content: <HTML>
  <HEAD>
       <TITLE></TITLE>
  </HEAD>
  <BODY STYLE="font: 10pt Times New Roman, Times, Serif">
  
  <P STYLE="margin: 0"></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-right: 0; margin-left: 0"><B>UNITED STATES<BR>
  SECURITIES AND EXCHANGE COMMISSION<BR>
  Washington, D.C. 20549</B></P>
  
  <HR SIZE="2" NOSHADE ALIGN="CENTER" STYLE="width: 120px; width: 1.25in; color: #ACA899">
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-right: 0; margin-left: 0"><B>FORM 10-Q</B></P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 13%; font-size: 10pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 10pt; color: windowtext"><B>(Mark One)</B></FONT></TD>
      <TD STYLE="width: 87%; font-size: 10pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="text-align: center; vertical-align: middle">
          <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><FONT STYLE="font-family: Wingdings"><B>x</B></FONT></P></TD>
      <TD STYLE="font-size: 10pt; font-weight: bold; text-align: center"><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR&nbsp;15(d)&nbsp;OF&nbsp;THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>For the Quarter Ended January 31, 2013</B></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>or</B></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="font: bold 10pt Wingdings; text-align: center"><BR>
  <FONT STYLE="font: 10pt Wingdings; color: windowtext">o</FONT></TD>
      <TD STYLE="font-size: 10pt; font-weight: bold; text-align: center"><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR&nbsp;15(d)&nbsp;OF&nbsp;THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>For the transition period from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-right: 0; margin-left: 0"><B>Commission file number
  000-33391</B></P>
  
  
  <HR SIZE="2" NOSHADE ALIGN="CENTER" STYLE="width: 120px; width: 1.25in; color: #ACA899">
  
  <P STYLE="font: 24pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Terra Inventions Corp.</B></P>
  
  <P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: center"><B>(Formerly Li-ion Motors Corp.)</B></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 6pt 0; text-align: center">(Name of Registrant as Specified in Its
  Charter)<B> </B></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 49%; font-size: 10pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 10pt; color: windowtext"><B>Nevada</B></FONT><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>(State or Other Jurisdiction</B></FONT><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>of Incorporation or Organization)</B></FONT></TD>
      <TD STYLE="width: 2%; font-size: 10pt; font-weight: bold; text-align: center">&nbsp;</TD>
      <TD STYLE="width: 49%; font-size: 10pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 10pt; color: windowtext"><B>88-0490890</B></FONT><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>(I.R.S. Employer</B></FONT><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>Identification No.)</B></FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>
          <P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-right: 0; margin-left: 0"><B><BR>
          4894 Lone Mountain #168, Las Vegas, Nevada </B></P>
          <P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-right: 0; margin-left: 0"><B>(Address of Principal
          Executive Offices)</B></P></TD>
      <TD STYLE="font-size: 10pt; font-weight: bold; text-align: center">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; font-weight: bold; text-align: center"><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>89130</B></FONT><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>(Zip Code)</B></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="3" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>(702)&nbsp;940-9940</B></FONT><BR>
  <FONT STYLE="font-size: 10pt; color: windowtext"><B>(Issuer&rsquo;s Telephone Number, Including Area Code)</B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-right: 0; margin-left: 0"><B>Securities registered
  under Section&nbsp;12(b) of the Exchange Act:</B><BR>
  None</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-right: 0; margin-left: 0"><B>Securities registered
  under Section&nbsp;12(g) of the Exchange Act:</B><BR>
  Common Stock, Par value $0.01 per share</P>
  
  
  <HR SIZE="2" NOSHADE ALIGN="CENTER" STYLE="width: 120px; width: 1.25in; color: #ACA899">
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-right: 0; margin-left: 0">Indicate by check mark whether the issuer:
  (1) filed all reports required to be filed by Section&nbsp;13 or 15(d) of the Exchange Act during the past 12&nbsp;months (or for
  such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been subject to such filing requirements
  for the past 90&nbsp;days.&nbsp; [X]&nbsp;Yes&nbsp;&nbsp;&nbsp;[ ]&nbsp;No</P>
  
  
  <!-- Field: Page; Sequence: 1 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->1<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-right: 0; margin-left: 0">Indicate by check mark
  whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
  to be submitted and posted pursuant to Rule 405 of Regulation S-T (&sect;232.405 of this chapter) during the preceding 12 months
  (or for such shorter period that the registrant was required to submit and post such files). [X]&nbsp;Yes&nbsp;&nbsp;&nbsp;[ ]&nbsp;No</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-right: 0; margin-left: 0">Indicate by check mark
  whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. (Check One):</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-right: 0; margin-left: 0">Large accelerated filer
  [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-right: 0; margin-left: 0">(Do not check if a smaller reporting company)</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-right: 0; margin-left: 0">Indicate by check mark whether the registrant
  is a shell company (as defined in Rule 12b-2 of the Exchange Act).</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-right: 0; margin-left: 0">[ ] Yes [X] No</P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-right: 0; margin-left: 0">On March 11, 2013, there
  were 39,938,166 shares of common stock outstanding.</P>
  
  <HR SIZE="2" NOSHADE ALIGN="CENTER" STYLE="width: 100%; color: black">
  
  <P STYLE="font: 6.5pt/normal Tahoma, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 6.5pt/normal Tahoma, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 6.5pt/normal Tahoma, Helvetica, Sans-Serif; margin: 0"></P>
  
  
  <P STYLE="font: 6.5pt/normal Tahoma, Helvetica, Sans-Serif; margin: 0"></P>
  
  <P STYLE="font: 6.5pt/normal Tahoma, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B></B></P>
  
  <TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD>
      <TD>&nbsp;</TD>
      <TD STYLE="text-align: right"><A NAME="a_001"></A>Page&nbsp;No.</TD></TR>
  <TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
      <TD><A HREF="#a_002">PART I. FINANCIAL INFORMATION</A></TD>
      <TD>&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD>
      <TD>&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
      <TD><A HREF="#a_004">ITEM I &ndash; Unaudited Financial Statements</A></TD>
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="text-align: right">3</TD></TR>
  <TR STYLE="vertical-align: top; background-color: White">
      <TD>&nbsp;</TD>
      <TD>&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_005">Balance Sheets as of January 31, 2013 and July 31, 2012 (Unaudited)</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">4</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_006">Consolidated Statements of Operations for the Three and Six Months Ended January 31, 2013 and 2012 (Unaudited)</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">5</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_007">Consolidated Statement of Comprehensive Income (Loss) for the Three and Six Months Ended January 31, 2013 and 2012 (Unaudited)</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">6</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_008">Consolidated Statements of Cash Flows for the Six Months Ended January 31, 2013 and 2012 (Unaudited)</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">7</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_009">Statement of Stockholders Deficiency (Unaudited)</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">8</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_010">Notes to Unaudited Consolidated Financial Statements</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">9</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_011">ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">18</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_012">ITEM 3 &ndash; Quantitative and Qualitative Disclosures About Market Risk</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">22</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_013">ITEM 4T&ndash; Controls and Procedures</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">22</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_014">PART II. OTHER INFORMATION</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top"><A HREF="#a_016">ITEM 6 - Exhibits</A></TD>
      <TD STYLE="vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="vertical-align: bottom; text-align: right">24</TD></TR>
  </TABLE>
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="color: Red; font: 9pt/115% Sans-Serif; margin: 0"><B></B></P>
  
  
  <!-- Field: Page; Sequence: 2 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->2<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><A NAME="a_002"></A>PART I. FINANCIAL INFORMATION</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><A NAME="a_004"></A>ITEM 1. Financial Statements</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Certain information and footnote disclosures
  required under accounting principles generally accepted in the United States of America have been condensed or omitted from the
  following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It
  is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial
  statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended July 31, 2012. In the opinion
  of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position
  have been included and all such adjustments are of a normal recurring nature. The results of operation for the three and six months
  ended January 31, 2013 and 2012 are not necessarily indicative of the results for the entire fiscal year or for any other period.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 3 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->3<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 9pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="15" STYLE="font-size: 11pt; font-weight: bold; text-align: center">Terra Inventions Corp.</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="15" STYLE="font-size: 11pt; font-weight: bold; text-align: center">(Formerly Li-ion Motors Corp.)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="15" STYLE="font-size: 11pt; font-weight: bold; text-align: center"><A NAME="a_005"></A>Consolidated Balance Sheets</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="15" STYLE="font-size: 11pt; font-weight: bold; text-align: center">(unaudited)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-size: 10pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 10pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 10pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-size: 10pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">July 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2013</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-size: 10pt; font-weight: bold">Assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Current assets:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Cash and cash equivalents</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">64</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Accounts receivable, net of allowance for doubtful accounts of 649,457 and $561,237, respectively</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Notes receivable, net of allowance for doubtful accounts of $1,750,000 and $2,458,602, respectively</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-left: 10pt">Inventories</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Building and building improvements, net</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,049,146</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Other current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,190</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 30pt">Total current assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,514</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,053,900</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Property and equipment, net</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,508</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,785</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Deferred patent and trademark costs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">38,063</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">37,413</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 30pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">44,085</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,097,098</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold; text-align: left">Liabilities and Stockholders' Deficiency</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Current liabilities:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Accounts payable and accrued expenses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,509,293</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,538,060</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Current portion of long-term debt</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">385,256</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,460,189</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Customer deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">102,188</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">102,188</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 30pt">Total current liabilities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,996,737</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,100,437</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-left: 10pt">Long-term liabilities:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Long-term debt, less current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">250,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">250,879</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 30pt">Total liabilities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,246,737</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,351,316</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Commitments and contingencies</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Stockholders' deficiency</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Preferred stock, $.001 par value, 5,000,000 shares authorized, 0 issued and outstanding</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Common stock, $.001 par value, 40,000,000 shares authorized, 39,938,166 and 20,642,347 issued</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">and outstanding at January 31, 2013 and July 31, 2012, respectively.</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,938</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,642</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Additional paid-in capital</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">62,905,729</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">62,625,225</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Accumulated deficit</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(65,140,015</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(64,892,123</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Accumulated other comprehensive loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(8,304</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,962</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 30pt">Stockholders' deficiency attributable to Terra Inventions Corp.</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,202,652</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,254,218</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-left: 20pt">Non-controlling interests</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Stockholders' deficiency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,202,652</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,254,218</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 30pt">Total stockholders' deficiency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,202,652</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,254,218</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 30pt">Total liabilities and stockholders' deficiency</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">44,085</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,097,098</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="color: red">&nbsp;</TD>
      <TD STYLE="color: red; text-align: left">&nbsp;</TD><TD STYLE="color: red; text-align: right">&nbsp;</TD><TD STYLE="color: red; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD COLSPAN="9" STYLE="text-align: center">See accompanying notes to unaudited consolidated financial statements</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 12pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></P>
  
  
  <!-- Field: Page; Sequence: 4 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P>
  
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"></P>
  
  <P STYLE="font: 12pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="25" STYLE="font-size: 11pt; font-weight: bold; text-align: center">Terra Inventions Corp.</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="25" STYLE="font-size: 11pt; font-weight: bold; text-align: center">(Formerly Li-ion Motors Corp.)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="25" STYLE="font-size: 11pt; font-weight: bold; text-align: center"><A NAME="a_006"></A>Consolidated Statements of Operations</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="25" STYLE="font-size: 11pt; font-weight: bold; text-align: center">(unaudited)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the Three Months Ended</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the Six Months Ended</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2013</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2012</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2013</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2012</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Revenue:</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Sales</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">473,128</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">476,696</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">License agreement revenue</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">168,750</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">337,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Total revenue</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">641,878</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">814,196</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Costs and expenses:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Cost of sales</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">257,452</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">258,047</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">General and administrative</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">120,954</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,396,441</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">169,274</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,620,659</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">(Gain) loss on disposal of property and equipment</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,467</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,552</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Research and development</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">155,785</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,297</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">411,651</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Total costs and expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">114,487</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,809,678</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">176,123</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,290,357</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Loss from operations</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(114,487</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,167,800</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(176,123</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,476,161</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Other (expenses) income:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Interest (expense)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(18,897</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(32,309</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(41,108</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(73,842</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Loss on extinguishment of debt</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(119,140</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(119,140</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Other income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43,944</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">93,060</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">88,479</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">155,731</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Loss before provision for (benefit from) income taxes</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(208,580</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,107,049</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(247,892</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,394,272</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Provision for (benefit from) income taxes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Net loss</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(208,580</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,107,049</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(247,892</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,394,272</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Less: net loss attributable to non-controlling interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss attributable to Terra Inventions Corp.</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(208,580</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,107,049</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(247,892</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,394,272</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Loss per share - basic and diluted:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Loss per common share attributable to Terra Inventions Corp. common shareholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.02</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.10</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.01</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.12</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Weighted average number of shares outstanding - basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,704,783</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">20,642,347</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21,399,154</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">20,642,347</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="17" STYLE="font-size: 9pt; text-align: center">See accompanying notes to unaudited consolidated financial statements</TD></TR>
  </TABLE>
  
  
  
  
  <P STYLE="font: 12pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></P>
  
  
  <!-- Field: Page; Sequence: 5 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"><B></B></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="21" STYLE="font-size: 11pt; font-weight: bold; text-align: center">Terra Inventions Corp.</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="21" STYLE="font-size: 11pt; font-weight: bold; text-align: center">(Formerly Li-ion Motors Corp.)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="21" STYLE="font-size: 11pt; font-weight: bold; text-align: center"><A NAME="a_007"></A>Consolidated Statement of Comprehensive Loss</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="21" STYLE="font-size: 11pt; font-weight: bold; text-align: center">(unaudited)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the Three Months Ended</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the Six Months Ended</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2013</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2012</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2013</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2012</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Net loss</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(208,580</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(2,107,049</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(247,892</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(2,394,272</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Other comprehensive income</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Currency translation adjustment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(289</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">468</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(342</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Comprehensive loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(208,869</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,106,581</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(248,234</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,393,761</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Comprehensive loss attributable to noncontrolling interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Comprehensive loss attributable to Terra Inventions Corp</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(208,869</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,106,581</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(248,234</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,393,761</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="17" STYLE="font-size: 9pt; text-align: center">See accompanying notes to unaudited consolidated financial statements</TD></TR>
  </TABLE>
  
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"><B></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 6 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->6<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 9pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="21" STYLE="font-size: 11pt; font-weight: bold; text-align: center">Terra Inventions Corp.</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="21" STYLE="font-size: 11pt; font-weight: bold; text-align: center">(Formerly Li-ion Motors Corp.)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="21" STYLE="font-size: 11pt; font-weight: bold; text-align: center"><A NAME="a_008"></A>Consolidated Statements of Cash Flows</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="21" STYLE="font-size: 11pt; font-weight: bold; text-align: center">(unaudited)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-size: 8pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 10pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-size: 8pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For the Six Months Ended</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">2013</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">2012</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; text-align: left">CASH FLOWS FROM OPERATING ACTIVITIES:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="width: 56%; text-align: left; padding-left: 10pt">Net loss</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(247,892</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(2,394,272</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Adjustments to reconcile net earnings (loss) to net cash utilized by operating activities</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-left: 20pt">Depreciation</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,277</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,716</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Loss on disposal of property and equipment, net</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,552</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,687</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Provision for doubtful accounts</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,167,313</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Licensing fees</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(354,833</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Non-cash sale of property and equipment</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,537</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-left: 20pt">Non-cash sale of inventories</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">255,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Non-cash sale of electric vehicles</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">217,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Loss on extinguishment of debt</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119,140</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Increase (decrease) in cash flows from changes in operating assets and liabilities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-left: 30pt">Inventories</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(84,389</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 30pt">Prepaid expenses and other current assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,190</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">138,132</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 30pt">Deferred patent and trademark costs</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(650</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(875</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 30pt">Bank overdraft</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">806</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 30pt">Accounts payable and accrued expenses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,491</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,274</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 30pt">Customer deposits</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(99</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 30pt">Deferred revenue</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(66,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Net cash used in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(76,892</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">353,997</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold; text-align: left">CASH FLOWS FROM INVESTING ACTIVITIES:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Additions to property and equipment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold; text-align: left">CASH FLOWS FROM FINANCING ACTIVITIES:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Advances on notes receivable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(54,539</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Payments received on notes receivable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,984</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Proceeds from issuance of debt</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">77,185</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">572,462</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Payments on debt</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(900,102</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Net cash provided by financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">77,185</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(359,195</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Effect of exchange rate changes on cash and cash equivalents</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(342</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; text-align: left">CHANGE IN CASH AND CASH EQUIVALENTS</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Net increase (decrease) in cash and cash equivalents</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(49</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,687</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Cash and cash equivalents at beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">64</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,118</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Cash and cash equivalents at end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">431</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD STYLE="color: red; font-style: italic">&nbsp;</TD>
      <TD STYLE="color: red; font-style: italic; text-align: left">&nbsp;</TD><TD STYLE="color: red; font-style: italic; text-align: right">&nbsp;</TD><TD STYLE="color: red; font-style: italic; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; text-align: left">SUPPLEMENTAL CASH FLOW DISCLOSURES</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Cash paid during the period for:</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-left: 20pt">Interest</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,975</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt">Income taxes</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold; text-align: left">SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Assignment of note receivable with Sky Power Solutions Corp. to Frontline Asset Management debt</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">70,860</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Shares issued for debt</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">299,800</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Property and equipment, inventories and electric vehicles exchanged for payment on debt</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">611,537</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="9" STYLE="text-align: center">See accompanying notes to unaudited consolidated financial statements</TD></TR>
  </TABLE>
  
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P>
  
  <!-- Field: Page; Sequence: 7 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->7<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 7pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="37" STYLE="font-size: 11pt; font-weight: bold; text-align: center">Terra Inventions Corp.</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="37" STYLE="font-size: 11pt; font-weight: bold; text-align: center">(Formerly Li-ion Motors Corp.)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="37" STYLE="font-size: 11pt; font-weight: bold; text-align: center"><A NAME="a_009"></A>Consolidated Statement of Stockholders' Equity (Deficiency)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="37" STYLE="font-size: 11pt; font-weight: bold; text-align: center">For the Periods Ended As Noted</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="37" STYLE="font-size: 11pt; font-weight: bold; text-align: center">(unaudited)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Number of <BR> Common Shares</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Common Shares<BR> $0.01 <BR> Par Value</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Additional Paid in <BR> Capital</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Accumulated<BR> Deficit</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Accumulated Other<BR> Comprehensive <BR> Income (Loss)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Treasury Stock<BR> at Cost</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Non-Controlling Interest</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Comprehensive<BR> Income (Loss)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Total</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 28%; font-weight: bold; text-align: justify">Balance - August 1, 2011</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%; text-align: right">642,347</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 4%; text-align: right">642</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 4%; text-align: right">62,645,225</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 4%; text-align: right">(62,580,108</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 4%; text-align: right">(9,197</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 4%; text-align: right">(20,000</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 4%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 4%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 4%; text-align: right">36,562</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 8pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Common stock issued as collateral on loan released to lender</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(20,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Foreign currency translation</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,235</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,235</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,235</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Net earnings</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,312,015</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(2,312,015</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,312,015</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9px">Comprehensive income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,310,780</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold; text-align: justify; padding-bottom: 1pt">Balance - July 31, 2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,642,347</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,642</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">62,625,225</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(64,892,123</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,962</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,254,218</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-size: 8pt">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Common stock issued on conversion of debt</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,295,819</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,296</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">280,504</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">299,800</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Foreign currency translation</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(342</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(342</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(342</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Net earnings</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(247,892</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(247,892</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(247,892</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9px">Comprehensive income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(248,234</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; text-align: justify; padding-bottom: 1pt">Balance - January 31, 2013</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">39,938,166</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">39,938</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">62,905,729</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(65,140,015</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(8,304</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,202,652</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 8pt; color: red">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-size: 8pt; color: red">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; color: red; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD COLSPAN="37" STYLE="text-align: center">See accompanying notes to unaudited consolidated financial statements</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P>
  
  <!-- Field: Page; Sequence: 8 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->8<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Terra Inventions Corp.</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>(Formerly Li-ion Motors Corp.)</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><A NAME="a_010"></A>Notes to Unaudited Consolidated Financial Statements</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>January 31, 2013</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Note 1. Financial Statement Presentation</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>History and Nature of Business</I></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Li-ion Motors Corp. was incorporated under the laws of the
  State of Nevada on April 12, 2000. On November 30, 2012, Li-ion Motors merged with its wholly owned subsidiary, Terra Inventions,
  Corp. (the &ldquo;Company&rdquo; or &ldquo;Terra&rdquo;) and as a result of the merger the name of the Company was changed. The
  name Terra was effective for trading purposes on December 21, 2012. The Company is currently pursuing the development and marketing
  of electric powered vehicles and products based on the advanced lithium battery technology it has developed.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Effective April 15, 2008, the Company entered into a License
  Agreement (&ldquo;License Agreement&rdquo;) with Sky Power Solutions, now Clean Enviro Tech Corp. (&ldquo;CET&rdquo;), CET providing
  for their license to CET of their patent applications and technologies for rechargeable lithium ion batteries for electric vehicles
  and other applications (&ldquo;Licensed Products&rdquo;). Under the License Agreement, the Company has the right to purchase their
  requirements of lithium ion batteries from CET, and their requirements of lithium ion batteries shall be supplied by CET in preference
  to, and on a priority basis as compared with, supply and delivery arrangements in effect for other customers of CET. The Company&rsquo;s
  cost for lithium ion batteries purchased from CET shall be CET&rsquo;s actual manufacturing costs for such batteries for the fiscal
  quarter of CET in which the Company&rsquo;s purchase takes place. On May 25, 2010, the license agreement was amended to reflect
  Clean Enviro Tech&rsquo;s territory would only be the United States and US possessions and territories and we can license to other
  companies in other parts of the world. The Company issued a license to a firm for the rights in Canada in 2010.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Under the terms of the license agreement, CET had agreed
  to invest a minimum of $1,500,000 in each of the following two years(2009 and 2010)in development of the technology for the Licensed
  Products. To date, CET has not met the minimum requirements in the development of technology, and therefore, is not in compliance
  with its obligations under this covenant of the license agreement.&nbsp; The Company has advised CET that it will not give notice
  of default against them for their failure to comply with this covenant over the term of the License Agreement.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Effective May 28, 2010, the Company entered into a ten year
  license agreement with Lithium Electric Vehicle Corp. (&ldquo;LEVC&rdquo;) providing for the Company to license to LEVC certain
  of the Company&rsquo;s patent applications and technologies for electric vehicles and other applications. The purpose of the licensee
  is to expand sales of the Company&rsquo;s current line of products by the manufacture and sale of such products in Canada, which
  is LEVC&rsquo;s exclusive territory under the license agreement.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The license agreement consists of an annual fee of $500,000
  for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third party.&nbsp;&nbsp;LEVC
  is required to pay $1 million of the license fee during year one for the initial two years and $500,000 each additional year.&nbsp;&nbsp;The
  Company has received $732,666 from LEVC with a balance due of $267,334 as of July 31, 2012, which is now delinquent.&nbsp;&nbsp;The
  Company has reflected the delinquent amount due from LEVC in its accounts receivable and has established a reserve for doubtful
  accounts for the entire amount.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The note of $1,750,000 has been reflected on the books of
  the Company. Due to LEVC having no assets to secure the note, the Company has recorded a reserve for doubtful accounts for the
  entire note amount of $1,750,000.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">As of February 19, 2013 Terra Inventions Corp and Lithium
  Electric Vehicle Corp. signed an amended License Agreement.&nbsp; Both parties have agreed that, (1) Terra Inventions will own
  49% of LEVC in exchange for the balance of any funds due to Terra in connection with the license agreement.&nbsp; (2) LEVC intends
  to further develop Terra&rsquo;s technology in Canada.&nbsp; In exchange for this agreement Terra will have full access to these
  developments made by LEVC for Terra&rsquo;s use, including further development in the United States.&nbsp; (3) LEVC will retain
  ownership of further developments only. (4) Terra and LEVC also agree that LEVC will be doing R &amp; D and develop free energy
  technology and wind turbine technology to achieve higher efficiency for electric vehicles.&nbsp; By Terra providing the platform,
  technology and BMS system for electric vehicles to LEVC, LEVC will also allow Terra to further develop these technologies in the
  United States.&nbsp; (5) Both parties understand that LEVC will own these technologies accept for rights hereby granted to Terra
  for the USA.</P>
  
  
  <!-- Field: Page; Sequence: 9 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->9<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><I>Basis of Presentation</I></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Going Concern</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company&rsquo;s financial statements for the six months
  ended January 31, 2013, have been prepared on a going concern basis which contemplates the realization of assets and settlement
  of liabilities and commitments in the normal course of business.&nbsp;&nbsp;The Company did not have any cash revenue from vehicle
  sales in the six months ended January 31, 2013.&nbsp;&nbsp;Management recognized that the Company&rsquo;s continued existence is
  dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and revenue to cover
  expenses, as the Company continues to incur losses from operations.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Since its incorporation, the Company financed its operations
  through advances and loans from its controlling shareholders.&nbsp;&nbsp;The Company expects to finance operations through the
  sale of equity or other investments as well as continued advances from shareholders for the foreseeable future, as the Company
  does not expect to receive significant revenue from vehicle sales until the required certifications have been received.&nbsp;&nbsp;There
  is no guarantee that the Company will be successful in arranging financing on acceptable terms.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company&rsquo;s facility in Mooresville, North Carolina
  was financed through Bayview Loan Servicing, LLC (&ldquo;Bayview&rdquo;). Frontline Asset Management, Inc. (&ldquo;Frontline&rdquo;),
  had a second lien on the property. Li-ion became delinquent with the mortgage payments, and, following a prior foreclosure filing
  and new agreement as to payments under the mortgage, on July 12, 2012, Bayview refiled a notice of hearing on foreclosure on its
  deed of trust and security agreement for a hearing on August 21, 2012, the outstanding amount of the loan at July 31, 2012 being
  $946,279.&nbsp;&nbsp;&nbsp;A similar notice of foreclosure pursuant to the Frontline deed of trust was filed by the Trustee with
  the same court on July 25, 2012, noticing a hearing for August 22, 2012, the amended notice of default in the amount of $660,546
  having been given on July 23, 2012. The Trustee for Frontline also filed on July 25, 2012, a notice of foreclosure and sale to
  take place on August 22, 2012.&nbsp;&nbsp;The Trustee under the Bayview deed of trust on August 21, 2012, filed its notice of foreclosure
  and sale to take place on September 18, 2012, of the real and personal property securing the deed of trust.&nbsp;&nbsp;&nbsp;On
  September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure and sale was completed, and
  Frontline assigned its rights to its foreclosure bid to A&amp;S Holdings Inc., a related holding company, subject to the rights
  of Bayview, as the holder of the first mortgage on the property.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">As of the filing of this Report, the Company does not have
  any substantive plan on where its facilities will be or how it will continue the manufacturing process of its electric vehicles.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company&rsquo;s ability to raise additional capital is
  affected by trends and uncertainties beyond its control.&nbsp;&nbsp;The Company does not currently have any arrangements for financing
  and it may not be able to find such financing if required.&nbsp;&nbsp;Obtaining additional financing would be subject to a number
  of factors, including investor sentiment.&nbsp;&nbsp;Market factors may make the timing, amount, terms or conditions of additional
  financing unavailable to it.&nbsp;&nbsp;These uncertainties raise substantial doubt about the ability of the Company to continue
  as a going concern.&nbsp;&nbsp;The accompanying financial statements do not include adjustments that might result from the outcome
  of these uncertainties. The Company has reduced the workforce to a few consultants, even if financing is obtained qualified engineers
  and technicians that would need to be hired may not be readily available.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Common Stock</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On December 13, 2011, the Board of Directors unanimously
  approved an amendment to the Company&rsquo;s Articles of Incorporation to decrease the authorized number of shares of common stock
  from 300 million shares, par value $.001 per share, to 60 million shares, par value $.001 per share.&nbsp;&nbsp;The Company filed
  the amendment with the Secretary of State of Nevada on December 14, 2011.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Effective January 26, 2012, the Financial Industry Regulatory
  Authority (&ldquo;FINRA&rdquo;) approved a one-for-five reverse split of the common stock.&nbsp;&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Our Board of Directors unanimously approved an amendment
  to our Articles of Incorporation to increase the authorized number of shares of common stock from 60,000,000 shares, par value
  $.001 per share, to 400,000,000 shares, par value $.001 per share, on July 20, 2012. On the same date we received the written consent
  from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the amendment
  with the Secretary of State of Nevada on August 30, 2012, and the amendment was effective on that date.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P>
  
  <!-- Field: Page; Sequence: 10 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->10<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Our Board of Directors unanimously approved an amendment
  to our Articles of Incorporation to decrease the authorized number of shares of common stock from 400,000,000 shares, par value
  $.001 per share, to 40,000,000 shares, par value $.001 per share, on November 29, 2012. On the same date we received the written
  consent from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the
  amendment with the Secretary of State of Nevada on November 29, 2012, and the amendment was effective on that date.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Effective December 31, 2012, FINRA approved a one-for-ten
  reverse split of the common stock. All share and per share amounts have been restated to reflect the one-for-ten reverse stock
  split.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">All shares and per share information has been revised to
  give retroactive effect to the reverse stock splits.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 2. Summary of Significant Accounting Policies</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company&rsquo;s significant accounting policies are summarized
  in Note 1 of the Company&rsquo;s Annual Report on Form 10-K for the year ended July 31, 2012. There were no significant changes
  to these accounting policies during the three months ended January 31, 2013 and the Company does not expect that the adoption of
  other recent accounting pronouncements will have a material impact on its financial statements.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 3. Fair Value Measurements&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company utilizes the accounting guidance for fair value
  measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized
  or disclosed at fair value in the consolidated financial statements on a recurring basis or on a nonrecurring basis during the
  reporting period.&nbsp;&nbsp;The fair value is an exit price, representing the price that would be received to sell an asset or
  paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability
  at the measurement date.&nbsp;&nbsp;The Company utilizes market data or assumptions that market participants would use in pricing
  the asset or liability.&nbsp;&nbsp;The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the
  inputs used in measuring fair value.&nbsp;&nbsp;These tiers are defined as follows:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Level 1</B> - Observable inputs such as quoted market
  prices in active markets</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Level 2</B> - Inputs other than quoted prices in active
  markets that are either directly or indirectly observable</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Level 3 -</B> Unobservable inputs about which little or
  no market data exists, therefore requiring an entity to develop its own assumptions.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">As of January 31, 2013, the Company held certain financial
  assets that are measured at fair value on a recurring basis. These consisted of cash and cash equivalents. The fair values of the
  cash and cash equivalents is determined based on quoted market prices in public markets and is categorized as Level 1. The Company
  does not have any financial assets measured at fair value on a recurring basis as Level 3 and there were no transfers in or out
  of Level 1, Level 2 or Level 3 during the six months ended January 31, 2013, and 2012.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">The following table sets forth by level, within the fair value
  hierarchy, the Company&rsquo;s financial assets accounted for at fair value on a recurring basis as of January 31, 2013, and July
  31, 2012.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0"><B></B></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="11" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Assets at Fair Value Using</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Quoted Prices in<BR> Activated Markets for Identical Assets</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Significant Other<BR> Observable Inputs</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Significant Observable<BR> Inputs</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">(Level 1)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">(Level 2)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">(Level 2)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: center">January 31, 2013</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="width: 40%; text-align: left">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">14</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 13%; text-align: right">14</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 13%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: center">July 31, 2012</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Cash and cash equivalents</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">64</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">64</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0"><B></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 11 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->11<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 4. Notes Receivable</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">As of July 31, 2012, the Company had a note receivable balance
  with CET of $708,602. On October 2, 2012 the Company sold its interest in the receivable to Frontline Asset Management (&ldquo;Frontline&rdquo;)
  for $0.10 on the dollar which reduced the Company&rsquo;s debt with Frontline to $70,786. The entire note receivable had previously
  been reserved for in its entirety; therefore, we had a $70,786 credit in our bad debt expense which is included in the general
  and administrative expenses on the Company&rsquo;s consolidated statement of operations for the six months ended January 31, 2013.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">During the six months ended January 31, 2013, the Company
  advanced $0 and $0 was repaid by CET. During the six months ended January 31, 2012 the Company advanced CET $54,539 of which $22,984
  was repaid. As of January 31, 2013 and July 31, 2012, an allowance for doubtful accounts in the amount of $0 and $708,602, respectively,
  was recorded against the note receivable, reducing the amount to $0.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On November 26, 2010, LEVC issued the Company a Secured Promissory
  Note (&ldquo;LEVC Note&rdquo;) in the amount of $1,750,000 in accordance with the license agreement. The LEVC Note bears interest
  at ten (10%) percent per annum on the outstanding amount of the loan and shall accrue for the first 12 months during which the
  outstanding amount, or any portion thereof is outstanding. Commencing for the first month following the first year and for all
  subsequent months during which any portion of the amount is outstanding, LEVC shall make monthly interest payments in arrears on
  the first day of the month following the month for which the interest payment is made on the outstanding amount of the LEVC Note,
  including any accrued unpaid interest thereon. The outstanding amount and any accrued but unpaid interest thereon shall be repaid
  in full by LEVC within sixty (60) days of receiving written demand for repayment by the Company. LEVC shall have the right to repay
  the LEVC Note in whole or in part, at any time without notice, bonus or penalty. The LEVC Note is secured by LEVC&rsquo;s (1) inventory;
  (2) equipment, other than inventory; (3) receivables; and (4) all other property, including leasehold interests, chattel paper,
  documents of title, securities, instruments, money and intangibles. In addition, the LEVC Note includes a conversion right in which
  the Company can convert the LEVC Note if LEVC should begin trading on the TSX Venture Exchange. The conversion clause stipulates
  that the LEVC Note will be converted at a price the greater of fifteen cents ($0.15) per share or ninety percent (90%) of the average
  ten (10) day trading price and if the conversion of the LEVC Note results in a fractional share, LEVC shall, in lieu of issuing
  such fractional share, pay to the Company an amount equal to the conversion value of the fractional share.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">LEVC is currently attempting to complete a public registration
  in Germany. The Company has the option, upon the completion of the registration, of converting the note into LEVC common stock.
  Due to the uncertainty of LEVC&rsquo;s ability to complete the public registration in Germany and with LEVC having no assets to
  secure the note, the Company has recorded a reserve for doubtful accounts for the entire note amount of $1,750,000.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company recognized interest income of $88,645 and $88,219,
  none of which has been received, in accordance to the terms of the LEVC Note for the six months ended January 31, 2013 and January
  31, 2012, respectively. The Company has reflected the amount due from LEVC in its accounts receivable and has established a reserve
  for doubtful accounts for the entire amount and is included in general and administrative expenses on the Company&rsquo;s consolidated
  statement of operations.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 5. Inventories</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Inventories consist of the following:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">July 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2013</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: justify; padding-bottom: 1pt">Finished Goods</TD><TD STYLE="width: 8%; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">1,500</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">1,500</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">1,500</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">1,500</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"><B></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Raw materials, work in progress and finished goods for the
  quarter ended January 31, 2013, and year ended July 31, 2012, are related to the Company&rsquo;s planned sales of electric powered
  vehicles.</P>
  
  
  <!-- Field: Page; Sequence: 12 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->12<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;<B>Note 6. Property and Equipment</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Property and equipment consist of:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">July&nbsp;31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2013</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: justify">Building and Improvements</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">552,276</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify">Equipment and Furniture and Fixtures</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,827</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,827</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify">Vehicles</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,429</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,429</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-bottom: 1pt">Land</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">700,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">71,256</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,323,532</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify; padding-bottom: 1pt">Less Accumulated Depreciation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(66,748</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(268,601</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold; text-align: justify; padding-bottom: 2.5pt">Net Property and Equipment</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">4,508</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">1,054,931</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Depreciation expense for the three months ended January 31,
  2013 and 2012, was $639 and $8,643, respectively. Depreciation expense for the six months ended January 31, 2013 and 2012, was
  $1,277 and $31,716, respectively, and is included in general and administrative expenses on the Company&rsquo;s consolidated statement
  of operations.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On September 14, 2012, the sale of the property pursuant
  to the Frontline August 22, 2012 foreclosure and sale was completed. Due to the foreclosure of the property and the loss of rights
  to the facility, the Company wrote-off the building and its improvements, which caused a loss of $5,552 and is reflected on the
  Company&rsquo;s consolidated statement of operations.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 7. Other Current Assets</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="3" STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">July&nbsp;31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="3" STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2013</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="3" STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 1%; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="width: 26%; text-align: left; vertical-align: bottom">Deposits</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="width: 8%; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 26%; border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 26%; border-bottom: Black 1pt solid; text-align: right">3,190</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left; vertical-align: bottom">Total</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">3,190</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 8. Accounts Payable and Accrued Expenses</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Accounts payable, accrued expenses and other current liabilities
  at January 31, 2012 and July 31, 2011 consisted of:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">July&nbsp;31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: left">Accounts Payable</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">310,532</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">291,156</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Accounts Payable - Related Parties</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,177</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,682</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Wages, Paid Leave and Payroll Related Taxes</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">998,235</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">948,410</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Accrued Interest</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,428</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">120,067</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Legal Settlements</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">152,976</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">152,976</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 1pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,945</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,769</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">1,509,293</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">1,538,060</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"><B></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Accounts payable due to related parties are reimbursable
  general and administrative expenses paid by the Company&rsquo;s President.</P>
  
  
  <!-- Field: Page; Sequence: 13 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->13<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 9. Long-Term Debt</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Long-term debt consists of:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">July&nbsp;31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="color: #00B050; text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2013</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 63%; text-align: left">5% Note payable to Bayview Loan Servicing, LLC, payable in monthly installments of $5,433 including interest, collateralized by real property. Due to foreclosure of the building, the entire balance has been eliminated. (1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">946,279</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="color: #00B050; text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">12% Note payable to Frontline Asset Management, payable in monthly installments of interest only, due in full on March 1, 2013 (2)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">378,959</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">508,492</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">48.956% Note payable to Amicus Funding Group, LLC, payable in monthly installments of approximately $467, collateralized by real property due in full on September 1, 2013 (3)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,297</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,297</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">10% Note payable to Cameo Properties, LLC payable in monthly installments of interest only, due in full on December 27, 2014 (4)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">250,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">250,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">635,256</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,711,068</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Less Current Portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(385,256</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,460,189</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">250,000</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">250,879</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Principal maturities for long-term debt are as follows for
  the second quarters ended January 31:&#9;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0"><B></B></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 30%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 52%; text-align: left; vertical-align: bottom">2013</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 43%; text-align: right">385,256</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom">2014</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">250,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom">2015</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom">2016</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom">2017</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom">Thereafter</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">635,256</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">(1) In November 2007, the Company refinanced the first mortgage
  loan on its Mooresville, North Carolina building (the &ldquo;property&rdquo;) with Bayview. On July 25, 2012, Frontline, the junior
  lien holder noticed a foreclosure hearing and sale to take place on August 22, 2012, and the sale of the property to an assignee
  of Frontline, which was the only bidder, was completed on September 14, 2012.&nbsp;&nbsp;The Company debt to Bayview was reduced
  to zero upon the completion of the sale.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">(2) On February 26, 2010, the Company entered into a loan
  agreement with Frontline. The loan provides for payments to the Company of $2,000,000 with interest at a fixed annual rate of 12%.&nbsp;&nbsp;On
  March 1, 2012, an Addendum to the original Promissory Note, dated February 26, 2010, was entered into which amended the term of
  the note to&nbsp;&nbsp;provide for interest only payments, due on the last day of every month until maturity date March 30, 2013,
  when all principal and accrued interest shall be due and payable.&nbsp;&nbsp;On April 11, 2011, Frontline assigned $850,279 of
  its debt to Windsor Capital, Inc. (&ldquo;Windsor&rdquo;). On April 19, 2011, Frontline partially assigned $437,309 to Kisumu S.A.
  (&ldquo;Kisumu&rdquo;) and Kisumu immediately converted the assigned note for 1,041,212 shares of Common Stock at a fair value
  price of $0.42 per share.&nbsp;&nbsp;On April 19, 2011, Frontline assigned $420,000 to Eurolink Corporation (&ldquo;Eurolink&rdquo;)
  and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a fair value price of $0.42 per share.&nbsp;&nbsp;On
  December 27, 2011, Frontline purchased two electric vehicles for $255,000.&nbsp;&nbsp;On the same day Frontline assigned $250,000
  to Cameo Properties, LLC.&nbsp;&nbsp;On April 26, 2012, the Company assigned $112,500 of its note receivable with CET to Frontline
  which reduced the balance due to Frontline by</P>
  
  
  <!-- Field: Page; Sequence: 14 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->14<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">$112,500. On September 13, 2012, Frontline converted $39,000
  of accrued interest for 1,300,000 shares of Common Stock at a discounted value price of $0.30 per share. On October 2, 2012, Frontline
  purchased our receivable with CET at $0.10 on the dollar for $70,786, which reduced the Company&rsquo;s accrued interest by $43,726
  and debt by $27,060. On October 2, 2012, Frontline converted $12,180 for 1,450,000 shares of Common Stock at a discounted&nbsp;value
  price of $0.0084 per share. On November 13, 2012, Frontline partially assigned $17,280 to Kisumu and Kisumu immediately converted
  the assigned note for 3,200,000 shares of Common Stock at a discounted value price of $0.0054 per share. On December 26, 2012,
  Frontline partially assigned $112,200 to Kisumu and Kisumu converted the assigned note for 18,700,000 shares of Common Stock at
  a discounted price of $0.006 per share.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Loans under the Frontline loan agreement are secured by a
  junior deed of trust on the Company&rsquo;s&nbsp;&nbsp;property located at 158 Rolling Hill Road, Mooresville, North Carolina.&nbsp;&nbsp;On
  August 22, 2012, the foreclosure by Frontline of the property took place, pursuant to a notice of foreclosure and sale dated July
  25, 2012, and the foreclosure sale to an assignee of Frontline, which was the only bidder, was completed on September 14, 2012.&nbsp;&nbsp;Frontline
  received $50,000 upon the sale of the foreclosed property and this amount reduced the debt to Frontline.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Interest expense for the three months ended January 31, 2013
  and 2012, was $12,135 and $15,244, respectively . Interest expense for the six months ended January 31, 2013 and 2012, was $27,423
  and $32,904, respectively.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">(3) On March 11, 2011, the Company financed $7,992 for office
  equipment with Amicus Funding Group, LLC (&ldquo;Amicus&rdquo;) and monthly payments including interest of 48.956% are approximately
  $477. During the three months ended January 31, 2013 and 2012, the Company repaid $0 and $380, respectively. During the six months
  ended January 31, 2013 and 2012, the Company repaid $0 and $895, respectively. The Company is in default on this note.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Interest expense for the three months ended January 31, 2013
  and 2012, was $461 and $819, respectively. Interest expense for the six months ended January 31, 2013 and 2012, was $1,028 and
  $1,703, respectively.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">(4) The Company entered into a Loan Agreement, dated as of
  July 14, 2011, with Cameo Properties LLC (&ldquo;Cameo&rdquo;) and was amended on October 14, 2011 (the &ldquo;Amended Loan Agreement&rdquo;).
  Each Note issued under the Amended Loan Agreement is due three years from the date of its issuance. The Amended Loan Agreement
  provides for loans to the Company of up to $750,000 (the &ldquo;Loan&rdquo;), with a minimum initial loan of $250,000 within 60
  days of the date of the Loan Agreement, and up to an additional $500,000 within the first year and a half from execution of the
  Amended Loan Agreement. This is not a revolving facility, and any principal repaid by the Company will not be available for additional
  advances to the Company under the Amended Loan Agreement. The Company cannot, without the Lender&rsquo;s consent, prepay all or
  part of the Loan. The notes evidencing the installments of the loans bear interest payable monthly in arrears at the rate of 10%
  per annum, and mature and are due and payable three years from the date of issuance. On December 27, 2011, Frontline assigned $250,000
  of its receivable to Cameo.&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Interest expense for the three months ended January 31, 2013
  and 2012, was $6,301 and $2,937, respectively. Interest expense for the six months ended January 31, 2013 and 2012, was $12,603
  and $2,937, respectively.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 10. Stockholders&rsquo; Equity (Deficiency)</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On July 14, 2011, the Company entered into a Loan Agreement
  with Cameo Properties LLC (&ldquo;Cameo&rdquo;). The loans under the Loan Agreement are secured, over the life of the loan, by
  20 million shares of our common stock.&nbsp;&nbsp;If the Company should default on the loan, Cameo will retain all of the 20 million
  shares of common stock.&nbsp;&nbsp;In the event of a reverse stock split or combination of shares, the number of shares of common
  stock constituting the Share Collateral will, immediately following such reverse stock split or combination of shares, be increased
  by a new issuance of common stock of the Company to that number of shares constituting the Share Collateral immediately prior to
  such reverse stock split or combination of shares. The certificates representing any share dividends that the Company pays during
  the term of the Loan with respect to the Shares being held in escrow shall be credited and delivered to the Lender and held by
  the Lender pursuant to the terms of the Loan Agreement.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Effective January 26, 2012, the Securities and Exchange Commission
  approved a one-for-five reverse split of the common stock.&nbsp;&nbsp;Pursuant to the anti-dilution provisions in the Cameo Properties
  loan agreement the Company issued 16,000,000 shares to Cameo Properties, so they again held 20,00,000 post reverse stock split
  shares.</P>
  
  
  <!-- Field: Page; Sequence: 15 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->15<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Effective December 31, 2012, the Securities and Exchange
  Commission approved a one-for-ten reverse split of the common stock.&nbsp;&nbsp;Pursuant to the anti-dilution provisions in the
  Cameo Properties loan agreement the Company issued 18,000,000 shares to Cameo Properties, so they again held 20,00,000 post reverse
  stock split shares.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">On September 13, 2012, Frontline converted $39,000 of accrued
  interest for 1,300,000 shares of Common Stock at a discounted value price of $0.30 per share. The Company recorded a loss on extinguishment
  of debt in the amount of $26,000 in connection with the conversion.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">On October 2, 2012, Frontline converted $12,180 for 1,450,000
  shares of Common Stock at a discounted&nbsp;value price of $0.0084 per share. The Company recorded a loss on extinguishment of
  debt in the amount of $5,220 in connection with the conversion.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">On November 13, 2012, Frontline partially assigned $17,280
  to Kisumu and Kisumu immediately converted the assigned note for 3,200,000 shares of Common Stock at a discounted value price of
  $0.0054 per share. The Company recorded a loss on extinguishment of debt in the amount of $13,120 in connection with the conversion.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">On December 26, 2012, Frontline partially assigned $112,200
  to Kisumu and Kisumu converted the assigned note for 18,700,000 shares of Common Stock at a discounted price of $0.006 per share.
  The Company recorded a loss on extinguishment of debt in the amount of $74,800 in connection with the conversion.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><I>Changes to Authorized Common Stock</I></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On June 24, 2011, the Board of Directors unanimously approved
  an amendment to the Articles of Incorporation to increase the authorized number of shares of common stock from 100 million shares,
  par value $.001 per share, to 300 million shares, par value $.001 per share. The Company filed the amendment with the Secretary
  of State of Nevada on August 10, 2011, after mailing a Definitive Information Statement to the Company&rsquo;s stockholders and
  the amendment was effective August 10, 2011.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On December 13, 2011, the Board of Directors unanimously
  approved an amendment to the Company&rsquo;s Articles of Incorporation to change the authorized number of shares of common stock
  from 300 million shares, par value $.001 per share, to 60 million shares, par value $.001 per share, and to effect a reverse split
  in the outstanding common stock in the same ratio.&nbsp;&nbsp;The Company filed the amendment with the Secretary of State of Nevada
  on December 14, 2011.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Our Board of Directors unanimously approved
  an amendment to our Articles of Incorporation to increase the authorized number of shares of common stock from 60,000,000 shares,
  par value $.001 per share, to 400,000,000 shares, par value $.001 per share, on July 20, 2012. On the same date we received the
  written consent from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We
  filed the amendment with the Secretary of State of Nevada on August 30, 2012, and the amendment was effective on that date.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">On November 29, 2012, our Board of Directors unanimously
  approved an amendment to our Articles of Incorporation to increase the authorized number of shares of common stock from 400,000,000
  shares, par value $.001 per share, to 40,000,000 shares, par value $.001 per share. On the same day we received the written consent
  from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the amendment
  with the Secretary of State of Nevada on November 29, 2012, and the amendment was effective on that date.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 11. Net Earnings (Loss) Per Common Share</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The following table sets forth the reconciliation of the
  basic and diluted net earnings (loss) per common share computations for the three months ended January 31, 2013 and 2012.</P>
  
  
  <!-- Field: Page; Sequence: 16 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->16<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"><B></B></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-family: Calibri, Helvetica, Sans-Serif">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three Months Ended</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six Months Ended</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2013</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify">Basic and Diluted Earnings (Loss) Per Share</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="width: 48%; text-align: justify">Net Earnings (Loss) Ascribed to Common Shareholders - Basic and Diluted</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(208,580</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(2,107,049</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(247,892</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(2,394,272</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify">Weighted Average Shares Outstanding - Basic and Diluted</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,704,783</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,642,347</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,399,154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,642,347</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: justify; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Basic and Diluted Net Earnings (Loss) Per Common Share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.02</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.10</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.01</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.12</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"><B></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Net loss per common share for the six months
  ended January 31, 2012, has been revised.&nbsp;All share and per share amounts have been restated to reflect the one-for-five
  reverse stock split as discussed in Note 10.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The amounts previously reported for the three months ended
  January 31, 2011, were as follows:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"><B></B></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Three Months Ended</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">Six Months Ended</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31, 2012</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January 31, 2012</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: left">Basic and Diluted Loss Per Common Share</TD><TD STYLE="width: 4%">&nbsp;</TD>
      <TD STYLE="width: 5%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(0.33</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 7%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(0.37</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 1pt">Weighted Average Number of Shares</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Outstanding -Basic and Diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,418,322</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,418,322</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="color: Red; font: 9pt/normal Sans-Serif; margin: 0; text-align: center"><B></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 12. Share Based Compensation</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company records compensation expense in its consolidated
  statement of operations related to employee stock-based options and awards in accordance with FASB ASC 718, &ldquo;Compensation&rdquo;,
  and (&ldquo;ASC 718&rdquo;).</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company recognizes the cost of all employee stock options
  on a straight-line attribution basis over their respective contractual terms, net of estimated forfeitures. The Company has selected
  the modified prospective method of transition.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><I>Stock Option Plan</I></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">As of January 31, 2013, there are no shares of common stock
  remaining and available for issuance under the stock option plans.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 13. Income Taxes</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company adopted the provisions of ASC 740, &ldquo;Income
  Taxes&rdquo; (&ldquo;ASC 74&rdquo;) on August 1, 2007. The implementation of ASC 740 did not impact the total amount of the Company&rsquo;s
  liabilities for uncertain tax position.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company recorded no provisions for income taxes for the
  six months ended January 31, 2013 and 2012.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Note 14. Commitments and Contingencies</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><I>Legal Proceedings </I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company is currently involved in various claims and legal
  proceedings. Quarterly, the Company reviews the status of each significant matter and assesses its potential financial exposure
  and if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated,
  the Company accrues a liability for the estimated loss.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Caudle &amp; Spears has obtained a default judgment against
  the Company in Meckenberg County, North Carolina, General Court, in the amount of $17,686. This law firm represented us in our
  litigation against Martin Koebler, a former employee, whom we successfully sued for return of Company property and other damages.
  The Company is in settlement negotiations with Caudle &amp; Spears, since its judgment against Martin Koebler is still in the collection
  process. A payment agreement has been reached in the amount of $2,500 per month with no interest until paid.&nbsp;&nbsp;The Company
  is not current with its payment arrangements and has a balance of $4,263 still due.</P>
  
  
  <!-- Field: Page; Sequence: 17 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->17<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Internal Revenue Service (&ldquo;IRS&rdquo;) served the Company
  with a tax lien dated March 3, 2010 in the total amount of $251,928. Third quarter 2009 taxes are approximately $117,000, which
  are included in total due.&nbsp;&nbsp;The Company has been served with an additional tax lien dated January 19, 2011, in the amount
  of $2,925. The Company had a payment plan in place with IRS; however, the Company is arrears in payments as of July 31, 2012. Management
  is working with the local IRS office to try and revise the payment agreement.&nbsp;&nbsp;The balance due on the most recent statement<B>&nbsp;</B>from
  the IRS is $566,071.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Tallman Hudders &amp; Sorrentino has obtained a judgment
  in Lehigh County, Pennsylvania, on behalf of their client Javad Hajihadian, an individual.&nbsp;&nbsp;Mr. Hajihadian had ordered
  and paid for, the first super car to be produced by Li-ion Motors in November 2008. The car was in the design stage when it was
  ordered.&nbsp;&nbsp;Mr. Hajihadian&rsquo;s attorney subsequently contacted the Company to cancel his contract and have his payment
  refunded. The parties had reached a settlement agreement and the payment was being refunded with interest. The settlement agreement
  was for $102,500 and stipulated monthly payments of $10,250 commencing in July 2010.&nbsp;&nbsp;Payments were made through November
  2010, totaling $51,250, leaving a balance of five payments or $51,250 still due; which is reflected on the Company&rsquo;s balance
  sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with litigation and on February 4,
  2011, a judgment was issued in his favor for $51,750.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The Company&rsquo;s facility in Mooresville, North Carolina
  was financed through Bayview and Frontline, which had a second lien on the property. Li-ion became delinquent with the mortgage
  payments, and, following a prior foreclosure filing and new agreement as to payments under the mortgage, on July 12, 2012, Bayview&nbsp;&nbsp;refiled
  a notice of hearing on foreclosure on its deed of trust and security agreement for a hearing on August 21, 2012, the outstanding
  amount of the loan at July 31, 2012 being $946,279.&nbsp;&nbsp;&nbsp;A similar notice of foreclosure pursuant to the Frontline
  deed of trust was filed by the Trustee with the same court on July 25, 2012, noticing a hearing for August 22, 2012, with an amended
  notice of default, the amount of $508,492 being outstanding under the loan as of July 31, 2012. The Trustee for Frontline also
  filed on July 25, 2012, a notice of foreclosure and sale to take place on August 22, 2012.&nbsp;&nbsp;The Trustee under the Bayview
  deed of trust on August 21, 2012, filed its notice of foreclosure and sale to take place on September 18, 2012, of the real and
  personal property securing the deed of trust.&nbsp;&nbsp;&nbsp;On September 14, 2012, the sale of the property pursuant to the
  Frontline August 22, 2012 foreclosure and sale was completed, and Frontline assigned its rights to its foreclosure bid to A&amp;S
  Holdings Inc., subject to the rights of Bayview, as the holder of the first mortgage on the property.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Fine Mobile and Li-ion Motors entered into a confession of
  judgment in relation to X-Prize winnings.&nbsp;&nbsp;The parties agreed to a payment arrangement of $10,000 per month for a period
  of eight (8) months.&nbsp;&nbsp;If a default were to occur, the debtor would then be entitled to exercise confession of judgment
  in the amount of $120,000 without further delay.&nbsp;&nbsp;The initial payment was wired on December 15, 2011; however, the Company
  was unable to make any additional payments.&nbsp;&nbsp;On June 18, 2012 Fine Mobile executed the judgment with the Iredell County
  Sheriff&rsquo;s Office and on July 2, 2012, the Sherriff took possession of the building located at 158 Rolling Hill Road, Mooresville,
  NC, seizing all remaining assets.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><A NAME="a_011"></A><B>ITEM 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations.</B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>Forward Looking Statements</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">This quarterly report contains forward-looking&nbsp;statements
  that involve risks and uncertainties.&nbsp;&nbsp;We use words such as anticipate, believe, plan, expect, future, intend and similar
  expressions to identify such forward-looking&nbsp;statements. You should not place too much&nbsp;reliance&nbsp;on these&nbsp;forward-looking&nbsp;statements.&nbsp;&nbsp;Our
  actual results are likely to differ&nbsp;materially from those&nbsp;anticipated in these forward-looking&nbsp;statements&nbsp;for
  many&nbsp;reasons,&nbsp;including the risks faced by us described in this section.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>Results of Operations for the Three and Six months Ended
  January 31, 2013</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>Electric Vehicle Operations</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Sales of our electric powered vehicles
  for the three months ended January 31, 2013 and 2012 were $0 and $472,000, respectively. Vehicle parts sold during the three months
  ended January 31, 2013 and 2012 were $0 and $1,128, respectively.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <!-- Field: Page; Sequence: 18 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->18<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Sales of our electric powered vehicles
  for the six months ended January 31, 2013 and 2012 were $0 and $472,000, respectively. Vehicle parts sold during the six months
  ended January 31, 2013 and 2012 were $0 and $4,696, respectively.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">With the licenses of our lithium battery
  and electric vehicle technology described below, we are concentrating on sales of our vehicles.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><I>Clean Enviro Tech Corp</I></B>. <B><I>License Agreement</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We entered into a License Agreement (&ldquo;Clean
  Enviro Tech License Agreement&rdquo;) with Clean Enviro Tech Corp. (formerly Sky Power Solutions) in April 2008, providing for
  our license to Clean Enviro Tech Corp. (&ldquo;CET&rdquo;) of our patent applications and technologies for rechargeable lithium
  ion batteries for hybrid vehicles and other applications (&ldquo;Licensed Products&rdquo;). Under the CET License Agreement, we
  have the right to purchase our requirements of lithium ion batteries from CET, and our requirements of lithium ion batteries shall
  be supplied by CET in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for other
  customers of CET. Our cost for lithium ion batteries purchased from CET shall be CET&rsquo;s actual manufacturing costs for such
  batteries for the fiscal quarter of CET in which our purchase takes place. On May 25, 2010, the CET License Agreement was amended
  to reflect CET&rsquo;s territory would be the United States, U.S. possessions and territories only, and the Company can license
  other companies in other parts of the world.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">CET agreed to invest a minimum of $1,500,000
  in 2008 and 2009, in development of the technology for the Licensed Products. To date, CET has not met the minimum requirements
  in the development of technology, and therefore, is not in compliance with its obligations under this covenant of the license agreement.&nbsp;
  The Company has advised CET that it will not give notice of default against them for their failure to comply with this covenant
  over the term of the License Agreement.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On May 25, 2010 the CET License Agreement
  was amended to limiting the license granted to CET to only the United States, permitting Terra to grant other licenses to companies
  in other parts of the world.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><I>Lithium Electric Vehicle Corp. License Agreement</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Effective May 28, 2010, the Company entered
  into a ten year license agreement with Lithium Electric Vehicle Corp. (&ldquo;LEVC&rdquo;) providing for the Company to license
  to LEVC certain Company patent applications and technologies for electric vehicles and other applications. The purpose of the licensee
  is to expand sales of the Company&rsquo;s line of products by the manufacture and sale of such products in Canada, which is LEVC&rsquo;s
  exclusive territory under the license agreement.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The license agreement consists of an
  annual fee of $500,000 for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third
  party.&nbsp;&nbsp;LEVC is required to pay $1 million of the license fee during year one for the initial two years and $500,000
  each additional year.&nbsp;&nbsp;The Company has received $732,666 from LEVC with a balance due of $267,334 as of July 31, 2012,
  which is now delinquent.&nbsp;&nbsp;The Company has reflected the delinquent amount due from LEVC in its accounts receivable and
  has established a reserve for doubtful accounts for the entire amount.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Company is still in discussions with
  LEVC regarding the delinquency.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The note of $1,750,000 has been reflected
  on the books of the Company and due to LEVC having no assets to secure the note; the Company has recorded a reserve for doubtful
  accounts for the entire note amount of $1,750,000.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of February 19, 2013 Terra Inventions
  Corp and Lithium Electric Vehicle Corp. signed an amended License Agreement.&nbsp; Both parties have agreed that, (1) Terra Inventions
  will own 49% of LEVC in exchange for the balance of any funds due to Terra in connection with the license agreement.&nbsp; (2)
  LEVC intends to further develop Terra&rsquo;s technology in Canada.&nbsp; In exchange for this agreement Terra will have full access
  to these developments made by LEVC for Terra&rsquo;s use, including further development in the United States.&nbsp; (3) LEVC will
  retain ownership of further developments only. (4) Terra and LEVC also agree that LEVC will be doing R &amp; D and develop free
  energy technology and wind turbine technology to achieve higher efficiency for electric vehicles.&nbsp; By Terra providing the
  platform, technology and BMS system for electric vehicles to LEVC, LEVC will also allow Terra to further develop these technologies
  in the United States.&nbsp; (5) Both parties understand that LEVC will own these technologies accept for rights hereby granted
  to Terra for the USA.</P>
  
  
  <!-- Field: Page; Sequence: 19 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->19<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>Cost of Sales</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Cost of sales as a percentage of net vehicle
  sales for the three months ended January 31, 2013 was 0% compared to approximately 54% during the same period in 2012. Cost of
  sales as a percentage of net vehicle sales for the six months ended January 31, 2013 was 0% compared to approximately 54% during
  the same period in 2012. Based on our historical review of costs, we expect that cost of sales in the future will remain in line
  on a percentage basis with our historic level of approximately 20%. As sales volumes and prices increase, costs should then reduce
  as a percentage of sales.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>General and Administrative Expenses</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">General and administrative (&ldquo;SG&amp;A&rdquo;)
  expenses decreased to $120,954 for the three months ended January 31, 2013, as compared to $2,396,441 during the same period in
  2012. The decrease was attributable to a reduction in: (1) bad debt expense of $2,191,070; (2) payroll related expenses of $64,472;
  and (3) other various expenses of $19,945.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">SG&amp;A expenses decreased to $169,274
  for the six months ended January 31, 2013, as compared to $2,620,659 during the same period in 2012. The decrease was attributable
  to a reduction in: (1) bad debt expense of $2,238,173; (2) payroll related expenses of $63,915; (3) depreciation expense of $30,438;
  (4) penalties of $29,084; (5) financing related expenditure of $25,000; (6) director fees of $21,000 and (6) other various expenses
  of $43,775.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Of all SG&amp;A expenses the Company incurred
  during the first six months of 2013, the majority were charges that are expected to be recurring.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>Research and Development Expenses</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">No set amount has been set aside for research
  and development (&ldquo;R&amp;D&rdquo;), however, all projects and purchases require approval prior to initiation. Salaries, payroll
  taxes, and benefits expensed to R&amp;D for the three months ended January 31, 2013 and January 31, 2012, amounted to $0 and $151,013,
  respectively. Parts and supplies expensed to R&amp;D was $0 and $4,772 for the three months ended January 31, 2013 and 2012, respectively.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Salaries, payroll taxes, and benefits expensed
  to R&amp;D for the six months ended January 31, 2013 and January 31, 2012, amounted to $0 and $399,819, respectively. Parts and
  supplies expensed to R&amp;D was $1,297 and $11,832 for the six months ended January 31, 2013 and 2012, respectively.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 62.25pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We expect that research and development
  expenses will continue to remain substantial and grow as we aggressively move to bring products to market</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>Interest Expense</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Interest expense decreased to $18,897 for
  the three months ended January 31, 2013 as compared to $32,309 for 2012, and $41,108 for the six months ended January 31, 2013
  as compared to $73,842 for 2012 due to the reduction of the Company&rsquo;s debt. Interest expense consists primarily of interest
  related to borrowings.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>Other Income</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Other income for the three months ended
  January 31, 2013, consisted primarily of interest income from the LEVC Note of $43,944.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Other income for the three months ended
  January 31, 2012 consists of (1) accounting fees and rental income from</P>
  
  
  <!-- Field: Page; Sequence: 20 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->20<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">CET for $16,931; (2) rental income from Advanced Tech of $6,928;
  (3) interest income from the LEVC note of $44,110; (4) forfeiture of customer deposit of $30,000; and (5) various other income
  of $130. Other income was reduced by $4,688 for loss from sale of assets and $351 for foreign exchange transactional expense.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Other income for the six months ended
  January 31, 2013, consisted of interest income from the LEVC Note of $88,645, which was offset by $166 for foreign exchange transactional
  expense.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Other income for the six months ended January
  31, 2012 consists of (1) accounting fees and rental income from CET for $35,362; (2) rental income from Advanced Tech of $6,928;
  (3) interest income from the LEVC note of $88,219; (4) forfeiture of customer deposit of $30,000; and (5) various other income
  of $130. Other income was reduced by $4,688 for loss from sale of assets and $220 for foreign exchange transactional expense.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>Net Loss</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Net loss attributable to common stockholders
  for the three months ended January 31, 2013 was $208,580 compared to $2,107,049 for the previous fiscal quarter. Basic and diluted
  loss attributable to common stockholders per share of common stock for the three months ended January 31, 2013 was $.02 as compared
  to $0.10 for the previous fiscal quarter.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Net earnings attributable to common stockholders
  for the six months ended January 31, 2013 was $247,892 compared to a net loss of $2,394,272 for the previous fiscal quarter. Basic
  and diluted loss attributable to common stockholders per share of common stock for the six months ended January 31, 2013 was $.01
  as compared to $0.12 for the previous fiscal quarter.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>Liquidity and Capital Resources</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Since our incorporation, we have financed
  our operations almost exclusively through the sale of our&nbsp;common&nbsp;shares to&nbsp;investors and borrowings.&nbsp;&nbsp;We&nbsp;expect&nbsp;to&nbsp;finance
  operations&nbsp;through&nbsp;borrowings and the sale of equity in the foreseeable future as we receive minimal revenue from our
  current business operations. There is no guarantee that we will be successful in arranging financing on acceptable terms.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At January 31, 2013, we had liabilities
  of $2,246,737, as compared with $3,351,316 at July 31, 2012; and working capital deficiency of $1,995,223 and stockholders' equity
  deficiency of $2,202,652.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our property and equipment decreased
  to $4,508 at January 31, 2013, as compared with $5,785 at July 31, 2012.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Net cash used in operating activities
  was $76,892 during the three months ended October 31, 2012, as compared with net cash provided by of $353,997 in 2012. We did not
  have any investing activities during the six months ended January 31, 2013 and 2012.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">During the six months ended January
  31, 2013, from the issuance of a promissory note for a receivable, we advanced $0 to CET and were repaid $0. During the six months
  ended January 31, 2013, we received&nbsp;net proceeds of $77,185 from the issuance of promissory notes for debt, and made repayments
  of $0. Total cash provided by financing activities in the six months ended January 31, 2011 was $77,185 as compared with cash used
  of $359,195 in 2012.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><I>&nbsp;</I></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Liquidity Issues</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company has
  substantial obligations to the Internal Revenue Service and other creditors. The Company is working toward a payment plan with
  the Internal Revenue Service (IRS) for delinquent payroll taxes, and has a plan in place with one of two judgment creditors. There
  is no assurance that we will be able raise additional required capital to meet obligations arising from the settlements of these
  obligations and litigation matters, as well as the settlement payments with the IRS, and continue operations.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></P>
  
  <!-- Field: Page; Sequence: 21 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->21<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our current operating
  funds are less than necessary for commercialization of our planned products, and therefore we will need to obtain additional financing
  in order to complete our business plan. We anticipate that up to $2,000,000 of additional working capital will be required over
  the next 12 months for market introduction of these products through joint venture partners or otherwise. We do not have sufficient
  cash on hand to meet these anticipated obligations, which are in addition to payments we will owe to judgment creditors and the
  IRS.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We do not currently
  have any additional arrangements for financing, and we may not be able to find such financing if required. Obtaining additional
  financing would be subject to a number of factors, including investor sentiment. Market factors may make the timing, amount, terms
  or conditions of additional financing unavailable to us.</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>Critical Accounting Issues</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Company&rsquo;s significant accounting
  policies are summarized in Note 1 of the Company&rsquo;s Annual Report on Form 10-K for the year ended July 31, 2012. There were
  no significant changes to these accounting policies during the six months ended January 31, 2013, and the Company does not expect
  that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><A NAME="a_012"></A>ITEM 3. Quantitative and Qualitative Disclosures About Market
  Risk.</B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Interest Rate Risk - Interest rate risk
  refers to fluctuations in the value of a security resulting from changes in the general level of interest rates. Investments that
  are classified as cash and cash equivalents have original maturities of three months or less. Our interest income is sensitive
  to changes in the general level of U.S. interest rates.&nbsp;&nbsp;We do not have significant short-term investments, and due to
  the short-term nature of our investments, we believe that there is not a material risk exposure.&nbsp;&nbsp;Our debt is at fixed
  interest rates.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Credit Risk - Our accounts receivables
  are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies
  and business practices to protect against the adverse effects of collection risks. As a result we do not anticipate any material
  losses in this area.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><A NAME="a_013"></A>ITEM 4 (T). Controls and Procedures.</B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/12.75pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of the end of the fiscal quarter
  covered by this Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company&rsquo;s
  management, including the Company&rsquo;s Chief Executive Officer and Principal Financial and Accounting Officer, of the effectiveness
  of the design and operation of the Company&rsquo;s disclosure controls and procedures as defined in Rule 13a-14 of the Securities
  Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Principal Financial and Accounting Officer concluded
  that the Company&rsquo;s disclosure controls and procedures were not effective in timely alerting her to material information relating
  to the Company (including its consolidated subsidiaries) required to be included in this Quarterly Report on Form 10-Q. There have
  been no changes in the Company&rsquo;s internal controls over financial reporting during the Company&rsquo;s last fiscal quarter
  that have materially affected, or are reasonably likely to materially affect, the Company&rsquo;s internal control over financial
  reporting.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><A NAME="a_014"></A><I>PART II. OTHER INFORMATION</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><A NAME="a_015"></A><B>ITEM 1. Legal Proceedings.</B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Other than as described below, we are not
  a party to any material legal proceedings and to our knowledge, no such proceedings are threatened or contemplated.</P>
  
  
  <!-- Field: Page; Sequence: 22 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->22<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><I>Caudle &amp; Spears v. EV Innovations, Inc.</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Caudle &amp; Spears has obtained a default
  judgment against the Company in Mecklenburg County, North Carolina, General Court, in the amount of $17,686. This law firm represented
  us in our litigation against Martin Koebler, a former employee, whom we successfully sued for return of Company property and other
  damages. The Company is in settlement negotiations with Caudle &amp; Spears, since its judgment against Martin Koebler is still
  in the collection process. A payment agreement has been reached in the amount of $2,500 per month with no interest until paid.
  The Company is not current with its payment arrangements and has a balance of $4,263 still due.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><I>Internal Revenue Service</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Internal Revenue Service (&ldquo;IRS&rdquo;)
  served the Company with a tax lien dated March 3, 2010 in the total amount of $251,928. Third quarter 2009 taxes are approximately
  $117,000, which are included in total due.&nbsp;&nbsp;The Company has been served with an additional tax lien dated January 19,
  2011, in the amount of $2,925. The Company had a payment plan in place with IRS; however, the Company is arrears in payments as
  of July 31, 2012. Management is working with the local IRS office to try and revise the payment agreement.&nbsp;&nbsp;The balance
  due on the most recent statement<B>&nbsp;</B>from the IRS is $566,071.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><I>Javad Hajihadian</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Tallman Hudders &amp; Sorrentino has
  obtained a judgment in Lehigh County, Pennsylvania, on behalf of their client Javad Hajihadian, an individual.&nbsp;&nbsp;Mr. Hajihadian
  had ordered and paid for, the first super car to be produced by Li-ion Motors in November 2008. The car was in the design stage
  when it was ordered.&nbsp;&nbsp;Mr. Hajihadian&rsquo;s attorney subsequently contacted&nbsp;&nbsp;the Company to cancel his contract
  and have his payment refunded. The parties had reached a settlement agreement and the payment was being refunded with interest.
  The settlement agreement was for $102,500 and stipulated monthly payments of $10,250 commencing in July 2010.&nbsp;&nbsp;Payments
  were made through November 2010, totaling $51,250, leaving a balance of five payments or $51,250 still due; which is reflected
  on the Company&rsquo;s balance sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with
  litigation and on February 4, 2011, a judgment was issued in his favor for $51,750. Management was<B>&nbsp;</B>deposed December
  2011, and produced requested documents and information.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><I>Bayview Loan Servicing, LLC</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Company&rsquo;s facility in Mooresville
  North Carolina was financed through Bayview Loan Servicing, LLC (&ldquo;Bayview&rdquo;) secured by a first lien on the Company&rsquo;s
  property located at 158 Rolling Hill Road&nbsp;&nbsp;in Mooresville. Frontline Asset Management, Inc. (&ldquo;Frontline&rdquo;)
  holds a note in the amount of $2,000,000 (current balance due of $508,492) secured by a second lien on the property..&nbsp;&nbsp;On
  July 12, 2012, Bayview&nbsp;&nbsp;refiled a notice of hearing on foreclosure on its deed of trust and security agreement for a
  hearing on August 21, 2012, the outstanding amount of the loan at July 31, 2012 being $946,279.&nbsp;&nbsp;&nbsp;A similar notice
  of foreclosure pursuant to the Frontline deed of trust was filed by the Trustee with the same court on July 25, 2012, noticing
  a hearing for August 22, 2012, with an amended notice of default, the amount of $508,492 being outstanding under the loan as of
  July 31, 2012. The Trustee for Frontline also filed in Superior Court of Iredell County North Carolina on July 25, 2012, a notice
  of foreclosure and sale to take place on August 22, 2012.&nbsp;&nbsp;The Trustee under the Bayview deed of trust on August 21,
  2012, filed its notice of foreclosure and sale to take place on September 18, 2012, of the real and personal property securing
  the deed of trust.&nbsp;&nbsp;&nbsp;On September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure
  and sale was completed, and Frontline assigned its rights to its foreclosure bid to A&amp;S Holdings Inc., subject to the rights
  of Bayview, as the holder of the first mortgage on the property.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><I>FINE Mobile</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Fine Mobile and Li-ion Motors entered
  into a confession of judgment in relation to the X-Prize winnings.&nbsp;&nbsp;The parties agreed to a payment arrangement of $10,000
  per month for a period of eight (8) months.&nbsp;&nbsp;If a default were to occur, the debtor would then be entitled to exercise
  confession of judgment in the amount of $120,000 without further delay.&nbsp;&nbsp;The initial payment was wired on December 15,
  2011; however, the Company was unable to make any additional payments.&nbsp;&nbsp;On June 18, 2012 Fine Mobile executed the judgment
  with the Iredell County Sheriff&rsquo;s Office and on July 2, 2012, the Sherriff took possession of the building located at 158
  Rolling Hill Road, Mooresville, NC, seizing all remaining assets.</P>
  
  
  <!-- Field: Page; Sequence: 23 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->23<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><A NAME="a_016"></A><B>ITEM 6. Exhibits </B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="color: Red; font: 9pt/115% Sans-Serif; margin: 0"></P>
  
  <TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: left; vertical-align: top">31</TD>
      <TD>&nbsp;</TD>
      <TD><A HREF="ex31_302certification.htm">Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes- <BR> Oxley Act of 2002, filed herewith</A>.</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
      <TD>&nbsp;</TD>
      <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: left; vertical-align: top">32</TD>
      <TD>&nbsp;</TD>
      <TD><A HREF="ex32_906certification.htm">Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as<BR> Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith</A>.</TD></TR>
  </TABLE>
  
  
  <P STYLE="color: Red; font: 9pt/115% Sans-Serif; margin: 0"></P>
  
  
  <!-- Field: Page; Sequence: 24 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: center"><B><A NAME="a_017"></A>SIGNATURES</B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In accordance with Section 13 or 15(d) of the Exchange Act,
  the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly&nbsp;authorized.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font-size: 10pt">
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD>
      <TD COLSPAN="2" STYLE="line-height: 115%; font-family: Times New Roman, Times, Serif">Terra Inventions Corp.</TD>
      <TD STYLE="line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 50%; line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD>
      <TD STYLE="width: 3%; line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD>
      <TD STYLE="width: 35%; line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD>
      <TD STYLE="width: 12%; line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="border-bottom: white 3pt solid; line-height: 115%; font-family: Times New Roman, Times, Serif">Date: March 15, 2013</TD>
      <TD STYLE="border-bottom: white 3pt solid; line-height: 115%; font-family: Times New Roman, Times, Serif">By:</TD>
      <TD NOWRAP STYLE="border-bottom: black 1.5pt solid; line-height: 115%; font-family: Times New Roman, Times, Serif">/s/ Stacey Fling</TD>
      <TD STYLE="border-bottom: white 3pt solid; line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD></TR>
  <TR>
      <TD STYLE="vertical-align: top; line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD>
      <TD STYLE="vertical-align: top; line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%; font-family: Times New Roman, Times, Serif">Stacey Fling</TD>
      <TD STYLE="vertical-align: top; line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD>
      <TD STYLE="line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD>
      <TD STYLE="line-height: 115%; font-family: Times New Roman, Times, Serif">Chief Executive Officer and Principal Financial Officer</TD>
      <TD STYLE="line-height: 115%; font-family: Times New Roman, Times, Serif">&nbsp;</TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><BR>
  In accordance with the Securities Exchange Act, this report has been signed&nbsp;below by the following persons on behalf of the
  registrant and in the capacities&nbsp;and on the dates indicated.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 3%; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 37%; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 11%; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 5%; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 33%; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 11%; line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="padding-bottom: 1.2pt; line-height: 115%">By:&nbsp;</TD>
      <TD STYLE="border-bottom: black 1.5pt solid; line-height: 115%">&nbsp;/s/ Stacey Fling</TD>
      <TD STYLE="padding-bottom: 1.2pt; line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-bottom: 1.2pt; line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-bottom: 1.2pt; line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-bottom: 1.2pt; line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">Stacey Fling</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">President </TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">(President, Chief Executive Officer</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">Principal Financial Officer and Director)</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">Date: March 15, 2013</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%">&nbsp;</TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 25 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->25<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: left; width: 100%"><A HREF="#a_001" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A></TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"></P>
  
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P>
  
  </BODY>
  </HTML>
metadata_documents: [{"type": "10-Q", "sequence": "1", "filename": "f10q_terra.htm", "description": "FORM 10-Q TERRA INVENTIONS CORP.", "secsgml_size_bytes": 314126}]
metadata_filer: {"company-data": {"conformed-name": "Li-ion Motors Corp.", "cik": "0001141263", "assigned-sic": "3690", "irs-number": "880490890", "state-of-incorporation": "NV", "fiscal-year-end": "0731"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-33391", "film-number": "13696433"}, "business-address": {"street1": "4894 LONE MOUNTAIN # 168", "city": "LAS VEGAS", "state": "NV", "zip": "89130", "phone": "(702) 940-9940"}, "mail-address": {"street1": "4894 LONE MOUNTAIN # 168", "city": "LAS VEGAS", "state": "NV", "zip": "89130"}, "former-company": [{"former-conformed-name": "Li-on Motors Corp.", "date-changed": "20100317"}, {"former-conformed-name": "EV Innovations, Inc.", "date-changed": "20090417"}, {"former-conformed-name": "Hybrid Technologies Inc.", "date-changed": "20050404"}]}
text: UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549
  FORM 10-Q
  (Mark One)
  x
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the Quarter Ended January 31, 2013
  or
  o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from                                      to
  Commission file number
  000-33391
  Terra Inventions Corp.
  (Formerly Li-ion Motors Corp.)
  (Name of Registrant as Specified in Its
  Charter)
  Nevada
  (State or Other Jurisdiction
  of Incorporation or Organization)
  88-0490890
  (I.R.S. Employer
  Identification No.)
  4894 Lone Mountain #168, Las Vegas, Nevada
  (Address of Principal
          Executive Offices)
  89130
  (Zip Code)
  (702) 940-9940
  (Issuer's Telephone Number, Including Area Code)
  Securities registered
  under Section 12(b) of the Exchange Act:
  None
  Securities registered
  under Section 12(g) of the Exchange Act:
  Common Stock, Par value $0.01 per share
  Indicate by check mark whether the issuer:
  (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
  such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
  for the past 90 days.  [X] Yes   [ ] No
  1
  Table of Contents
  Indicate by check mark
  whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
  to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
  (or for such shorter period that the registrant was required to submit and post such files). [X] Yes   [ ] No
  Indicate by check mark
  whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. (Check One):
  Large accelerated filer
  [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]
  (Do not check if a smaller reporting company)
  Indicate by check mark whether the registrant
  is a shell company (as defined in Rule 12b-2 of the Exchange Act).
  [ ] Yes [X] No
  On March 11, 2013, there
  were 39,938,166 shares of common stock outstanding.
  Page No.
  PART I. FINANCIAL INFORMATION
  ITEM I – Unaudited Financial Statements
  3
  Balance Sheets as of January 31, 2013 and July 31, 2012 (Unaudited)
  4
  Consolidated Statements of Operations for the Three and Six Months Ended January 31, 2013 and 2012 (Unaudited)
  5
  Consolidated Statement of Comprehensive Income (Loss) for the Three and Six Months Ended January 31, 2013 and 2012 (Unaudited)
  6
  Consolidated Statements of Cash Flows for the Six Months Ended January 31, 2013 and 2012 (Unaudited)
  7
  Statement of Stockholders Deficiency (Unaudited)
  8
  Notes to Unaudited Consolidated Financial Statements
  9
  ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.
  18
  ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk
  22
  ITEM 4T– Controls and Procedures
  22
  PART II. OTHER INFORMATION
  ITEM 6 - Exhibits
  24
  2
  Table of Contents
  PART I. FINANCIAL INFORMATION
  ITEM 1. Financial Statements
  Certain information and footnote disclosures
  required under accounting principles generally accepted in the United States of America have been condensed or omitted from the
  following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It
  is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial
  statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended July 31, 2012. In the opinion
  of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position
  have been included and all such adjustments are of a normal recurring nature. The results of operation for the three and six months
  ended January 31, 2013 and 2012 are not necessarily indicative of the results for the entire fiscal year or for any other period.
  3
  Table of Contents
  Terra Inventions Corp.
  (Formerly Li-ion Motors Corp.)
  Consolidated Balance Sheets
  (unaudited)
  January 31,
  July 31,
  2013
  2012
  Assets
  Current assets:
  Cash and cash equivalents
  $
  14
  $
  64
  Accounts receivable, net of allowance for doubtful accounts of 649,457 and $561,237, respectively
  —
  —
  Notes receivable, net of allowance for doubtful accounts of $1,750,000 and $2,458,602, respectively
  —
  —
  Inventories
  1,500
  1,500
  Building and building improvements, net
  —
  1,049,146
  Other current assets
  —
  3,190
  Total current assets
  1,514
  1,053,900
  Property and equipment, net
  4,508
  5,785
  Deferred patent and trademark costs
  38,063
  37,413
  Total assets
  $
  44,085
  $
  1,097,098
  Liabilities and Stockholders' Deficiency
  Current liabilities:
  Accounts payable and accrued expenses
  $
  1,509,293
  $
  1,538,060
  Current portion of long-term debt
  385,256
  1,460,189
  Customer deposits
  102,188
  102,188
  Total current liabilities
  1,996,737
  3,100,437
  Long-term liabilities:
  Long-term debt, less current portion
  250,000
  250,879
  Total liabilities
  2,246,737
  3,351,316
  Commitments and contingencies
  —
  —
  Stockholders' deficiency
  Preferred stock, $.001 par value, 5,000,000 shares authorized, 0 issued and outstanding
  —
  —
  Common stock, $.001 par value, 40,000,000 shares authorized, 39,938,166 and 20,642,347 issued
  and outstanding at January 31, 2013 and July 31, 2012, respectively.
  39,938
  20,642
  Additional paid-in capital
  62,905,729
  62,625,225
  Accumulated deficit
  (65,140,015
  )
  (64,892,123
  )
  Accumulated other comprehensive loss
  (8,304
  )
  (7,962
  )
  Stockholders' deficiency attributable to Terra Inventions Corp.
  (2,202,652
  )
  (2,254,218
  )
  Non-controlling interests
  —
  —
  Stockholders' deficiency
  (2,202,652
  )
  (2,254,218
  )
  Total stockholders' deficiency
  (2,202,652
  )
  (2,254,218
  )
  Total liabilities and stockholders' deficiency
  $
  44,085
  $
  1,097,098
  See accompanying notes to unaudited consolidated financial statements
  4
  Table of Contents
  Terra Inventions Corp.
  (Formerly Li-ion Motors Corp.)
  Consolidated Statements of Operations
  (unaudited)
  For the Three Months Ended
  For the Six Months Ended
  January 31,
  January 31,
  2013
  2012
  2013
  2012
  Revenue:
  Sales
  $
  —
  $
  473,128
  $
  —
  $
  476,696
  License agreement revenue
  —
  168,750
  —
  337,500
  Total revenue
  —
  641,878
  —
  814,196
  Costs and expenses:
  Cost of sales
  —
  257,452
  —
  258,047
  General and administrative
  120,954
  2,396,441
  169,274
  2,620,659
  (Gain) loss on disposal of property and equipment
  (6,467
  )
  —
  5,552
  —
  Research and development
  —
  155,785
  1,297
  411,651
  Total costs and expenses
  114,487
  2,809,678
  176,123
  3,290,357
  Loss from operations
  (114,487
  )
  (2,167,800
  )
  (176,123
  )
  (2,476,161
  )
  Other (expenses) income:
  Interest (expense)
  (18,897
  )
  (32,309
  )
  (41,108
  )
  (73,842
  )
  Loss on extinguishment of debt
  (119,140
  )
  —
  (119,140
  )
  —
  Other income
  43,944
  93,060
  88,479
  155,731
  Loss before provision for (benefit from) income taxes
  (208,580
  )
  (2,107,049
  )
  (247,892
  )
  (2,394,272
  )
  Provision for (benefit from) income taxes
  —
  —
  —
  —
  Net loss
  (208,580
  )
  (2,107,049
  )
  (247,892
  )
  (2,394,272
  )
  Less: net loss attributable to non-controlling interest
  —
  —
  —
  —
  Net loss attributable to Terra Inventions Corp.
  $
  (208,580
  )
  $
  (2,107,049
  )
  $
  (247,892
  )
  $
  (2,394,272
  )
  Loss per share - basic and diluted:
  Loss per common share attributable to Terra Inventions Corp. common shareholders
  $
  (0.02
  )
  $
  (0.10
  )
  $
  (0.01
  )
  $
  (0.12
  )
  Weighted average number of shares outstanding - basic and diluted
  13,704,783
  20,642,347
  21,399,154
  20,642,347
  See accompanying notes to unaudited consolidated financial statements
  5
  Table of Contents
  Terra Inventions Corp.
  (Formerly Li-ion Motors Corp.)
  Consolidated Statement of Comprehensive Loss
  (unaudited)
  For the Three Months Ended
  For the Six Months Ended
  January 31,
  January 31,
  2013
  2012
  2013
  2012
  Net loss
  $
  (208,580
  )
  $
  (2,107,049
  )
  $
  (247,892
  )
  $
  (2,394,272
  )
  Other comprehensive income
  Currency translation adjustment
  (289
  )
  468
  (342
  )
  511
  Comprehensive loss
  (208,869
  )
  (2,106,581
  )
  (248,234
  )
  (2,393,761
  )
  Comprehensive loss attributable to noncontrolling interest
  —
  —
  —
  —
  Comprehensive loss attributable to Terra Inventions Corp
  $
  (208,869
  )
  $
  (2,106,581
  )
  $
  (248,234
  )
  $
  (2,393,761
  )
  See accompanying notes to unaudited consolidated financial statements
  6
  Table of Contents
  Terra Inventions Corp.
  (Formerly Li-ion Motors Corp.)
  Consolidated Statements of Cash Flows
  (unaudited)
  For the Six Months Ended
  January 31,
  2013
  2012
  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss
  $
  (247,892
  )
  $
  (2,394,272
  )
  Adjustments to reconcile net earnings (loss) to net cash utilized by operating activities
  Depreciation
  1,277
  31,716
  Loss on disposal of property and equipment, net
  5,552
  4,687
  Provision for doubtful accounts
  —
  2,167,313
  Licensing fees
  —
  (354,833
  )
  Non-cash sale of property and equipment
  —
  139,537
  Non-cash sale of inventories
  —
  255,000
  Non-cash sale of electric vehicles
  217,000
  Loss on extinguishment of debt
  119,140
  —
  Increase (decrease) in cash flows from changes in operating assets and liabilities
  Inventories
  —
  (84,389
  )
  Prepaid expenses and other current assets
  3,190
  138,132
  Deferred patent and trademark costs
  (650
  )
  (875
  )
  Bank overdraft
  —
  806
  Accounts payable and accrued expenses
  42,491
  300,274
  Customer deposits
  —
  (99
  )
  Deferred revenue
  —
  (66,000
  )
  Net cash used in operating activities
  (76,892
  )
  353,997
  CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment
  —
  —
  Net cash used in investing activities
  —
  —
  CASH FLOWS FROM FINANCING ACTIVITIES:
  Advances on notes receivable
  —
  (54,539
  )
  Payments received on notes receivable
  —
  22,984
  Proceeds from issuance of debt
  77,185
  572,462
  Payments on debt
  —
  (900,102
  )
  Net cash provided by financing activities
  77,185
  (359,195
  )
  Effect of exchange rate changes on cash and cash equivalents
  (342
  )
  511
  CHANGE IN CASH AND CASH EQUIVALENTS
  Net increase (decrease) in cash and cash equivalents
  (49
  )
  (4,687
  )
  Cash and cash equivalents at beginning of period
  64
  5,118
  Cash and cash equivalents at end of period
  $
  15
  $
  431
  SUPPLEMENTAL CASH FLOW DISCLOSURES
  Cash paid during the period for:
  Interest
  $
  —
  $
  9,975
  Income taxes
  $
  —
  $
  —
  SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
  Assignment of note receivable with Sky Power Solutions Corp. to Frontline Asset Management debt
  $
  70,860
  $
  —
  Shares issued for debt
  $
  299,800
  $
  —
  Property and equipment, inventories and electric vehicles exchanged for payment on debt
  $
  —
  $
  611,537
  See accompanying notes to unaudited consolidated financial statements
  7
  Table of Contents
  Terra Inventions Corp.
  (Formerly Li-ion Motors Corp.)
  Consolidated Statement of Stockholders' Equity (Deficiency)
  For the Periods Ended As Noted
  (unaudited)
  Number of
  Common Shares
  Common Shares
  $0.01
  Par Value
  Additional Paid in
  Capital
  Accumulated
  Deficit
  Accumulated Other
  Comprehensive
  Income (Loss)
  Treasury Stock
  at Cost
  Non-Controlling Interest
  Comprehensive
  Income (Loss)
  Total
  Balance - August 1, 2011
  642,347
  $
  642
  $
  62,645,225
  $
  (62,580,108
  )
  $
  (9,197
  )
  $
  (20,000
  )
  $
  —
  $
  —
  $
  36,562
  Common stock issued as collateral on loan released to lender
  20,000,000
  20,000
  (20,000
  )
  —
  —
  20,000
  —
  20,000
  Foreign currency translation
  —
  —
  —
  —
  1,235
  —
  —
  1,235
  1,235
  Net earnings
  —
  —
  —
  (2,312,015
  )
  —
  —
  —
  (2,312,015
  )
  (2,312,015
  )
  Comprehensive income
  $
  (2,310,780
  )
  —
  Balance - July 31, 2012
  20,642,347
  20,642
  62,625,225
  (64,892,123
  )
  (7,962
  )
  —
  —
  (2,254,218
  )
  Common stock issued on conversion of debt
  19,295,819
  19,296
  280,504
  —
  —
  —
  —
  299,800
  Foreign currency translation
  —
  —
  —
  —
  (342
  )
  —
  —
  (342
  )
  (342
  )
  Net earnings
  —
  —
  —
  (247,892
  )
  —
  —
  —
  (247,892
  )
  (247,892
  )
  Comprehensive income
  —
  —
  $
  (248,234
  )
  —
  Balance - January 31, 2013
  39,938,166
  $
  39,938
  $
  62,905,729
  $
  (65,140,015
  )
  $
  (8,304
  )
  $
  —
  $
  —
  $
  (2,202,652
  )
  See accompanying notes to unaudited consolidated financial statements
  8
  Table of Contents
  Terra Inventions Corp.
  (Formerly Li-ion Motors Corp.)
  Notes to Unaudited Consolidated Financial Statements
  January 31, 2013
  Note 1. Financial Statement Presentation
  History and Nature of Business
  Li-ion Motors Corp. was incorporated under the laws of the
  State of Nevada on April 12, 2000. On November 30, 2012, Li-ion Motors merged with its wholly owned subsidiary, Terra Inventions,
  Corp. (the "Company" or "Terra") and as a result of the merger the name of the Company was changed. The
  name Terra was effective for trading purposes on December 21, 2012. The Company is currently pursuing the development and marketing
  of electric powered vehicles and products based on the advanced lithium battery technology it has developed.
  Effective April 15, 2008, the Company entered into a License
  Agreement ("License Agreement") with Sky Power Solutions, now Clean Enviro Tech Corp. ("CET"), CET providing
  for their license to CET of their patent applications and technologies for rechargeable lithium ion batteries for electric vehicles
  and other applications ("Licensed Products"). Under the License Agreement, the Company has the right to purchase their
  requirements of lithium ion batteries from CET, and their requirements of lithium ion batteries shall be supplied by CET in preference
  to, and on a priority basis as compared with, supply and delivery arrangements in effect for other customers of CET. The Company's
  cost for lithium ion batteries purchased from CET shall be CET's actual manufacturing costs for such batteries for the fiscal
  quarter of CET in which the Company's purchase takes place. On May 25, 2010, the license agreement was amended to reflect
  Clean Enviro Tech's territory would only be the United States and US possessions and territories and we can license to other
  companies in other parts of the world. The Company issued a license to a firm for the rights in Canada in 2010.
  Under the terms of the license agreement, CET had agreed
  to invest a minimum of $1,500,000 in each of the following two years(2009 and 2010)in development of the technology for the Licensed
  Products. To date, CET has not met the minimum requirements in the development of technology, and therefore, is not in compliance
  with its obligations under this covenant of the license agreement.  The Company has advised CET that it will not give notice
  of default against them for their failure to comply with this covenant over the term of the License Agreement.
  Effective May 28, 2010, the Company entered into a ten year
  license agreement with Lithium Electric Vehicle Corp. ("LEVC") providing for the Company to license to LEVC certain
  of the Company's patent applications and technologies for electric vehicles and other applications. The purpose of the licensee
  is to expand sales of the Company's current line of products by the manufacture and sale of such products in Canada, which
  is LEVC's exclusive territory under the license agreement.
  The license agreement consists of an annual fee of $500,000
  for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third party.  LEVC
  is required to pay $1 million of the license fee during year one for the initial two years and $500,000 each additional year.  The
  Company has received $732,666 from LEVC with a balance due of $267,334 as of July 31, 2012, which is now delinquent.  The
  Company has reflected the delinquent amount due from LEVC in its accounts receivable and has established a reserve for doubtful
  accounts for the entire amount.
  The note of $1,750,000 has been reflected on the books of
  the Company. Due to LEVC having no assets to secure the note, the Company has recorded a reserve for doubtful accounts for the
  entire note amount of $1,750,000.
  As of February 19, 2013 Terra Inventions Corp and Lithium
  Electric Vehicle Corp. signed an amended License Agreement.  Both parties have agreed that, (1) Terra Inventions will own
  49% of LEVC in exchange for the balance of any funds due to Terra in connection with the license agreement.  (2) LEVC intends
  to further develop Terra's technology in Canada.  In exchange for this agreement Terra will have full access to these
  developments made by LEVC for Terra's use, including further development in the United States.  (3) LEVC will retain
  ownership of further developments only. (4) Terra and LEVC also agree that LEVC will be doing R & D and develop free energy
  technology and wind turbine technology to achieve higher efficiency for electric vehicles.  By Terra providing the platform,
  technology and BMS system for electric vehicles to LEVC, LEVC will also allow Terra to further develop these technologies in the
  United States.  (5) Both parties understand that LEVC will own these technologies accept for rights hereby granted to Terra
  for the USA.
  9
  Table of Contents
  Basis of Presentation
  Going Concern
  The Company's financial statements for the six months
  ended January 31, 2013, have been prepared on a going concern basis which contemplates the realization of assets and settlement
  of liabilities and commitments in the normal course of business.  The Company did not have any cash revenue from vehicle
  sales in the six months ended January 31, 2013.  Management recognized that the Company's continued existence is
  dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and revenue to cover
  expenses, as the Company continues to incur losses from operations.
  Since its incorporation, the Company financed its operations
  through advances and loans from its controlling shareholders.  The Company expects to finance operations through the
  sale of equity or other investments as well as continued advances from shareholders for the foreseeable future, as the Company
  does not expect to receive significant revenue from vehicle sales until the required certifications have been received.  There
  is no guarantee that the Company will be successful in arranging financing on acceptable terms.
  The Company's facility in Mooresville, North Carolina
  was financed through Bayview Loan Servicing, LLC ("Bayview"). Frontline Asset Management, Inc. ("Frontline"),
  had a second lien on the property. Li-ion became delinquent with the mortgage payments, and, following a prior foreclosure filing
  and new agreement as to payments under the mortgage, on July 12, 2012, Bayview refiled a notice of hearing on foreclosure on its
  deed of trust and security agreement for a hearing on August 21, 2012, the outstanding amount of the loan at July 31, 2012 being
  $946,279.   A similar notice of foreclosure pursuant to the Frontline deed of trust was filed by the Trustee with
  the same court on July 25, 2012, noticing a hearing for August 22, 2012, the amended notice of default in the amount of $660,546
  having been given on July 23, 2012. The Trustee for Frontline also filed on July 25, 2012, a notice of foreclosure and sale to
  take place on August 22, 2012.  The Trustee under the Bayview deed of trust on August 21, 2012, filed its notice of foreclosure
  and sale to take place on September 18, 2012, of the real and personal property securing the deed of trust.   On
  September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure and sale was completed, and
  Frontline assigned its rights to its foreclosure bid to A&S Holdings Inc., a related holding company, subject to the rights
  of Bayview, as the holder of the first mortgage on the property.
  As of the filing of this Report, the Company does not have
  any substantive plan on where its facilities will be or how it will continue the manufacturing process of its electric vehicles.
  The Company's ability to raise additional capital is
  affected by trends and uncertainties beyond its control.  The Company does not currently have any arrangements for financing
  and it may not be able to find such financing if required.  Obtaining additional financing would be subject to a number
  of factors, including investor sentiment.  Market factors may make the timing, amount, terms or conditions of additional
  financing unavailable to it.  These uncertainties raise substantial doubt about the ability of the Company to continue
  as a going concern.  The accompanying financial statements do not include adjustments that might result from the outcome
  of these uncertainties. The Company has reduced the workforce to a few consultants, even if financing is obtained qualified engineers
  and technicians that would need to be hired may not be readily available.
  Common Stock
  On December 13, 2011, the Board of Directors unanimously
  approved an amendment to the Company's Articles of Incorporation to decrease the authorized number of shares of common stock
  from 300 million shares, par value $.001 per share, to 60 million shares, par value $.001 per share.  The Company filed
  the amendment with the Secretary of State of Nevada on December 14, 2011.
  Effective January 26, 2012, the Financial Industry Regulatory
  Authority ("FINRA") approved a one-for-five reverse split of the common stock.
  Our Board of Directors unanimously approved an amendment
  to our Articles of Incorporation to increase the authorized number of shares of common stock from 60,000,000 shares, par value
  $.001 per share, to 400,000,000 shares, par value $.001 per share, on July 20, 2012. On the same date we received the written consent
  from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the amendment
  with the Secretary of State of Nevada on August 30, 2012, and the amendment was effective on that date.
  10
  Table of Contents
  Our Board of Directors unanimously approved an amendment
  to our Articles of Incorporation to decrease the authorized number of shares of common stock from 400,000,000 shares, par value
  $.001 per share, to 40,000,000 shares, par value $.001 per share, on November 29, 2012. On the same date we received the written
  consent from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the
  amendment with the Secretary of State of Nevada on November 29, 2012, and the amendment was effective on that date.
  Effective December 31, 2012, FINRA approved a one-for-ten
  reverse split of the common stock. All share and per share amounts have been restated to reflect the one-for-ten reverse stock
  split.
  All shares and per share information has been revised to
  give retroactive effect to the reverse stock splits.
  Note 2. Summary of Significant Accounting Policies
  The Company's significant accounting policies are summarized
  in Note 1 of the Company's Annual Report on Form 10-K for the year ended July 31, 2012. There were no significant changes
  to these accounting policies during the three months ended January 31, 2013 and the Company does not expect that the adoption of
  other recent accounting pronouncements will have a material impact on its financial statements.
  Note 3. Fair Value Measurements
  The Company utilizes the accounting guidance for fair value
  measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized
  or disclosed at fair value in the consolidated financial statements on a recurring basis or on a nonrecurring basis during the
  reporting period.  The fair value is an exit price, representing the price that would be received to sell an asset or
  paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability
  at the measurement date.  The Company utilizes market data or assumptions that market participants would use in pricing
  the asset or liability.  The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the
  inputs used in measuring fair value.  These tiers are defined as follows:
  Level 1
  - Observable inputs such as quoted market
  prices in active markets
  Level 2
  - Inputs other than quoted prices in active
  markets that are either directly or indirectly observable
  Level 3 -
  Unobservable inputs about which little or
  no market data exists, therefore requiring an entity to develop its own assumptions.
  As of January 31, 2013, the Company held certain financial
  assets that are measured at fair value on a recurring basis. These consisted of cash and cash equivalents. The fair values of the
  cash and cash equivalents is determined based on quoted market prices in public markets and is categorized as Level 1. The Company
  does not have any financial assets measured at fair value on a recurring basis as Level 3 and there were no transfers in or out
  of Level 1, Level 2 or Level 3 during the six months ended January 31, 2013, and 2012.
  The following table sets forth by level, within the fair value
  hierarchy, the Company's financial assets accounted for at fair value on a recurring basis as of January 31, 2013, and July
  31, 2012.
  Assets at Fair Value Using
  Quoted Prices in
  Activated Markets for Identical Assets
  Significant Other
  Observable Inputs
  Significant Observable
  Inputs
  Total
  (Level 1)
  (Level 2)
  (Level 2)
  January 31, 2013
  Cash and cash equivalents
  $
  14
  $
  14
  $
  —
  $
  —
  July 31, 2012
  Cash and cash equivalents
  $
  64
  $
  64
  $
  —
  $
  —
  11
  Table of Contents
  Note 4. Notes Receivable
  As of July 31, 2012, the Company had a note receivable balance
  with CET of $708,602. On October 2, 2012 the Company sold its interest in the receivable to Frontline Asset Management ("Frontline")
  for $0.10 on the dollar which reduced the Company's debt with Frontline to $70,786. The entire note receivable had previously
  been reserved for in its entirety; therefore, we had a $70,786 credit in our bad debt expense which is included in the general
  and administrative expenses on the Company's consolidated statement of operations for the six months ended January 31, 2013.
  During the six months ended January 31, 2013, the Company
  advanced $0 and $0 was repaid by CET. During the six months ended January 31, 2012 the Company advanced CET $54,539 of which $22,984
  was repaid. As of January 31, 2013 and July 31, 2012, an allowance for doubtful accounts in the amount of $0 and $708,602, respectively,
  was recorded against the note receivable, reducing the amount to $0.
  On November 26, 2010, LEVC issued the Company a Secured Promissory
  Note ("LEVC Note") in the amount of $1,750,000 in accordance with the license agreement. The LEVC Note bears interest
  at ten (10%) percent per annum on the outstanding amount of the loan and shall accrue for the first 12 months during which the
  outstanding amount, or any portion thereof is outstanding. Commencing for the first month following the first year and for all
  subsequent months during which any portion of the amount is outstanding, LEVC shall make monthly interest payments in arrears on
  the first day of the month following the month for which the interest payment is made on the outstanding amount of the LEVC Note,
  including any accrued unpaid interest thereon. The outstanding amount and any accrued but unpaid interest thereon shall be repaid
  in full by LEVC within sixty (60) days of receiving written demand for repayment by the Company. LEVC shall have the right to repay
  the LEVC Note in whole or in part, at any time without notice, bonus or penalty. The LEVC Note is secured by LEVC's (1) inventory;
  (2) equipment, other than inventory; (3) receivables; and (4) all other property, including leasehold interests, chattel paper,
  documents of title, securities, instruments, money and intangibles. In addition, the LEVC Note includes a conversion right in which
  the Company can convert the LEVC Note if LEVC should begin trading on the TSX Venture Exchange. The conversion clause stipulates
  that the LEVC Note will be converted at a price the greater of fifteen cents ($0.15) per share or ninety percent (90%) of the average
  ten (10) day trading price and if the conversion of the LEVC Note results in a fractional share, LEVC shall, in lieu of issuing
  such fractional share, pay to the Company an amount equal to the conversion value of the fractional share.
  LEVC is currently attempting to complete a public registration
  in Germany. The Company has the option, upon the completion of the registration, of converting the note into LEVC common stock.
  Due to the uncertainty of LEVC's ability to complete the public registration in Germany and with LEVC having no assets to
  secure the note, the Company has recorded a reserve for doubtful accounts for the entire note amount of $1,750,000.
  The Company recognized interest income of $88,645 and $88,219,
  none of which has been received, in accordance to the terms of the LEVC Note for the six months ended January 31, 2013 and January
  31, 2012, respectively. The Company has reflected the amount due from LEVC in its accounts receivable and has established a reserve
  for doubtful accounts for the entire amount and is included in general and administrative expenses on the Company's consolidated
  statement of operations.
  Note 5. Inventories
  Inventories consist of the following:
  January 31,
  July 31,
  2013
  2012
  Finished Goods
  $
  1,500
  $
  1,500
  $
  1,500
  $
  1,500
  Raw materials, work in progress and finished goods for the
  quarter ended January 31, 2013, and year ended July 31, 2012, are related to the Company's planned sales of electric powered
  vehicles.
  12
  Table of Contents
  Note 6. Property and Equipment
  Property and equipment consist of:
  January 31,
  July 31,
  2013
  2012
  Building and Improvements
  $
  —
  $
  552,276
  Equipment and Furniture and Fixtures
  4,827
  4,827
  Vehicles
  66,429
  66,429
  Land
  —
  700,000
  71,256
  1,323,532
  Less Accumulated Depreciation
  (66,748
  )
  (268,601
  )
  Net Property and Equipment
  $
  4,508
  $
  1,054,931
  Depreciation expense for the three months ended January 31,
  2013 and 2012, was $639 and $8,643, respectively. Depreciation expense for the six months ended January 31, 2013 and 2012, was
  $1,277 and $31,716, respectively, and is included in general and administrative expenses on the Company's consolidated statement
  of operations.
  On September 14, 2012, the sale of the property pursuant
  to the Frontline August 22, 2012 foreclosure and sale was completed. Due to the foreclosure of the property and the loss of rights
  to the facility, the Company wrote-off the building and its improvements, which caused a loss of $5,552 and is reflected on the
  Company's consolidated statement of operations.
  Note 7. Other Current Assets
  January 31,
  July 31,
  2013
  2012
  Deposits
  $
  —
  $
  3,190
  Total
  $
  —
  $
  3,190
  Note 8. Accounts Payable and Accrued Expenses
  Accounts payable, accrued expenses and other current liabilities
  at January 31, 2012 and July 31, 2011 consisted of:
  January 31,
  July 31,
  2012
  2012
  Accounts Payable
  $
  310,532
  $
  291,156
  Accounts Payable - Related Parties
  10,177
  4,682
  Wages, Paid Leave and Payroll Related Taxes
  998,235
  948,410
  Accrued Interest
  34,428
  120,067
  Legal Settlements
  152,976
  152,976
  Other
  2,945
  20,769
  Total
  $
  1,509,293
  $
  1,538,060
  Accounts payable due to related parties are reimbursable
  general and administrative expenses paid by the Company's President.
  13
  Table of Contents
  Note 9. Long-Term Debt
  Long-term debt consists of:
  January 31,
  July 31,
  2013
  2012
  5% Note payable to Bayview Loan Servicing, LLC, payable in monthly installments of $5,433 including interest, collateralized by real property. Due to foreclosure of the building, the entire balance has been eliminated. (1)
  $
  —
  $
  946,279
  12% Note payable to Frontline Asset Management, payable in monthly installments of interest only, due in full on March 1, 2013 (2)
  378,959
  508,492
  48.956% Note payable to Amicus Funding Group, LLC, payable in monthly installments of approximately $467, collateralized by real property due in full on September 1, 2013 (3)
  6,297
  6,297
  10% Note payable to Cameo Properties, LLC payable in monthly installments of interest only, due in full on December 27, 2014 (4)
  250,000
  250,000
  635,256
  1,711,068
  Less Current Portion
  (385,256
  )
  (1,460,189
  )
  $
  250,000
  $
  250,879
  Principal maturities for long-term debt are as follows for
  the second quarters ended January 31:
  2013
  $
  385,256
  2014
  250,000
  2015
  —
  2016
  —
  2017
  —
  Thereafter
  —
  $
  635,256
  (1) In November 2007, the Company refinanced the first mortgage
  loan on its Mooresville, North Carolina building (the "property") with Bayview. On July 25, 2012, Frontline, the junior
  lien holder noticed a foreclosure hearing and sale to take place on August 22, 2012, and the sale of the property to an assignee
  of Frontline, which was the only bidder, was completed on September 14, 2012.  The Company debt to Bayview was reduced
  to zero upon the completion of the sale.
  (2) On February 26, 2010, the Company entered into a loan
  agreement with Frontline. The loan provides for payments to the Company of $2,000,000 with interest at a fixed annual rate of 12%.  On
  March 1, 2012, an Addendum to the original Promissory Note, dated February 26, 2010, was entered into which amended the term of
  the note to  provide for interest only payments, due on the last day of every month until maturity date March 30, 2013,
  when all principal and accrued interest shall be due and payable.  On April 11, 2011, Frontline assigned $850,279 of
  its debt to Windsor Capital, Inc. ("Windsor"). On April 19, 2011, Frontline partially assigned $437,309 to Kisumu S.A.
  ("Kisumu") and Kisumu immediately converted the assigned note for 1,041,212 shares of Common Stock at a fair value
  price of $0.42 per share.  On April 19, 2011, Frontline assigned $420,000 to Eurolink Corporation ("Eurolink")
  and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a fair value price of $0.42 per share.  On
  December 27, 2011, Frontline purchased two electric vehicles for $255,000.  On the same day Frontline assigned $250,000
  to Cameo Properties, LLC.  On April 26, 2012, the Company assigned $112,500 of its note receivable with CET to Frontline
  which reduced the balance due to Frontline by
  14
  Table of Contents
  $112,500. On September 13, 2012, Frontline converted $39,000
  of accrued interest for 1,300,000 shares of Common Stock at a discounted value price of $0.30 per share. On October 2, 2012, Frontline
  purchased our receivable with CET at $0.10 on the dollar for $70,786, which reduced the Company's accrued interest by $43,726
  and debt by $27,060. On October 2, 2012, Frontline converted $12,180 for 1,450,000 shares of Common Stock at a discounted value
  price of $0.0084 per share. On November 13, 2012, Frontline partially assigned $17,280 to Kisumu and Kisumu immediately converted
  the assigned note for 3,200,000 shares of Common Stock at a discounted value price of $0.0054 per share. On December 26, 2012,
  Frontline partially assigned $112,200 to Kisumu and Kisumu converted the assigned note for 18,700,000 shares of Common Stock at
  a discounted price of $0.006 per share.
  Loans under the Frontline loan agreement are secured by a
  junior deed of trust on the Company's  property located at 158 Rolling Hill Road, Mooresville, North Carolina.  On
  August 22, 2012, the foreclosure by Frontline of the property took place, pursuant to a notice of foreclosure and sale dated July
  25, 2012, and the foreclosure sale to an assignee of Frontline, which was the only bidder, was completed on September 14, 2012.  Frontline
  received $50,000 upon the sale of the foreclosed property and this amount reduced the debt to Frontline.
  Interest expense for the three months ended January 31, 2013
  and 2012, was $12,135 and $15,244, respectively . Interest expense for the six months ended January 31, 2013 and 2012, was $27,423
  and $32,904, respectively.
  (3) On March 11, 2011, the Company financed $7,992 for office
  equipment with Amicus Funding Group, LLC ("Amicus") and monthly payments including interest of 48.956% are approximately
  $477. During the three months ended January 31, 2013 and 2012, the Company repaid $0 and $380, respectively. During the six months
  ended January 31, 2013 and 2012, the Company repaid $0 and $895, respectively. The Company is in default on this note.
  Interest expense for the three months ended January 31, 2013
  and 2012, was $461 and $819, respectively. Interest expense for the six months ended January 31, 2013 and 2012, was $1,028 and
  $1,703, respectively.
  (4) The Company entered into a Loan Agreement, dated as of
  July 14, 2011, with Cameo Properties LLC ("Cameo") and was amended on October 14, 2011 (the "Amended Loan Agreement").
  Each Note issued under the Amended Loan Agreement is due three years from the date of its issuance. The Amended Loan Agreement
  provides for loans to the Company of up to $750,000 (the "Loan"), with a minimum initial loan of $250,000 within 60
  days of the date of the Loan Agreement, and up to an additional $500,000 within the first year and a half from execution of the
  Amended Loan Agreement. This is not a revolving facility, and any principal repaid by the Company will not be available for additional
  advances to the Company under the Amended Loan Agreement. The Company cannot, without the Lender's consent, prepay all or
  part of the Loan. The notes evidencing the installments of the loans bear interest payable monthly in arrears at the rate of 10%
  per annum, and mature and are due and payable three years from the date of issuance. On December 27, 2011, Frontline assigned $250,000
  of its receivable to Cameo.
  Interest expense for the three months ended January 31, 2013
  and 2012, was $6,301 and $2,937, respectively. Interest expense for the six months ended January 31, 2013 and 2012, was $12,603
  and $2,937, respectively.
  Note 10. Stockholders' Equity (Deficiency)
  On July 14, 2011, the Company entered into a Loan Agreement
  with Cameo Properties LLC ("Cameo"). The loans under the Loan Agreement are secured, over the life of the loan, by
  20 million shares of our common stock.  If the Company should default on the loan, Cameo will retain all of the 20 million
  shares of common stock.  In the event of a reverse stock split or combination of shares, the number of shares of common
  stock constituting the Share Collateral will, immediately following such reverse stock split or combination of shares, be increased
  by a new issuance of common stock of the Company to that number of shares constituting the Share Collateral immediately prior to
  such reverse stock split or combination of shares. The certificates representing any share dividends that the Company pays during
  the term of the Loan with respect to the Shares being held in escrow shall be credited and delivered to the Lender and held by
  the Lender pursuant to the terms of the Loan Agreement.
  Effective January 26, 2012, the Securities and Exchange Commission
  approved a one-for-five reverse split of the common stock.  Pursuant to the anti-dilution provisions in the Cameo Properties
  loan agreement the Company issued 16,000,000 shares to Cameo Properties, so they again held 20,00,000 post reverse stock split
  shares.
  15
  Table of Contents
  Effective December 31, 2012, the Securities and Exchange
  Commission approved a one-for-ten reverse split of the common stock.  Pursuant to the anti-dilution provisions in the
  Cameo Properties loan agreement the Company issued 18,000,000 shares to Cameo Properties, so they again held 20,00,000 post reverse
  stock split shares.
  On September 13, 2012, Frontline converted $39,000 of accrued
  interest for 1,300,000 shares of Common Stock at a discounted value price of $0.30 per share. The Company recorded a loss on extinguishment
  of debt in the amount of $26,000 in connection with the conversion.
  On October 2, 2012, Frontline converted $12,180 for 1,450,000
  shares of Common Stock at a discounted value price of $0.0084 per share. The Company recorded a loss on extinguishment of
  debt in the amount of $5,220 in connection with the conversion.
  On November 13, 2012, Frontline partially assigned $17,280
  to Kisumu and Kisumu immediately converted the assigned note for 3,200,000 shares of Common Stock at a discounted value price of
  $0.0054 per share. The Company recorded a loss on extinguishment of debt in the amount of $13,120 in connection with the conversion.
  On December 26, 2012, Frontline partially assigned $112,200
  to Kisumu and Kisumu converted the assigned note for 18,700,000 shares of Common Stock at a discounted price of $0.006 per share.
  The Company recorded a loss on extinguishment of debt in the amount of $74,800 in connection with the conversion.
  Changes to Authorized Common Stock
  On June 24, 2011, the Board of Directors unanimously approved
  an amendment to the Articles of Incorporation to increase the authorized number of shares of common stock from 100 million shares,
  par value $.001 per share, to 300 million shares, par value $.001 per share. The Company filed the amendment with the Secretary
  of State of Nevada on August 10, 2011, after mailing a Definitive Information Statement to the Company's stockholders and
  the amendment was effective August 10, 2011.
  On December 13, 2011, the Board of Directors unanimously
  approved an amendment to the Company's Articles of Incorporation to change the authorized number of shares of common stock
  from 300 million shares, par value $.001 per share, to 60 million shares, par value $.001 per share, and to effect a reverse split
  in the outstanding common stock in the same ratio.  The Company filed the amendment with the Secretary of State of Nevada
  on December 14, 2011.
  Our Board of Directors unanimously approved
  an amendment to our Articles of Incorporation to increase the authorized number of shares of common stock from 60,000,000 shares,
  par value $.001 per share, to 400,000,000 shares, par value $.001 per share, on July 20, 2012. On the same date we received the
  written consent from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We
  filed the amendment with the Secretary of State of Nevada on August 30, 2012, and the amendment was effective on that date.
  On November 29, 2012, our Board of Directors unanimously
  approved an amendment to our Articles of Incorporation to increase the authorized number of shares of common stock from 400,000,000
  shares, par value $.001 per share, to 40,000,000 shares, par value $.001 per share. On the same day we received the written consent
  from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the amendment
  with the Secretary of State of Nevada on November 29, 2012, and the amendment was effective on that date.
  Note 11. Net Earnings (Loss) Per Common Share
  The following table sets forth the reconciliation of the
  basic and diluted net earnings (loss) per common share computations for the three months ended January 31, 2013 and 2012.
  16
  Table of Contents
  Three Months Ended
  Six Months Ended
  January 31,
  January 31,
  2013
  2012
  2012
  2011
  Basic and Diluted Earnings (Loss) Per Share
  Net Earnings (Loss) Ascribed to Common Shareholders - Basic and Diluted
  $
  (208,580
  )
  $
  (2,107,049
  )
  $
  (247,892
  )
  $
  (2,394,272
  )
  Weighted Average Shares Outstanding - Basic and Diluted
  13,704,783
  20,642,347
  21,399,154
  20,642,347
  Basic and Diluted Net Earnings (Loss) Per Common Share
  $
  (0.02
  )
  $
  (0.10
  )
  $
  (0.01
  )
  $
  (0.12
  )
  Net loss per common share for the six months
  ended January 31, 2012, has been revised. All share and per share amounts have been restated to reflect the one-for-five
  reverse stock split as discussed in Note 10.
  The amounts previously reported for the three months ended
  January 31, 2011, were as follows:
  Three Months Ended
  Six Months Ended
  January 31, 2012
  January 31, 2012
  Basic and Diluted Loss Per Common Share
  $
  (0.33
  )
  $
  (0.37
  )
  Weighted Average Number of Shares
  Outstanding -Basic and Diluted
  6,418,322
  6,418,322
  Note 12. Share Based Compensation
  The Company records compensation expense in its consolidated
  statement of operations related to employee stock-based options and awards in accordance with FASB ASC 718, "Compensation",
  and ("ASC 718").
  The Company recognizes the cost of all employee stock options
  on a straight-line attribution basis over their respective contractual terms, net of estimated forfeitures. The Company has selected
  the modified prospective method of transition.
  Stock Option Plan
  As of January 31, 2013, there are no shares of common stock
  remaining and available for issuance under the stock option plans.
  Note 13. Income Taxes
  The Company adopted the provisions of ASC 740, "Income
  Taxes" ("ASC 74") on August 1, 2007. The implementation of ASC 740 did not impact the total amount of the Company's
  liabilities for uncertain tax position.
  The Company recorded no provisions for income taxes for the
  six months ended January 31, 2013 and 2012.
  Note 14. Commitments and Contingencies
  Legal Proceedings
  The Company is currently involved in various claims and legal
  proceedings. Quarterly, the Company reviews the status of each significant matter and assesses its potential financial exposure
  and if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated,
  the Company accrues a liability for the estimated loss.
  Caudle & Spears has obtained a default judgment against
  the Company in Meckenberg County, North Carolina, General Court, in the amount of $17,686. This law firm represented us in our
  litigation against Martin Koebler, a former employee, whom we successfully sued for return of Company property and other damages.
  The Company is in settlement negotiations with Caudle & Spears, since its judgment against Martin Koebler is still in the collection
  process. A payment agreement has been reached in the amount of $2,500 per month with no interest until paid.  The Company
  is not current with its payment arrangements and has a balance of $4,263 still due.
  17
  Table of Contents
  Internal Revenue Service ("IRS") served the Company
  with a tax lien dated March 3, 2010 in the total amount of $251,928. Third quarter 2009 taxes are approximately $117,000, which
  are included in total due.  The Company has been served with an additional tax lien dated January 19, 2011, in the amount
  of $2,925. The Company had a payment plan in place with IRS; however, the Company is arrears in payments as of July 31, 2012. Management
  is working with the local IRS office to try and revise the payment agreement.  The balance due on the most recent statement
  from
  the IRS is $566,071.
  Tallman Hudders & Sorrentino has obtained a judgment
  in Lehigh County, Pennsylvania, on behalf of their client Javad Hajihadian, an individual.  Mr. Hajihadian had ordered
  and paid for, the first super car to be produced by Li-ion Motors in November 2008. The car was in the design stage when it was
  ordered.  Mr. Hajihadian's attorney subsequently contacted the Company to cancel his contract and have his payment
  refunded. The parties had reached a settlement agreement and the payment was being refunded with interest. The settlement agreement
  was for $102,500 and stipulated monthly payments of $10,250 commencing in July 2010.  Payments were made through November
  2010, totaling $51,250, leaving a balance of five payments or $51,250 still due; which is reflected on the Company's balance
  sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with litigation and on February 4,
  2011, a judgment was issued in his favor for $51,750.
  The Company's facility in Mooresville, North Carolina
  was financed through Bayview and Frontline, which had a second lien on the property. Li-ion became delinquent with the mortgage
  payments, and, following a prior foreclosure filing and new agreement as to payments under the mortgage, on July 12, 2012, Bayview  refiled
  a notice of hearing on foreclosure on its deed of trust and security agreement for a hearing on August 21, 2012, the outstanding
  amount of the loan at July 31, 2012 being $946,279.   A similar notice of foreclosure pursuant to the Frontline
  deed of trust was filed by the Trustee with the same court on July 25, 2012, noticing a hearing for August 22, 2012, with an amended
  notice of default, the amount of $508,492 being outstanding under the loan as of July 31, 2012. The Trustee for Frontline also
  filed on July 25, 2012, a notice of foreclosure and sale to take place on August 22, 2012.  The Trustee under the Bayview
  deed of trust on August 21, 2012, filed its notice of foreclosure and sale to take place on September 18, 2012, of the real and
  personal property securing the deed of trust.   On September 14, 2012, the sale of the property pursuant to the
  Frontline August 22, 2012 foreclosure and sale was completed, and Frontline assigned its rights to its foreclosure bid to A&S
  Holdings Inc., subject to the rights of Bayview, as the holder of the first mortgage on the property.
  Fine Mobile and Li-ion Motors entered into a confession of
  judgment in relation to X-Prize winnings.  The parties agreed to a payment arrangement of $10,000 per month for a period
  of eight (8) months.  If a default were to occur, the debtor would then be entitled to exercise confession of judgment
  in the amount of $120,000 without further delay.  The initial payment was wired on December 15, 2011; however, the Company
  was unable to make any additional payments.  On June 18, 2012 Fine Mobile executed the judgment with the Iredell County
  Sheriff's Office and on July 2, 2012, the Sherriff took possession of the building located at 158 Rolling Hill Road, Mooresville,
  NC, seizing all remaining assets.
  ITEM 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations.
  Forward Looking Statements
  This quarterly report contains forward-looking statements
  that involve risks and uncertainties.  We use words such as anticipate, believe, plan, expect, future, intend and similar
  expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements.  Our
  actual results are likely to differ materially from those anticipated in these forward-looking statements for
  many reasons, including the risks faced by us described in this section.
  Results of Operations for the Three and Six months Ended
  January 31, 2013
  Electric Vehicle Operations
  Sales of our electric powered vehicles
  for the three months ended January 31, 2013 and 2012 were $0 and $472,000, respectively. Vehicle parts sold during the three months
  ended January 31, 2013 and 2012 were $0 and $1,128, respectively.
  18
  Table of Contents
  Sales of our electric powered vehicles
  for the six months ended January 31, 2013 and 2012 were $0 and $472,000, respectively. Vehicle parts sold during the six months
  ended January 31, 2013 and 2012 were $0 and $4,696, respectively.
  With the licenses of our lithium battery
  and electric vehicle technology described below, we are concentrating on sales of our vehicles.
  Clean Enviro Tech Corp
  .
  License Agreement
  We entered into a License Agreement ("Clean
  Enviro Tech License Agreement") with Clean Enviro Tech Corp. (formerly Sky Power Solutions) in April 2008, providing for
  our license to Clean Enviro Tech Corp. ("CET") of our patent applications and technologies for rechargeable lithium
  ion batteries for hybrid vehicles and other applications ("Licensed Products"). Under the CET License Agreement, we
  have the right to purchase our requirements of lithium ion batteries from CET, and our requirements of lithium ion batteries shall
  be supplied by CET in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for other
  customers of CET. Our cost for lithium ion batteries purchased from CET shall be CET's actual manufacturing costs for such
  batteries for the fiscal quarter of CET in which our purchase takes place. On May 25, 2010, the CET License Agreement was amended
  to reflect CET's territory would be the United States, U.S. possessions and territories only, and the Company can license
  other companies in other parts of the world.
  CET agreed to invest a minimum of $1,500,000
  in 2008 and 2009, in development of the technology for the Licensed Products. To date, CET has not met the minimum requirements
  in the development of technology, and therefore, is not in compliance with its obligations under this covenant of the license agreement. 
  The Company has advised CET that it will not give notice of default against them for their failure to comply with this covenant
  over the term of the License Agreement.
  On May 25, 2010 the CET License Agreement
  was amended to limiting the license granted to CET to only the United States, permitting Terra to grant other licenses to companies
  in other parts of the world.
  Lithium Electric Vehicle Corp. License Agreement
  Effective May 28, 2010, the Company entered
  into a ten year license agreement with Lithium Electric Vehicle Corp. ("LEVC") providing for the Company to license
  to LEVC certain Company patent applications and technologies for electric vehicles and other applications. The purpose of the licensee
  is to expand sales of the Company's line of products by the manufacture and sale of such products in Canada, which is LEVC's
  exclusive territory under the license agreement.
  The license agreement consists of an
  annual fee of $500,000 for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third
  party.  LEVC is required to pay $1 million of the license fee during year one for the initial two years and $500,000
  each additional year.  The Company has received $732,666 from LEVC with a balance due of $267,334 as of July 31, 2012,
  which is now delinquent.  The Company has reflected the delinquent amount due from LEVC in its accounts receivable and
  has established a reserve for doubtful accounts for the entire amount.
  The Company is still in discussions with
  LEVC regarding the delinquency.
  The note of $1,750,000 has been reflected
  on the books of the Company and due to LEVC having no assets to secure the note; the Company has recorded a reserve for doubtful
  accounts for the entire note amount of $1,750,000.
  As of February 19, 2013 Terra Inventions
  Corp and Lithium Electric Vehicle Corp. signed an amended License Agreement.  Both parties have agreed that, (1) Terra Inventions
  will own 49% of LEVC in exchange for the balance of any funds due to Terra in connection with the license agreement.  (2)
  LEVC intends to further develop Terra's technology in Canada.  In exchange for this agreement Terra will have full access
  to these developments made by LEVC for Terra's use, including further development in the United States.  (3) LEVC will
  retain ownership of further developments only. (4) Terra and LEVC also agree that LEVC will be doing R & D and develop free
  energy technology and wind turbine technology to achieve higher efficiency for electric vehicles.  By Terra providing the
  platform, technology and BMS system for electric vehicles to LEVC, LEVC will also allow Terra to further develop these technologies
  in the United States.  (5) Both parties understand that LEVC will own these technologies accept for rights hereby granted
  to Terra for the USA.
  19
  Table of Contents
  Cost of Sales
  Cost of sales as a percentage of net vehicle
  sales for the three months ended January 31, 2013 was 0% compared to approximately 54% during the same period in 2012. Cost of
  sales as a percentage of net vehicle sales for the six months ended January 31, 2013 was 0% compared to approximately 54% during
  the same period in 2012. Based on our historical review of costs, we expect that cost of sales in the future will remain in line
  on a percentage basis with our historic level of approximately 20%. As sales volumes and prices increase, costs should then reduce
  as a percentage of sales.
  General and Administrative Expenses
  General and administrative ("SG&A")
  expenses decreased to $120,954 for the three months ended January 31, 2013, as compared to $2,396,441 during the same period in
  2012. The decrease was attributable to a reduction in: (1) bad debt expense of $2,191,070; (2) payroll related expenses of $64,472;
  and (3) other various expenses of $19,945.
  SG&A expenses decreased to $169,274
  for the six months ended January 31, 2013, as compared to $2,620,659 during the same period in 2012. The decrease was attributable
  to a reduction in: (1) bad debt expense of $2,238,173; (2) payroll related expenses of $63,915; (3) depreciation expense of $30,438;
  (4) penalties of $29,084; (5) financing related expenditure of $25,000; (6) director fees of $21,000 and (6) other various expenses
  of $43,775.
  Of all SG&A expenses the Company incurred
  during the first six months of 2013, the majority were charges that are expected to be recurring.
  Research and Development Expenses
  No set amount has been set aside for research
  and development ("R&D"), however, all projects and purchases require approval prior to initiation. Salaries, payroll
  taxes, and benefits expensed to R&D for the three months ended January 31, 2013 and January 31, 2012, amounted to $0 and $151,013,
  respectively. Parts and supplies expensed to R&D was $0 and $4,772 for the three months ended January 31, 2013 and 2012, respectively.
  Salaries, payroll taxes, and benefits expensed
  to R&D for the six months ended January 31, 2013 and January 31, 2012, amounted to $0 and $399,819, respectively. Parts and
  supplies expensed to R&D was $1,297 and $11,832 for the six months ended January 31, 2013 and 2012, respectively.
  We expect that research and development
  expenses will continue to remain substantial and grow as we aggressively move to bring products to market
  Interest Expense
  Interest expense decreased to $18,897 for
  the three months ended January 31, 2013 as compared to $32,309 for 2012, and $41,108 for the six months ended January 31, 2013
  as compared to $73,842 for 2012 due to the reduction of the Company's debt. Interest expense consists primarily of interest
  related to borrowings.
  Other Income
  Other income for the three months ended
  January 31, 2013, consisted primarily of interest income from the LEVC Note of $43,944.
  Other income for the three months ended
  January 31, 2012 consists of (1) accounting fees and rental income from
  20
  Table of Contents
  CET for $16,931; (2) rental income from Advanced Tech of $6,928;
  (3) interest income from the LEVC note of $44,110; (4) forfeiture of customer deposit of $30,000; and (5) various other income
  of $130. Other income was reduced by $4,688 for loss from sale of assets and $351 for foreign exchange transactional expense.
  Other income for the six months ended
  January 31, 2013, consisted of interest income from the LEVC Note of $88,645, which was offset by $166 for foreign exchange transactional
  expense.
  Other income for the six months ended January
  31, 2012 consists of (1) accounting fees and rental income from CET for $35,362; (2) rental income from Advanced Tech of $6,928;
  (3) interest income from the LEVC note of $88,219; (4) forfeiture of customer deposit of $30,000; and (5) various other income
  of $130. Other income was reduced by $4,688 for loss from sale of assets and $220 for foreign exchange transactional expense.
  Net Loss
  Net loss attributable to common stockholders
  for the three months ended January 31, 2013 was $208,580 compared to $2,107,049 for the previous fiscal quarter. Basic and diluted
  loss attributable to common stockholders per share of common stock for the three months ended January 31, 2013 was $.02 as compared
  to $0.10 for the previous fiscal quarter.
  Net earnings attributable to common stockholders
  for the six months ended January 31, 2013 was $247,892 compared to a net loss of $2,394,272 for the previous fiscal quarter. Basic
  and diluted loss attributable to common stockholders per share of common stock for the six months ended January 31, 2013 was $.01
  as compared to $0.12 for the previous fiscal quarter.
  Liquidity and Capital Resources
  Since our incorporation, we have financed
  our operations almost exclusively through the sale of our common shares to investors and borrowings.  We expect to finance
  operations through borrowings and the sale of equity in the foreseeable future as we receive minimal revenue from our
  current business operations. There is no guarantee that we will be successful in arranging financing on acceptable terms.
  At January 31, 2013, we had liabilities
  of $2,246,737, as compared with $3,351,316 at July 31, 2012; and working capital deficiency of $1,995,223 and stockholders' equity
  deficiency of $2,202,652.
  Our property and equipment decreased
  to $4,508 at January 31, 2013, as compared with $5,785 at July 31, 2012.
  Net cash used in operating activities
  was $76,892 during the three months ended October 31, 2012, as compared with net cash provided by of $353,997 in 2012. We did not
  have any investing activities during the six months ended January 31, 2013 and 2012.
  During the six months ended January
  31, 2013, from the issuance of a promissory note for a receivable, we advanced $0 to CET and were repaid $0. During the six months
  ended January 31, 2013, we received net proceeds of $77,185 from the issuance of promissory notes for debt, and made repayments
  of $0. Total cash provided by financing activities in the six months ended January 31, 2011 was $77,185 as compared with cash used
  of $359,195 in 2012.
  Liquidity Issues
  The Company has
  substantial obligations to the Internal Revenue Service and other creditors. The Company is working toward a payment plan with
  the Internal Revenue Service (IRS) for delinquent payroll taxes, and has a plan in place with one of two judgment creditors. There
  is no assurance that we will be able raise additional required capital to meet obligations arising from the settlements of these
  obligations and litigation matters, as well as the settlement payments with the IRS, and continue operations.
  21
  Table of Contents
  Our current operating
  funds are less than necessary for commercialization of our planned products, and therefore we will need to obtain additional financing
  in order to complete our business plan. We anticipate that up to $2,000,000 of additional working capital will be required over
  the next 12 months for market introduction of these products through joint venture partners or otherwise. We do not have sufficient
  cash on hand to meet these anticipated obligations, which are in addition to payments we will owe to judgment creditors and the
  IRS.
  We do not currently
  have any additional arrangements for financing, and we may not be able to find such financing if required. Obtaining additional
  financing would be subject to a number of factors, including investor sentiment. Market factors may make the timing, amount, terms
  or conditions of additional financing unavailable to us.
  Critical Accounting Issues
  The Company's significant accounting
  policies are summarized in Note 1 of the Company's Annual Report on Form 10-K for the year ended July 31, 2012. There were
  no significant changes to these accounting policies during the six months ended January 31, 2013, and the Company does not expect
  that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
  ITEM 3. Quantitative and Qualitative Disclosures About Market
  Risk.
  Interest Rate Risk - Interest rate risk
  refers to fluctuations in the value of a security resulting from changes in the general level of interest rates. Investments that
  are classified as cash and cash equivalents have original maturities of three months or less. Our interest income is sensitive
  to changes in the general level of U.S. interest rates.  We do not have significant short-term investments, and due to
  the short-term nature of our investments, we believe that there is not a material risk exposure.  Our debt is at fixed
  interest rates.
  Credit Risk - Our accounts receivables
  are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies
  and business practices to protect against the adverse effects of collection risks. As a result we do not anticipate any material
  losses in this area.
  ITEM 4 (T). Controls and Procedures.
  As of the end of the fiscal quarter
  covered by this Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company's
  management, including the Company's Chief Executive Officer and Principal Financial and Accounting Officer, of the effectiveness
  of the design and operation of the Company's disclosure controls and procedures as defined in Rule 13a-14 of the Securities
  Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Principal Financial and Accounting Officer concluded
  that the Company's disclosure controls and procedures were not effective in timely alerting her to material information relating
  to the Company (including its consolidated subsidiaries) required to be included in this Quarterly Report on Form 10-Q. There have
  been no changes in the Company's internal controls over financial reporting during the Company's last fiscal quarter
  that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial
  reporting.
  PART II. OTHER INFORMATION
  ITEM 1. Legal Proceedings.
  Other than as described below, we are not
  a party to any material legal proceedings and to our knowledge, no such proceedings are threatened or contemplated.
  22
  Table of Contents
  Caudle & Spears v. EV Innovations, Inc.
  Caudle & Spears has obtained a default
  judgment against the Company in Mecklenburg County, North Carolina, General Court, in the amount of $17,686. This law firm represented
  us in our litigation against Martin Koebler, a former employee, whom we successfully sued for return of Company property and other
  damages. The Company is in settlement negotiations with Caudle & Spears, since its judgment against Martin Koebler is still
  in the collection process. A payment agreement has been reached in the amount of $2,500 per month with no interest until paid.
  The Company is not current with its payment arrangements and has a balance of $4,263 still due.
  Internal Revenue Service
  Internal Revenue Service ("IRS")
  served the Company with a tax lien dated March 3, 2010 in the total amount of $251,928. Third quarter 2009 taxes are approximately
  $117,000, which are included in total due.  The Company has been served with an additional tax lien dated January 19,
  2011, in the amount of $2,925. The Company had a payment plan in place with IRS; however, the Company is arrears in payments as
  of July 31, 2012. Management is working with the local IRS office to try and revise the payment agreement.  The balance
  due on the most recent statement
  from the IRS is $566,071.
  Javad Hajihadian
  Tallman Hudders & Sorrentino has
  obtained a judgment in Lehigh County, Pennsylvania, on behalf of their client Javad Hajihadian, an individual.  Mr. Hajihadian
  had ordered and paid for, the first super car to be produced by Li-ion Motors in November 2008. The car was in the design stage
  when it was ordered.  Mr. Hajihadian's attorney subsequently contacted  the Company to cancel his contract
  and have his payment refunded. The parties had reached a settlement agreement and the payment was being refunded with interest.
  The settlement agreement was for $102,500 and stipulated monthly payments of $10,250 commencing in July 2010.  Payments
  were made through November 2010, totaling $51,250, leaving a balance of five payments or $51,250 still due; which is reflected
  on the Company's balance sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with
  litigation and on February 4, 2011, a judgment was issued in his favor for $51,750. Management was
  deposed December
  2011, and produced requested documents and information.
  Bayview Loan Servicing, LLC
  The Company's facility in Mooresville
  North Carolina was financed through Bayview Loan Servicing, LLC ("Bayview") secured by a first lien on the Company's
  property located at 158 Rolling Hill Road  in Mooresville. Frontline Asset Management, Inc. ("Frontline")
  holds a note in the amount of $2,000,000 (current balance due of $508,492) secured by a second lien on the property..  On
  July 12, 2012, Bayview  refiled a notice of hearing on foreclosure on its deed of trust and security agreement for a
  hearing on August 21, 2012, the outstanding amount of the loan at July 31, 2012 being $946,279.   A similar notice
  of foreclosure pursuant to the Frontline deed of trust was filed by the Trustee with the same court on July 25, 2012, noticing
  a hearing for August 22, 2012, with an amended notice of default, the amount of $508,492 being outstanding under the loan as of
  July 31, 2012. The Trustee for Frontline also filed in Superior Court of Iredell County North Carolina on July 25, 2012, a notice
  of foreclosure and sale to take place on August 22, 2012.  The Trustee under the Bayview deed of trust on August 21,
  2012, filed its notice of foreclosure and sale to take place on September 18, 2012, of the real and personal property securing
  the deed of trust.   On September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure
  and sale was completed, and Frontline assigned its rights to its foreclosure bid to A&S Holdings Inc., subject to the rights
  of Bayview, as the holder of the first mortgage on the property.
  FINE Mobile
  Fine Mobile and Li-ion Motors entered
  into a confession of judgment in relation to the X-Prize winnings.  The parties agreed to a payment arrangement of $10,000
  per month for a period of eight (8) months.  If a default were to occur, the debtor would then be entitled to exercise
  confession of judgment in the amount of $120,000 without further delay.  The initial payment was wired on December 15,
  2011; however, the Company was unable to make any additional payments.  On June 18, 2012 Fine Mobile executed the judgment
  with the Iredell County Sheriff's Office and on July 2, 2012, the Sherriff took possession of the building located at 158
  Rolling Hill Road, Mooresville, NC, seizing all remaining assets.
  23
  Table of Contents
  ITEM 6. Exhibits
  31
  Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-
  Oxley Act of 2002, filed herewith
  .
  32
  Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as
  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith
  .
  24
  Table of Contents
  SIGNATURES
  In accordance with Section 13 or 15(d) of the Exchange Act,
  the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  Terra Inventions Corp.
  Date: March 15, 2013
  By:
  /s/ Stacey Fling
  Stacey Fling
  Chief Executive Officer and Principal Financial Officer
  In accordance with the Securities Exchange Act, this report has been signed below by the following persons on behalf of the
  registrant and in the capacities and on the dates indicated.
  By:
  /s/ Stacey Fling
  Stacey Fling
  President
  (President, Chief Executive Officer
  Principal Financial Officer and Director)
  Date: March 15, 2013
  25
  Table of Contents