debenture, and evidencing the outstanding and unpaid principal amount of the lost, stolen, destroyed or mutilated Debenture.

8.

Partial Invalidity.  In the case any provision of this Debenture is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that its enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Debenture will not in any way be affected impaired thereby.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized.

				
	Dated: _____________________

	 
	Fresh Medical Laboratories, Inc.

	 
	 
	 
	 

	 
	 
	By

	 

	 
	 
	 
	Steven C. Eror

	 
	 
	Its

	President and Chief Executive Officer

EXHIBIT A

NOTICE OF CONVERSION

(To Be Executed by the Registered Holder in Order to Convert the Debenture)

The Undersigned hereby irrevocably elects to convert $                                of the Eight Percent (8%) Convertible Debenture,  No. ____________, into restricted shares of common stock of Fresh Medical Laboratories, Inc. (the "Company"), according to the terms and conditions set forth in the Debenture, as of the date written below. If securities are to be issued to a person other than the Undersigned, the Undersigned agrees to pay all applicable transfer taxes with respect thereto.

The Undersigned represents that it, as of this date, is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D promulgated by the SEC under the 1933 Act.

The Undersigned also represents that the Conversion Shares are being acquired for the Holder’s own account and not as a nominee for any other party. The Undersigned represents and warrants that all offers and sales by the Undersigned of the Conversion Shares shall be made pursuant to either an effective registration statement or an exemption from registration under the 1933 Act. 

Conversion Date*:   ________________________

Holder (Print True Legal Name): 

_____________________________________________

(Signature of Duly Authorized Representative of Holder)

			
	Address of Holder:  

	 

	 
	 
	 

	 
	 
	 

* This Notice of Conversion (whether by facsimile or otherwise as permitted in the Debenture) must be received by the Company by the first business day following the Conversion Date and at least thirty (30) days prior to the Maturity Date of  the Debenture.

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