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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Washington, D.C. 20549</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM 8-K</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CURRENT REPORT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Pursuant to Section&nbsp;13 or 15(d)
of the Securities Exchange Act of 1934</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Date of Report (Date of earliest event reported)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">July 27, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>PETROSONIC ENERGY, INC.</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Exact name of registrant as specified in
its charter)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 80%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 32%; font-weight: bold; text-align: center"><U>Nevada</U></TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 30%; font-weight: bold; text-align: center"><U>000-53881</U></TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 32%; font-weight: bold; text-align: center"><U>98-0585718</U></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(State or other jurisdiction</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">of incorporation)</P></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">(Commission File<BR>
 Number)</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(IRS Employer</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Identification No.)</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>Suite 204, 205 &ndash; 9<SUP>th</SUP>
Avenue SE&nbsp;, Calgary, AB, Canada, T2G 0R3</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Address of Principal Executive Offices)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>(403) 708-7869</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Issuer's Telephone Number)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>Suite 300, 714 &ndash; 1<SUP>st</SUP>
Street, SE, Calgary, AB CANADA, T2G 2G8</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Former name or former address if changed
since last report)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Wingdings">o</FONT>&nbsp;&nbsp;Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Wingdings">o</FONT>&nbsp;&nbsp;Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Wingdings">o</FONT>&nbsp;&nbsp;Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Wingdings">o</FONT>&nbsp;&nbsp;Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Cautionary Notice Regarding Forward-Looking
Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This Current Report on Form 8-K (&ldquo;Form
8-K&rdquo;) and other reports filed by the Registrant from time to time with the Securities and Exchange Commission (collectively
the &ldquo;Filings&rdquo;) contain or may contain forward-looking statements and information that are based upon beliefs of, and
information currently available to, the Registrant&rsquo;s management as well as estimates and assumptions made by the Registrant&rsquo;s
management. When used in the filings the words &ldquo;anticipate&rdquo;, &ldquo;believe&rdquo;, &ldquo;estimate&rdquo;, &ldquo;expect&rdquo;,
&ldquo;future&rdquo;, &ldquo;intend&rdquo;, &ldquo;plan&rdquo; or the negative of these terms and similar expressions as they relate
to the Registrant or the Registrant&rsquo;s management identify forward-looking statements. Such statements reflect the current
view of the Registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including
the risks contained in the section of this report entitled &ldquo;Risk Factors&rdquo;) relating to the Registrant&rsquo;s industry,
the Registrant&rsquo;s operations and results of operations and any businesses that may be acquired by the Registrant. Should one
or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated, expected, intended or planned.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Although the Registrant believes that the
expectations reflected in the forward looking statements are reasonable, the Registrant cannot guarantee future results, levels
of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States,
the Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results. The
following discussion should be read in conjunction with the Registrant&rsquo;s pro forma financial statements and the related notes
filed with this Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless otherwise indicated, in this Form
8-K, references to &ldquo;we,&rdquo; &ldquo;our,&rdquo; &ldquo;us,&rdquo; the &ldquo;Company&rdquo; or the &ldquo;Registrant&rdquo;
refer to Petrosonic Energy, Inc. (previously Bearing Mineral Exploration, Inc.), a Nevada corporation and its majority-owned subsidiary,
Petrosonic Albania Sha, a body corporate under the laws of Albania (&ldquo;AlbaniaCo&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless otherwise indicated, all monetary
references are to Canadian dollars.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Section 1 &ndash; Registration&rsquo;s
Business and Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 1.01 Entry into a Material Definitive
Agreement.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The information contained in Item 2.01
below is incorporated by reference herein.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Section 2 &ndash; Financial Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 2.01 Completion of Acquisition
or Disposition of Assets.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 27, 2012 (the &ldquo;Closing Date&rdquo;),
we acquired certain assets (the &ldquo;Assets&rdquo;) from Sonoro Energy Ltd., (&ldquo;Sonoro&rdquo;), including (i) certain technology
relating to the treatment and upgrading of heavy oil by sonicated solvent de-asphalting, (ii) 60,000 shares of AlbaniaCo pursuant
to a share purchase agreement (the &ldquo;Share Purchase Agreement&rdquo;), and (iii) sonic reactors located in Albania and Richmond,
British Columbia and a solvent recovery system located in or around Turin, Italy (the &ldquo;Transaction&rdquo;), pursuant to the
terms of the Asset Purchase and Sale Agreement, dated July 27, 2012 (the &ldquo;Purchase Agreement&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the terms of the Purchase Agreement,
in exchange for the Assets, we agreed to pay to Sonoro the following consideration: (i) $250,000, (ii) a convertible debenture
in the principal amount of $250,000 (the &ldquo;Debenture&rdquo;) and (iii) a 10% royalty interest in our realized net revenues
for a period of 10 years from the time we commence commercial operations, which is defined as the date upon which we process an
average of 50 barrels of feed stock per day over a period of 30 consecutive days utilizing the technology acquired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">The Purchase
Agreement contains customary representations, warranties, and </FONT>conditions to closing. The foregoing description of the terms
and conditions of the Purchase Agreement and the transactions contemplated thereunder that are material to the Company does not
purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement. Pursuant to the
Purchase Agreement, certain key personnel will enter into a non-competition and non-solicitation agreement with the Company (the
&ldquo;Non-Compete Agreement&rdquo;) and the Company and Sonoro will enter into a consulting agreement (the &ldquo;Consulting Agreement&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to the Transaction, we were a public
reporting &ldquo;shell company,&rdquo; as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended and the rules
and regulations promulgated thereunder (&ldquo;Exchange Act&rdquo;). Accordingly, pursuant to the requirements of Item 2.01(a)(f)
of Form 8-K, set forth below is the information that would be required if the Registrant were filing a general form for registration
of securities on Form 10 under the Exchange Act, for the Registrant&rsquo;s common stock, which is the only class of its securities
subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act upon consummation of the Transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Contemporaneous with the completion of
the Transaction, we have entered into a license agreement with Sonoro (the &ldquo;Iraq License Agreement&rdquo;) for commercialization
of the Company&rsquo;s technology in the Republic of Iraq, provided that under the terms of the Iraq License Agreement, Sonoro
shall not be obligated to pay the Company any license fees or royalty payments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Debenture, the Non-Compete Agreement,
the Consulting Agreement, the Share Purchase Agreement, and the Iraq License Agreement are attached to this report as Exhibits
10.2 through 10.6, respectively, and the terms and conditions are incorporated herein. The foregoing statements are not intended
to be a complete description of all terms and conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From and after the Closing Date, our primary
operations will consist of utilizing the Assets to develop a business relating to the treatment and upgrading of heavy oil by sonicated
solvent de-asphalting and operating the business of AlbaniaCo (the &ldquo;Business&rdquo;). Therefore, we disclose information
about the Business in this Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">For accounting
purposes, the Purchase Agreement has been accounted for under the Purchase Method of accounting by the Registrant. The financial
statements of the Business are set forth in Exhibit 99.1 and Exhibit 99.2 of this Current Report. For pro forma financial information,
see Exhibit 99.3 of this Current Report.</FONT><FONT STYLE="color: red"><B> </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: red"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: red"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF BUSINESS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>History</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We were incorporated under the laws of
the State of Nevada on June 11, 2008, under the name &ldquo;Bearing Mineral Exploration, Inc.&rdquo;, with authorized capital stock
of 75,000,000 shares at $0.001 par value. We were organized for the purpose of <FONT STYLE="color: black; background-color: white">conducting
gold exploration activities on a mineral claim located in the Province of Newfoundland, Canada.</FONT> We were not able to establish
the existence of a commercially minable gold deposit and therefore have acquired the Business and shifted our focus to opportunities
in the treatment and upgrading of heavy oil by sonicated solvent de-asphalting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 17, 2012, we issued 20,000,003
(1,777,778 pre-split) shares of our common stock to Art Agolli, our sole officer and director, in exchange for all of his right,
title and interest in a letter of intent with Sonoro for the purchase of the Assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 18, 2012, concurrent with his
resignation as a director of the Company, Gerhard Schlombs surrendered 22,500,000 (2,000,000 pre-split) shares of the Company&rsquo;s
common stock to the corporate treasury for cancellation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 16, 2012, we effected an 11.25-for-1
forward stock split of our Common Stock and an increase in our authorized number of common shares to 843,750,000. Additionally,
on May 16, 2012, we changed our name to &ldquo;Petrosonic Energy, Inc.&rdquo; and on July 27, 2012 we entered into the Purchase
Agreement to acquire the Assets from Sonoro (the &ldquo;Purchase Agreement&rdquo;).</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-underline-style: none">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-underline-style: none">Overview</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">Petrosonic
has developed a commercial process which improves heavy oil densities by 6 to 15 API</FONT><SUP>1</SUP><FONT STYLE="font-size: 10pt">
from as low as 8 API, reduces viscosities of oil by 99% to pipeline specifications and reduces sulphur and heavy metals by over
50%. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This process is especially beneficial to producers with the
following intrinsic challenges:</P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Stranded heavy oil due to transportation issues</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Diluent supply issues</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Limited refining markets (light oil refiners struggle with heavy oil)</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Heavy discounts due to</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">o</FONT></TD><TD>Density adjustments</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">o</FONT></TD><TD>High sulphur content</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">o</FONT></TD><TD>High metals content</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>1</SUP>&nbsp;&nbsp;The American Petroleum Institute gravity,
or <B><I>API gravity</I></B>, is a measure of how heavy or light a petroleum liquid is compared to water; one of the qualitative
measures for crude oil</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Depending on regional markets, traditional
heavy oil discounts (10 API oil with &gt;2% sulfur) are 35-40% and we believe such discounts could be reduced to only 10-20% through
our process. On 5,000 barrels of oil per day (&ldquo;bopd&rdquo;) this would equate to increased revenues of approximately $6/barrel
(bbl) or around $11 million per year (based on $100/bbl brent oil). Capital costs are expected to be between $0.5-1 million per
1,000 bbls capacity. Operating costs will be between $2-3 per bbl on a stand alone facility basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Petrosonic plans to have its first 1,000
bopd stand-alone facility operational by September 2012 in Albania. Expected annual cashflows from the initial 1,000 bopd facility
are expected to reduce heavy oil price discounts historically received in Albania from 40% to 20% as a result of achieving a 18-23
API oil. Petrosonic believes that with significant heavy oil production growth anticipated from the approximately 8 billion barrels
of oil reserves believed to be present in Albania, if we are able to successfully capture a portion of this processing business,
Petrosonic expects to expand its facilities over the next 3-5 years to 15,000 bopd as Albanian oil production increases.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If we are able to successfully establish
our first commercial facility, we believe heavy oil producers will want to integrate the Petrosonic system at their cost into their
treatment facilities. Petrosonic would sell the process solution and retain a royalty fee under this type of development. While
revenue per facility will be less (estimated at 50%), no capital and minimal support will be required. This strategy would allow
for faster growth. Petrosonic may also choose to develop its own stand alone facilities to capture further upside and long term
value creation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Further upside opportunities exist in several
other applications which the Company is in advanced stage of development, including, heavy oil sands separation (both from oil
sands and ecology pits), and oil separations from drill cuttings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>Vision
and Strategy</I></FONT></P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 18.7pt; text-align: justify; text-indent: -18.7pt"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 18.7pt"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify">Petrosonic hopes to provide its shareholders with returns and cash flow growth by leveraging its
experience and intellectual property within the heavy oil business.</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 18.7pt; text-align: justify; text-indent: -18.7pt"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 18.7pt"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify">Petrosonic plans to use an initial model of building its own stand-alone facilities to prove, optimize
and develop business growth opportunities with small to medium sized producers. To achieve higher returns and growth, the Company
will license out on a fee for service basis or royalty basis its processes to be integrated into producer&rsquo;s treatment facilities.</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify">Where there is a distinct advantage Petrosonic may capture heavy oil resources prospects or participate
jointly in them. Any resource level participation would require higher returns on investment and be required to stand on its own
prior to the benefits of applying Petrosonic&rsquo;s technology.</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify">We believe Petrosonic&rsquo;s leadership in oil processing technology compiled with a strong background
in the heavy oil industry is expected to result in a superior rate of return to shareholders from direct and indirect operations.
This will be further leveraged if the Company is able to financially participate in the underlying oil assets, especially by acquiring
these in advance.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>Key
Success Factors</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s success will be dependent upon:</P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Our ability to attract and develop numerous
projects once the first project is complete;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Access to an ample producer oil supply
and our ability to find equitable profit distribution;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Our development and distribution of asphalt
within the market;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Our ability to minimize the technical
risk through avoidance of scale up issues;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Alleviation of market risk through the
use of strategic partners which can gain quick access to markets; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Alleviation of financial risk through
partnering. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>Priorities
</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">Immediate priorities
of the Company are;</P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 37.4pt; text-align: justify; text-indent: -18.7pt"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 18.7pt"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Strengthening the operations and management
of the Company as it moves forward in the oil sector;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 37.4pt; text-align: justify; text-indent: -18.7pt"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 18.7pt"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Moving ahead with the processing facility
in Albania;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 37.4pt; text-align: justify; text-indent: -18.7pt"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 18.7pt"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Establishing a second country oil processing
project; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 37.4pt; text-align: justify; text-indent: -18.7pt"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18.7pt"></TD><TD STYLE="width: 18.7pt"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Building a firm backlog of projects with
financing commitments.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The Industry</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>Traditional
Heavy Oil Opportunities</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Crude oil is the world&rsquo;s most actively
traded commodity. Heavy crude oil is a type of highly viscous crude oil that does not flow easily (sometimes referred to as non-conventional
oil). Typically, it is defined as crude oil with an API gravity of less than 22 API. For example, Canadian extra-heavy crude (Athabasca
bitumen) has a viscosity of 10,000+ cP (the <FONT STYLE="text-underline-style: none; color: windowtext">cgs</FONT> <FONT STYLE="text-underline-style: none; color: windowtext">physical
unit</FONT> for dynamic viscosity is the <FONT STYLE="text-underline-style: none; color: windowtext"><I>poise</I></FONT> (P). It
is more commonly expressed, particularly in <FONT STYLE="text-underline-style: none; color: windowtext">ASTM</FONT> standards,
as <I>centipoise</I> (cP). Water at 20 &deg;C has a viscosity of 1.0020 cP<FONT STYLE="font-size: 10pt">)</FONT>, about the same
as cold molasses, and API gravity between 8-14 API. In comparison, WTI, a type of light crude oil used as a benchmark in oil pricing
of New York Mercantile Exchange&rsquo;s oil futures, has an API of approximately 39.6. Naturally, heavy oils can be upgraded to
high quality light synthetic oils using specialized refining processing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Heavy oil is a relative term, compared
to light crude oil, but relates to specific technical issues of its own on production, transportation, and refining. Usually a
diluent is added to carry heavy crude to facilitate its flow in pipelines.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>Global
Need, Supply and Production</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
exact number of reserves of heavy oil varies according to different sources, but it is generally accepted that the amount of recoverable
heavy oil is greater than remaining reserves of conventional oil. According to Schlumberger, the current world oil reserves consist
of 9-13 trillion barrels of oil, 30% of which are conventional sources, 40% heavy and extra-heavy sources and 30% oil sands bitumen
sources. </FONT><SUP>2</SUP></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Estimated
heavy oil production is around 5 million barrels per day and growing. The projected reduction in conventional oil in the next
few years is focusing the industry towards the more effective exploitation of non conventional reserves, heavy oil resources in
particular.</FONT><SUP>3<FONT STYLE="font-family: Times New Roman, Times, Serif"> </FONT></SUP></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: Red">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: Red"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="pg7.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Source: (http://www.slb.com/content/services/solutions/reservoir/heavy_oil.asp)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Production and transportation of heavy
oil has unique challenges that must be overcome in order for it to become a significant contributor to the production gap left
by conventional oil and global growing demand.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt"></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">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Heavy Oil</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Bitumen</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 64%; text-align: left">North America</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">35.3</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">530.9</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">South America</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">265.7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.1</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Africa</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">Middle East</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Asia</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29.6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42.8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Russia</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33.7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">Western Hemi</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">301</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">531</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">Eastern Hemi</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">128.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119.5</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">Worldwide*</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">429.4</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</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">650.5</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="RIGHT" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; font-size: 10pt">*Does not include extra-heavy</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt">and oil sand sources of bitumen (i.e. Canada,Venezuela)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; font-weight: bold">Source: US Geological Survey</TD></TR>
</TABLE><BR STYLE="clear: both">


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>2</SUP> http://www.slb.com/content/services/solutions/reservoir/heavy_oil.asp</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>3</SUP> http://www.slb.com/content/services/solutions/reservoir/heavy_oil.asp</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">According to a US Geological Survey, heavy
oils are found around the world, with an estimated 69% of the world&rsquo;s technically recoverable heavy oil and 82% percent of
the technically recoverable natural bitumen located in the Western Hemisphere. The Eastern Hemisphere, however, contains an estimated
85% of the world&rsquo;s light oil reserves.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Among
the more notable heavy oil reserves are: Venezuela&rsquo;s Orinoco Heavy Oil Belt; Canada&rsquo;s Athabasca Oil Sands; Russia&rsquo;s
Volga-Ural Basin; Brazil&rsquo;s offshore Campos Basin; Alaska&rsquo;s Prudhoe Bay; and China&rsquo;s Luda field in Bohai Bay.</FONT><SUP>4</SUP></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><I>Significance of Traditional
Heavy Oil for Petrosonic</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Around
the globe, some of the most prolific oilfields are reaching maturity and have begun to experience reduced production rates.</FONT><SUP>5
</SUP><FONT STYLE="font-family: Times New Roman, Times, Serif">What large conventional oilfields remain lie mostly in the lands
of Middle Eastern, OPEC nations. At the same time, the world&rsquo;s demand for oil continues to grow every year, fueled in part
by the rapidly growing economies of China and India. This declining availability of conventional oil combined with rising demand
has driven up oil prices and put more pressure on the search for alternate energy sources.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Into the picture come the tremendous deposits
of heavy oil and bitumen that are found in the Western hemisphere. These non-conventional resources are more difficult to extract,
so they have barely been touched in the past. With the price of oil reaching new highs in 2005 and 2006, investments in these more
challenging oil deposits are rapidly accelerating.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In fact, the U.S. oil industry alone has
invested $86 billion in &ldquo;frontier hydrocarbons&rdquo; since 2000 (Heavy Oil Magazine, Aug 2006), developing technologies
to recover and convert inferior grades of oil, such as heavy oil and bitumen, into a more usable form for refineries, and to turn
waste and residue hydrocarbons into high-value products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The worldwide importance of heavy oils
will continue to emerge as the price of oil remains high and the demand for it remains strong. For example, the tight worldwide
oil supply is expected to continue to force crude prices higher and turn Canada&rsquo;s oil sands into the single largest contributor
to net new global supply by the end of the decade, according to CIBC World Markets: <I>&ldquo;All of the net increase in oil production
is expected to come from non-conventional sources,&rdquo; </I>says Jeff Rubin, chief economist at CIBC World Markets, &ldquo;<I>While
deepwater oil is the primary source today, we forecast that the Canadian oil sands will become the single largest contributor to
incremental global supply by 2010.&rdquo;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><I>Industry Trends in Production
and Transport of Heavy Oil</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The market factors behind Petrosonic upgrading
derive from the oil industry&rsquo;s needs relative to the production and refining infrastructure. As production shifts more to
heavier oil it becomes necessary for refining capacity to adapt to it, either by pre-upgrading the oil or by major refining changes.
Until then heavy oil producers face a penalty due to refining and pipeline infrastructure limitations driven by:</P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The ability to produce and transport heavy
oil within the same systems as that established for conventional oil, i.e. using existing transport pipelines;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The need to maintain low capital costs
and operating costs;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Delivery of heavy oil to the point of
sale with reduced expenditures on diluents;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>4</SUP> http://www.slb.com/content/services/solutions/reservoir/heavy_oil.asp</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>5</SUP> http://www.slb.com/content/services/solutions/reservoir/heavy_oil.asp</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

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<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Production and transportable technology
that allows the exploitation of heavy oil reserves at lower total cost, particularly for smaller fields &ndash; without massive
infrastructure expenditures.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><I>Issues for Heavy Oil Producers</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">Pursuant to the aforementioned
industry pressures, heavy oil producers, especially small to medium size ones face price penalties:</P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Traditional heavy oil is both more viscous
and dense than conventional oil;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">API similar to bitumen from oil sands
(Canadian Athabasca bitumen API between 8-14 API);</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Peaking global supply increases the production
of less attractive and higher cost oil resources;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Smaller producers face high costs due
need to blend heavy oil with diluents for pipeline transportation or face penalties for failure to meet pipeline specifications
for viscosity and API (approximately 22 API); </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Fixed producer &ldquo;upgrading&rdquo;
facilities to increase the API have been limited by the poor economics of small scale and short production life; </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Upgrading is generally limited to de-asphalting
(removal of heavy asphaltene components &ndash; up to 16% by mass) and vis-breaking (low temperature cracking). </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>Oil
Sands</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
world&rsquo;s two largest sources of bitumen (and related extraction and recovery operations) are in Canada and in Venezuela.
There is also known oil shale or bituminous reserves in USA, Mexico, South America, Africa, Kazakhstan and other locations. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In Canada, oil sands are found in three
locations in the province of Alberta: The Athabasca, Peace River and Cold Lake regions. They cover 141,000 square kilometers (Camp,
1976, 1977; Cameron Engineers, 1978; Alberta Energy, 2002). The Athabasca is the largest deposit area, located in the northeast
part of Alberta. The total bitumen in place in Alberta is estimated at 1.7 to 2.5 trillion barrels (Morgan, 2001; Alberta Energy,
2002).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2005 about 1 million barrels of oil
per day were being produced from oil sands primarily from three projects: Suncor, Syncrude joint venture and Albion Sands (Athabasca
Oil Sands Project) joint venture. It is estimated that production will triple to 2.8-3 million barrels per day by 2015. About 300
billion barrels are estimated to be recoverable using current open pit mining and in-situ technologies (Mathieson and Stenason,
2001). The amount of this reserve is equivalent to over $30 trillion at current prices of oil.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><img src="pg9.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><I>Oil Sands Production in
Canada</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">The Canadian oil sands industry is dominated
by large integrated multi-national companies, including Albion Sands Energy Inc., Canadian Natural Resources Limited, Chevron,
EnCana Corporation Husky Energy Inc. Imperial Oil Resources Limited Petro-Canada (Fort Hills), Shell Canada Limited, Suncor Energy
Inc. and Syncrude Canada Ltd.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Upcoming players include (with projects
under development or already underway) TOTAL (Joslyn), Exxon Mobil, Synenco, Fort Hills (UTS), Kearl Lake Project with Imperial
Oil Resources Limited, and BP (British Petroleum).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Alberta&rsquo;s
oil sands (1.74 trillion barrels)</FONT><SUP>6</SUP><FONT STYLE="font-family: Times New Roman, Times, Serif"> are not only the
world&rsquo;s largest capital project but now represent 60 per cent of the world&rsquo;s investable oil reserves.</FONT><SUP>7
</SUP><FONT STYLE="font-family: Times New Roman, Times, Serif">But to produce one million barrels of oil a day, industry requires
withdrawals of enough water from the Athabasca River to sustain a city of two million people every year.</FONT><SUP>8</SUP><FONT STYLE="font-family: Times New Roman, Times, Serif">
Despite some recycling, the majority of this water never returns to the river and is pumped into some of the world&rsquo;s largest
man-made dykes containing toxic waste.</FONT><SUP>9</SUP><FONT STYLE="font-family: Times New Roman, Times, Serif"> By 2015, the
Canadian Association of Petroleum Producers predicts that oil sands production may total as much as three million barrels a day.</FONT><SUP>10</SUP></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Oil
sands extraction usually takes at least two tons of oil sand to fill one barrel of upgraded synthetic crude oil. Furthermore, for
every barrel of synthetic oil produced in Alberta, more than 80 kg of greenhouse gases are released into the atmosphere, and 3
to 5 barrels of waste water are dumped into tailing ponds.</FONT>11<FONT STYLE="font-family: Times New Roman, Times, Serif">
Production waste streams released into ponds have still relatively large amounts of unrecovered bitumen and expensive diluents
(as much as 4%). In large volumes typical for the oil extraction, these waste streams pose major environmental burden as well as
lost economic potential, creating a multibillion dollar opportunity.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Bitumen and naphtha recovery processes
involve separation of the complex mixtures of mineral matter (sand, clay), water and small amounts of soluble organic from the
bitumen. Current operators use a combination of energy (hydro-transport, heat, conventional mixing) chemical (caustic) addition,
flotation and light solvent dilation to achieve the necessary separations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><I>Petrosonic Opportunity</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We believe Petrosonic will be able to take
advantage of an opportunity that traditional upgrading technology cannot address &ndash; upstream upgrading on smaller scales.
The viability of upgrading is constantly changing due to production mix, refining infrastructure costs, and oil pricing. However,
there are three markets for small upgraders that make sense:</P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Pipeline systems where access to the pipeline
requires blending of heavy oil. Condensate prices and heavy oil differentials have been stable for some time and long term projections
indicate that low condensate prices following the global economic slow-down will be short-lived; </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Heavy oil producers in markets where light
oil dominates refinery infrastructure. Internationally there are several markets like this; and </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%"><SUP>&nbsp;</SUP></DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>6</SUP> Alberta Energy:http://www.energy.gov.ab.ca/1876.asp.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>7</SUP> CIBC World Markets, December 8, 2000, p 1.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>8</SUP> Down to the Last Drop: The Athabasca River and
the Oil Sands, Pembina Institute, March 2006, p.ii.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>9</SUP> Canada&rsquo;s Oil Sands: Opportunities and Challenges
to 2015: An Update, NEB, June 2006, p.38.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>10</SUP> Canadian Oil Sands Outlook, EIA 2007 Annual Energy
Outlook, March 2007.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><SUP>11</SUP> Environmental Research and Studies Centre, University
of Alberta, 2007.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

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<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Markets where upgrading asphalt by-products
can command premium prices. This is especially attractive in North America given the economic infrastructure stimulus measures
being implemented.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To take advantage of these opportunities
Petrosonic must be able to:</P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Economically upgrade heavy oil from small
and medium sized producers right in the field;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Add value and allow producers to capture
a larger share of the market price for refinery products;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Provide operating plants to heavy oil
producers in return for tolling process fees or purchase heavy oil at a premium to blenders; </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Upgraded oil provides uplift in crude&rsquo;s
value and eliminates issues related to transport of crude oil to pipeline and refinery companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>The Petrosonic Process</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Petrosonic heavy oil process will enable
heavy sour oil (HSO) and bitumen (from most heavy oil and oil sands fields in the world) to be converted from nominally an API
gravity of 8-14 degrees to a value-added synthetic crude oil of between 18 and 23 API. This is achieved through the reduction of
undesirable constituents of the raw heavy oil and/or bitumen. The process incorporates two stages: solvent de-asphalting and distillation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">While solvent de-asphalting and distillation
are both proven and well known technologies, the innovation associated with the Petrosonic upgrading process lies in the rapid
de-asphalting achieved by sonication of the de-asphalting phase with the Petrosonic reactor stage.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="text-underline-style: none">Petrosonic
Test Data</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="text-underline-style: none">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: black">The
Company has completed an extensive test program of heavy oils both in house and independently with the complete Petrosonic upgrading
process which has shown to consistently achieve the target improvements in API. </FONT>The tests were carried out in our R&amp;D
site in Richmond, British Columbia (in house) and the lab work for the specifics of the de-asphalted oil and asphaltenes generated
was carried out by Alberta Research Council in their laboratory (independent) in Edmonton, Alberta. The tests were carried out
during 2010 and 2011. <FONT STYLE="color: black">For Canadian bitumen samples this represents an upgrade from nominally 10&deg;
API to 25&deg; API. The test program included heavy oils and bitumen from the Canadian Athabasca and Lloydminster fields, heavy
oil from USA refineries, and crude oil from two international oil producers. The testing was conducted at Petrosonic&rsquo;s Sonoprocess&trade;
Facility in Richmond, British Columbia and at the Petrosonic Facility located in Albania. The Petrosonic upgraded oil quality is
typically:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 17.6pt"></TD><TD STYLE="width: 14.75pt"><FONT STYLE="font-size: 10pt; color: #0054A4"><B>&#9675;</B></FONT></TD><TD STYLE="text-align: justify"><B>Density -</B> from 23&deg; to 28&deg; API gravity, meeting pipeline specifications;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 17.6pt"></TD><TD STYLE="width: 14.75pt"><FONT STYLE="font-size: 10pt; color: #0054A4"><B>&#9675;</B></FONT></TD><TD STYLE="text-align: justify"><B>Viscosity - </B>less than 100 cSt at 25&deg;C (greater than 99% reduction), meeting pipeline
specifications;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 17.6pt"></TD><TD STYLE="width: 14.75pt"><FONT STYLE="font-size: 10pt; color: #0054A4"><B>&#9675;</B></FONT></TD><TD STYLE="text-align: justify"><B>Liquid yields -</B> From 85% to 92% by volume depending on the quantity and quality of asphaltene
by-product required;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 17.6pt"></TD><TD STYLE="width: 14.75pt"><FONT STYLE="font-size: 10pt; color: #0054A4"><B>&#9675;</B></FONT></TD><TD STYLE="text-align: justify"><B>Sulphur -</B> reduction by up to 40% by mass;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 32.2pt; text-align: justify; text-indent: -14.7pt; color: #0054A4"><B></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 17.5pt"></TD><TD STYLE="width: 14.7pt"><FONT STYLE="font-size: 10pt; color: #0054A4"><B>&#9675;</B></FONT></TD><TD STYLE="text-align: justify"><B>Heavy Metals -</B> typical reduction of Vanadium up to 80% and Nickel by up to 88% by mass.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 32.2pt; text-align: justify; text-indent: -14.7pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 32.2pt; text-align: justify; text-indent: -14.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">The following table illustrates some of the
data from the extensive test program that PETROSONIC has conducted. This is critical in establishing the application of the Petrosonic
process on a broad basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The table below (Table 1) shows key performance
parameters for Alberta/Cold Lake Oil:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Table 1</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Analysis</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Raw Bitumen</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Upgraded Oil <BR>[Petrosonic ID: 090309E-2]</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 34%; text-align: left">Total Acid Number (TAN)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 30%; text-align: right">1.24</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 30%; text-align: right">1.18</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">API Gravity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26.0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Density @15<SUP>o</SUP>C</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.9690</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.8982</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Nickel</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">46</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Vanadium</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">95</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>Sulphur</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.62</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.46</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Table 2 shows a PONA (fundamental heavy
oil testing of paraffins, olefins, napthenes and aromatics) summary by hydrocarbon group for Alberta/Cold Lake oil using commercially
available light naphtha:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Table 2</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Raw Bitumen</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Upgraded Oil <BR>[Petrosonic ID: 090309E-2]</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; padding-left: 1.7pt; border-bottom: Black 1pt solid">Group</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Wt</TD><TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Mol</TD><TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Wt</TD><TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Mol</TD><TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 28%; text-align: center; padding-left: 1.7pt">Aromatics</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">14.175</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">14.871</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">17.318</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">18.545</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 1.7pt">i-Paraffins</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25.572</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23.856</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24.912</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24.031</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 1.7pt">Naphthenes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30.728</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33.450</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19.017</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20.217</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 1.7pt">Olefins</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.431</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.147</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.837</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 1.7pt">Paraffins</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.715</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.695</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30.547</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29.677</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 1.7pt">Oxygenates</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 1.7pt">Unidentified</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.380</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.981</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.142</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.694</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 1.7pt; padding-bottom: 1pt">Plus</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0.000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0.000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0.000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0.000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; padding-left: 1.7pt; padding-bottom: 1pt">TOTAL</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">100.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">100.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">100.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">100.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Table 3 shows a PONA summary by carbon
number for Alberta/Cold Lake oil. Table 3 reflects the effectiveness of the Petrosonic upgrading process through the clear reduction
in the oil&rsquo;s carbon number from C9/C10 to C7/C8, which indicates clearly the generation of new lighter end fractions, each
having a lower density and thus serving to increase the API. Given the high sensitivity of the API calculation to density, even
small changes in density create significant gains in API quality.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Table 3</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Carbon #</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Raw Bitumen</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Upgraded Oil <BR>[Petrosonic Code 090309E-2]</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Wt</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Mol</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Wt</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Mol</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 28%; text-align: center">C4</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">0.001</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">0.002</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">C5</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.060</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.079</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.125</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">C6</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.063</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.296</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.979</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.053</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">C7</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.245</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21.005</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21.711</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25.435</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">C8</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.245</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18.619</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33.183</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33.915</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">C9</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29.209</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27.721</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25.799</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23.367</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">C10</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.940</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.127</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.057</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.179</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">C11</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.511</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.149</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.512</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.868</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">C12</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.478</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.328</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">C13</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.049</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.030</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">C14</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.006</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-bottom: 1pt">&gt;C15</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">13.726</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">11.981</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3.143</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2.694</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">TOTAL</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">100.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">100.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">100.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">100.00</TD><TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table (Table 4) illustrates
some of the data from the extensive test program that Petrosonic has conducted. This is critical in establishing the application
of the Petrosonic process on a broad basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Table 4</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"></FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; padding-bottom: 1pt"></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="18" STYLE="text-align: center; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>&nbsp;Raw</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="18" STYLE="text-align: center; padding-bottom: 1pt; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>&nbsp;Upgraded</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Country</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Specific<BR> Source</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">API</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Vanadium<BR> (g)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Nickel<BR> (g)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Sulphur<BR> (%)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total Acid<BR> Number<BR> (TAN)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">API</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Vanadium<BR> (g)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Nickel (g)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Sulphur<BR> (%)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total Acid<BR> Number<BR> (TAN)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 12%"><FONT STYLE="font-size: 8pt">Canada</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">CP</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">10.6</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">169.0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">80.0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">4.5</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">0.98</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">24.5</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">29.2</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">12.0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">2.64</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 8pt">0.73</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">Canada</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">CDL</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">14.4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">95.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">46.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.62</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.24</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">26.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">38.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">17.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.46</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.18</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">US (Texas)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">TG</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">17.4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5.4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.73</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.59</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">27.9</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4.2</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.9</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.78</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.99</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">US (Texas)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">TK</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">14.9</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">16.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.85</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.56</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">27.5</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4.4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4.2</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.51</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.58</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">US (Texas)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">TQ</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">11.2</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">15</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">16</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.33</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.71</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25.9</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.9</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.51</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.55</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">Albania</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">AB</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10.8</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">348.4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">68.5</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5.96</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.56</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">25.1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">56</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8.6</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.96</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.3</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">Albania</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">AD</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10.2</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">287.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">57.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.98</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.52</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">29.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">65.9</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12.2</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.27</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.73</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">Albania</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">AM</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">21.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">110.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">19.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.43</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.07</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">31.9</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">48.4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">7.7</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.88</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.85</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">Venezuela</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">VP</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9.4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">492.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">105.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4.26</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5.26</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">21.7</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">220</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">45.4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2.96</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.68</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">US (Utah)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">US</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">14.5</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">23.8</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12.2</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.18</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3.19</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">32.5</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.7</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.62</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">0.26</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal"><I>&nbsp;</I></FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="text-underline-style: none">Stages
in the Petrosonic Process</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="text-underline-style: none">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><U>Step 1: Solvent De-asphalting</U></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The primary process of solvent de-asphalting
dissolves bitumen in a common paraffinic solvent. The solvent is selected to ensure complete dissolution of the oil-soluble component
of the bitumen with the solvent to form a De-asphalted Oil (DAO) while the insoluble hydrocarbon component known as asphaltenes
are readily filtered through simple separation. This asphaltene fraction is concentrated with heavy metals such as nickel and vanadium
as well as sulphur.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Petrosonic reactor, using its patented
low-frequency / high-energy / high-amplitude reactor design, allows for significant improvement in the mass transfer efficiency
of the solvent de-asphalting step in particular, cutting the de-asphalting time required from 6 to 10+ hours to 2 minutes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="margin: 0pt 0"></P>







<P STYLE="margin: 0pt 0"><img src="pg14.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><U>Step 2: Solvent Recovery
</U></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At the completion of the two-stage Petrosonic
upgrading process, the upgraded oil is required to be separated from the solvent through a standard solvent recovery process such
as an evaporator or distillation column. Given the significant differential in boiling points of the upgraded oil and the solvent
for recovery, the separation process is economical and readily applicable to recover solvent with a solvent residual of less than
4% remaining in the oil and probably below 2%. Such a small solvent residual in the oil is well within the expected quality parameters
for pipeline and refinery specifications. The recovered solvent is reused at the solvent de-asphalting stage to complete the closed
loop on the Petrosonic upgrading process.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="text-underline-style: none">Petrosonic&rsquo;s
Technology</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>SonoProcess</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">We believe Petrosonic&rsquo;s
technology advantage is based upon the use of our Petrosonic reactor technology and the unique cavitational and enhanced mass transfer
effects that it provides. Petrosonic has developed a unique competency in the design of enhanced mass transfer energy processes
and the proprietary applications that result from this.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">In recent years the use
of cavitational technologies and ultrasound has been researched extensively for oil processing &ndash; usually in the context of
desulphurization or &ldquo;cold cracking&rdquo;. Our own research does not support this and we make no claims that it can create
a unique upgrading process. The chemistries used in the Petrosonic process are established and our advantage is that we make these
more effective.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">The Company looks to
maintain its initial technical advantage derived from the Petrosonic Sonoprocess&trade; for heavy oil by adding complementary proprietary
process technologies to this.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">The Petrosonic reactor
has been designed and built in a variety of configurations but all Petrosonic process development is undertaken on full scale units:</P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Petrosonic reactors are based on low-frequency
/ high-amplitude Petrosonic energy reactors;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">A patented electromagnetic drive puts
a massive steel bar into resonance and this allows efficient transfer of energy to the reaction chambers;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">There are no moving parts and so Petrosonic
reactors have a high reliability and operational availability;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The reaction chambers are attached at
the mid-node points one half wavelength from the drive system, enabling the reactors to apply Petrosonic energy to physical, chemical
and biological&nbsp;processes;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Petrosonic reactors are thus able to achieve
more sustainable processes &ndash; better reactivity, less reagents, less energy, greater effectiveness and more product for overall
economic advantage.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal"><I>Direct Sonicated Separation</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The previous holder of the technology has
also carried out independent tests on oil sands to determine if the technology could be effective in a low cost primary separation
process. Preliminary tests with a proprietary process protocol produced results comparable with existing technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">However, the effectiveness of this technology
is but a first step due to the massive scale of oil sands projects. At this time the Company believes the volume of material that
would need to be processed requires a &ldquo;next generation&rdquo; of Petrosonic reactor technology. Existing scale technology
may be applicable to small scale oil sands production.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has directed its efforts towards
a more immediate but directly related application &ndash; the treatment of drill cuttings. This is not the same scale of opportunity
but offers immediate access to market and cash flow generation based on modest investment of capital.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; text-underline-style: none"><I>Petrosonic
Heavy Oil Process Patents</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As part of the transaction with Sonoro
Energy the company has acquired the following Heavy Oil Process provisional and PCT applications based on the Company&rsquo;s Sonoprocess&trade;:</P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>Patent/Application No: WO2009111871.
Jurisdiction: WIPO. Title: Method for Treating Heavy Crude Oil. Application Status: Published.</I></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>Patent/Application No: EA201071060.
Jurisdiction: Eurasisa. Title: Method for Treating Heavy Crude Oil. Status: Pending.</I></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>Patent/Application No: EP2260089. Jurisdiction:
Europe. Title: Method for Treating Heavy Crude Oil. Status: Pending.</I></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>Patent/Application No: 2156/MUMNP/2010.
Jurisdiction: India. Title: Method for Treating Heavy Crude Oil. Status: Pending.</I></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 10pt Symbol"><B>&middot;</B></FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>Patent/Application No: US 61/035,690.
Jurisdiction: United States. Title: Method for Treating Heavy Crude Oil. Status: Company will appeal the expired priority claim
to reinstate the priority claim.</I></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>Competition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Currently heavy oil is upgraded by refineries
and upgraders (refineries that upgrade crude to synthetic crude grade level but not to full end products such as diesel, jet fuel
etc). These facilities refine large quantities of crude from 60,000 to 500,000 bbl/day and they are capital intensive, require
long lead times, significant engineering and intensive water use.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There have been other technologies introduced
that upgrade heavy oil via other methods such as Headwaters Incorporated&rsquo;s proprietary HCAT technology or Ivanhoe Energy&rsquo;s
HTL heavy oil upgrading technology. However, these technologies upgrade heavy crudes in smaller volumes and are also very complex,
capital intensive and require intense use of energy and water. They also have the associated environmental downsides such as carbon
emissions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Disadvantages of Petrosonic Process/Technology</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are few inherent disadvantages to
the Petrosonic process.&nbsp; The technology has been proven on other applications but long-term 24 hour operations have not been
attempted as prior successful commercialization efforts did not require long-term, 24 hour operations. In addition, one sonicator
at current dimensions can process up to 500 barrels of heavy oil per day. While this processing capacity can be an advantage for
small and medium size operations it may be considered as a disadvantage for larger operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1A1A1A">In addition, there are
technical and logistical risks associated with the heavy oil upgrading technology rollout in Albania.&nbsp; These risks can be
attributed to two general categories of risk:&nbsp; operational and logistical, which are influenced by the market risk factors
which are presented separately.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1A1A1A">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1A1A1A"><FONT STYLE="font-size: 10pt">The
design of the equipment was based on an estimation of both the required solvent as well as</FONT> the regional heavy crude oil
expected to be upgraded at site.&nbsp; Any changes and variations in either the solvent or the heavy oil will impact the overall
ability to commission the project.&nbsp; Remaining <FONT STYLE="font-size: 10pt">equipment to be ordered is minor in scope but
any delays or problems in sources of supply from European sources could lead to minor delays.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1A1A1A">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1A1A1A">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1A1A1A">The ability to procure
suitable safe installation for commissioning the equipment is critical given the limited number of suitable contractors available
in Albania.&nbsp; The ability to source and deliver piping, equipment could cause commissioning or optimization delays. &nbsp;The
equipment to be assembled into a continuous heavy oil upgrading process has not been operated in the proposed configuration elsewhere.
The process is expected to operate as designed but unforeseen assembly and commissioning situations are normal and expected. &nbsp;Remaining
equipment to be ordered is minor in scope but any delays or problems in sources of supply from European sources could lead to minor
delays.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="text-underline-style: none">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="text-underline-style: none">Marketing
and Sales Strategy</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Petrosonic&rsquo;s business model is to
provide integrated upgrading systems to heavy oil producers in exchange for revenue sharing in the economic uplift produced as
a result of the Sonoprocessing&trade;. Given the relative ease of integration and transportation, the process is designed to be
easily applicable to the upstream and midstream constituents. The immediate marketing and sales strategy is to sell our processing
services on toll or joint venture basis to heavy oil upstream producers directly. As a result, business models can take on various
forms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Oil Producers: Decrease viscosity and need for diluents; improve quality; increase marketability; increase price</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Pipeline Operators: Decrease viscosity and need for diluent resulting in increased throughput</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Storage &amp; Blending Operators: Increase yield and quality</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Refiners<B>: </B>Increase yield and quality. Rapid de-asphalting with less diluent and less cost. De-bottleneck refinery</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Customers </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our target customers are heavy oil producers, industrial groups
that consume heavy oil and refineries that refine heavy oil. In addition, our potential customers consist of heavy oil trading
companies and asphalt producers and consumers of asphalt products such as construction companies that require asphaltenes as raw
material for production of asphalt. Currently the Company has no customers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">We have currently
2 full-time employees and 3 part-time employees, as well as, several independent consultants. </FONT>We plan to hire a Chief Financial
Officer and three local operations staff in Albania during the first year of its operations. The Company has identified potential
candidates for such positions, and expects to proceed with such hires once it has secured the requisite financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Environmental Laws and Regulations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company may be subject to various environmental
laws and regulations in the countries in which it operates. With respect to Albania, the Company will require an environmental
permit for its facility and a fire safety permit. The Company has prepared all the necessary paperwork and information and has
applied for the environmental permit and is in discussion with all governmental authorities regarding the issuance of the permit
by the end of August 2012. Since the Company does not require any use of water, extensive energy or generate any emissions it does
not fall under more complicated and lengthy environmental permit requirements typical for refineries or upgraders. The Company
plans to install all necessary equipment required for anti-fire measures and regulations in the country.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Procurement of Equipment</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company will rely on a third party
contractor to manufacture the sonicators and other related equipment according to its patented design and specifications. The company
has received quotes from the third party manufacturer and expects that it will be able to obtain all the necessary equipment to
grow its processing capacity in the future. The manufacturer has the production and financial capability and capacity to fulfill
our orders in the future. In addition, the company has access to several local and international fabricators and engineering firms
to carry out the necessary assembly of the equipment and increase capacity of its processing plant in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>RISK FACTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>You should carefully consider the risks
described below together with all of the other information included in this Form 8-K before making an investment decision with
regard to our securities. The statements contained in or incorporated into this Form 8-K that are not statements of historic or
present facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking statements. If any of the following events described in these
risk factors actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading
price of our common stock could decline, and you may lose all or part of your investment.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><U>Risks Related to our Business</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>We have incurred losses in prior periods
and may incur losses in the future.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We cannot be assured that we can achieve
or sustain profitability on a quarterly or annual basis in the future.&nbsp;&nbsp;Our operations are subject to the risks and competition
inherent in the establishment of a business enterprise.&nbsp;&nbsp;There can be no assurance that future operations will be profitable.&nbsp;&nbsp;We
may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Our future is dependent upon our ability
to obtain financing.&nbsp;&nbsp;If we do not obtain such financing, we may have to cease our activities and investors could lose
their entire investment.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There is no assurance that we will operate
profitably or generate positive cash flow in the future.&nbsp;&nbsp;We will require additional financing in order to proceed beyond
the establishment of our own stand-alone facilities, including the processing facility in Albania.&nbsp;&nbsp;We will also require
additional financing to pay the fees and expenses necessary to become and operate as a public company.&nbsp;&nbsp;We will also&nbsp;need
more funds if the costs of the development and operation of our existing technologies are greater than we have anticipated.&nbsp;&nbsp;We
will also require additional financing to sustain our business operations if we are not successful in earning revenues. We may
not be able to obtain financing on commercially reasonable terms or terms that are acceptable to us when it is required.&nbsp;&nbsp;Our
future is dependent upon our ability to obtain financing.&nbsp;&nbsp;If we do not obtain such financing, our business could fail
and investors could lose their entire investment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Because we may never earn revenues from
our operations, our business may fail and investors may lose all of their investment in our Company.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have no history of revenues from operations.&nbsp;&nbsp;We
have yet to generate positive earnings and there can be no assurance that we will ever operate profitably.&nbsp;&nbsp;Our company
has a limited operating history.&nbsp;&nbsp;If our business plan is not successful and we are not able to operate profitably, then
our stock may become worthless and investors may lose all of their investment in our company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to completion of the oil processing
facility in Albania, we anticipate that we will incur increased operating expenses without realizing any revenues.&nbsp;&nbsp;We
therefore expect to incur significant losses into the foreseeable future.&nbsp;&nbsp;We recognize that if we are unable to generate
significant revenues from our processing facilities in the future, we will not be able to earn profits or continue operations.&nbsp;&nbsp;There
is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide no assurance
that we will generate any revenues or ever achieve profitability.&nbsp;&nbsp;If we are unsuccessful&nbsp;in addressing these risks,
our business will fail and investors may lose all of their investment in our company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>We may not be fully indemnified against
financial losses in all circumstances where damage to or loss of property, personal injury, death or environmental harm occur.
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As is customary in our industry, our contracts
will typically provide that our customers indemnify us for claims arising from the injury or death of their employees, the loss
or damage of their equipment, damage to the reservoir and pollution emanating from the customer&rsquo;s equipment or from the reservoir
(including uncontained oil flow from a reservoir). Conversely, we will typically indemnify our customers for claims arising from
the injury or death of our employees, the loss or damage of our equipment, or pollution emanating from our equipment. Our contracts
will typically provide that our customer will indemnify us for claims arising from catastrophic events, such as a well blowout,
fire or explosion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our indemnification arrangements may not
protect us in every case. For example, from time to time we may enter into contracts with less favorable indemnities or perform
work without a contract that protects us; our indemnity arrangements may be held unenforceable in some courts and jurisdictions;
or we may be subject to other claims brought by third parties or government agencies. Furthermore, the parties from which we seek
indemnity may not be solvent, may become bankrupt, may lack resources or insurance to honor their indemnities, or may not otherwise
be able to satisfy their indemnity obligations to us. The lack of enforceable indemnification could expose us to significant potential
losses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Further, our assets generally are not insured
against loss from political violence such as war, terrorism or civil commotion. If any of our assets are damaged or destroyed as
a result of an uninsured cause, we could recognize a loss of those assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Our operations are subject to environmental
and other laws and regulations that may expose us to significant liabilities and could reduce our business opportunities and revenues.
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are subject to various laws and regulations
relating to the energy industry in general and the environment in particular. An environmental claim could arise with respect to
one or more of our current businesses, products or services, or a business or property that one of our predecessors owned or used,
and such claims could involve material expenditures. Generally, environmental laws have in recent years become more stringent and
have sought to impose greater liability on a larger number of potentially responsible parties. The scope of regulation of our industry
and our products and services may increase further following the April 2010 accident in the Gulf of Mexico, including possible
increases in liabilities or funding requirements imposed by governmental agencies. We also cannot ensure that our future business,
if any, will be profitable in light of new regulations that have been and may continue to be promulgated and in light of the current
risk environment and insurance markets. Additional regulation could increase the costs of conducting our business and could materially
reduce our business opportunities and revenues if our customers decrease their levels of activity in response to such regulation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>We are subject to significant foreign
exchange and currency risks that could adversely affect our operations and our ability to reinvest earnings from operations, as
well as mitigate our foreign exchange risk through hedging transactions may be limited.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since we currently conduct a significant
portion our operations outside the United State of America, our business is subject to foreign currency risks, including currency
exchange rates fluctuations and difficulties in converting local currencies into U.S. dollars. The exchange rates between the Albanian
Lek, the Canadian dollar, the Euro and the U.S. dollar and other foreign currencies is affected by, among other things, changes
in local political and economic conditions. Such currency fluctuations may materially affect the Company&rsquo;s financial position
and results of operations and a material change in currency rates in our markets could affect our future results as well as affect
the carrying values of our assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We generally attempt to denominate our
contracts in U.S. dollars or in the currencies of our costs. However, we may enter into contracts that subject us to currency risk
exposure, primarily when our contract revenue is denominated in a currency different than the contract costs. We anticipate that
a significant portion of our consolidated revenue and consolidated operating expenses will be in foreign currencies. As a result,
we will be subject to significant foreign currency risks, including risks resulting from changes in foreign exchange rates and
limitations on our ability to reinvest earnings from operations in one country to fund the financing requirements of our operations
in other countries.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Customer credit risks could result in
losses. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The concentration of our future customers
in the energy industry may impact our overall exposure to credit risk as customers may be similarly affected by prolonged changes
in economic and industry conditions. Those countries that rely heavily upon income from hydrocarbon exports would be hit particularly
hard by a drop in oil prices. Further, laws in some jurisdictions in which we may operate could make collection difficult or time
consuming. We will perform ongoing credit evaluations of our customers and generally do not plan to require collateral in support
of our trade receivables. While we may maintain reserves for potential credit losses, we cannot assure such reserves will be sufficient
to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Global political, economic and market
conditions could affect projected results.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our operating results are based on our
current assumptions about oil supply and demand, oil prices, rig count and other market trends. Our assumptions on these matters
are in turn based on currently available information, which is subject to change. The oil industry is extremely volatile and subject
to change based on political and economic factors outside our control. A weakened global economic climate generally results in
lower demand and lower prices for oil, which reduces drilling, processing and production activity, which in turn results in lower
revenues and income for us. Worldwide drilling activity and global demand for oil may also be affected by changes in governmental
policies and sovereign debt, laws and regulations related to environmental or energy security matters, including those addressing
alternative energy sources and the risks of global climate change. Worldwide economic conditions, and the related demand for oil,
may in future periods be significantly weaker than we have assumed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>



<P STYLE="margin: 0"></P>
<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>We may be unable to recognize our expected
revenues from current and future contracts. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our potential customers, some of whom may
be national oil companies, often have significant bargaining leverage over us and may elect to cancel or revoke contracts, not
renew contracts, modify the scope of contracts or delay contracts, in some cases preventing us from realizing expected revenues
and/or profits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Increases in the prices and availability
of our raw materials could affect our results of operations. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We use significant amounts of raw materials
(including steel and other metals, chemicals, plastics, polymers and energy inputs) for manufacturing our products, facilities
and some of our fixed assets. The price of these raw materials has a significant impact on our cost of producing products for sale
or constructing fixed assets used in our business. There can be no assurance that the prices of our raw materials will remain within
a manageable range and will be readily available. If we are unable to obtain necessary raw materials or if we are unable to minimize
the impact of increased raw material costs or to realize the benefit of cost decreases in a timely fashion through our supply chain
initiatives or pricing, our margins and results of operations could be adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Our long-term growth depends upon technological
innovation and commercialization. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;Our ability to deliver our long-term
growth strategy depends in part on the commercialization of new technology. A central aspect of our growth strategy is to improve
our products and services through innovation, to obtain technologically advanced products through internal research and development
and/or acquisitions, to protect proprietary technology from unauthorized use and to expand the markets for new technology by leveraging
our infrastructure. Our success will depend on our ability to commercialize the technology that we have acquired and demonstrate
the enhanced value our technology brings to our customers&rsquo; operations. Our major technological advances include, but are
not limited to, those related to the design of enhanced mass transfer energy processes and reactors. We cannot be assured of the
successful commercialization of, and above-average growth from, our new products and services, as well as legal protection of our
intellectual property rights. Any failure in the commercialization of our technology could adversely affect our business and results
of operations.&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>If we are unable to enforce our intellectual
property rights or if our intellectual property rights become obsolete, our competitive position could be adversely impacted.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We utilize a variety of intellectual property
rights in our services. We view our portfolio of process and design technologies as one of our competitive strengths and we use
it as part of our efforts to differentiate our service offerings. We may not be able to successfully preserve these intellectual
property rights in the future and these rights could be invalidated, circumvented, challenged or infringed upon. In addition, the
laws of some foreign countries in which our services may be sold do not protect intellectual property rights to the same extent
as the laws of the United States. If we are unable to protect and maintain our intellectual property rights, or if there are any
successful intellectual property challenges or infringement proceedings against us, our ability to differentiate our service offerings
could diminish. In addition, if our intellectual property rights or work processes become obsolete, we may not be able to differentiate
our service offerings and some of our competitors may be able to offer more attractive services to our customers. As a result,
our business and financial performance could be materially and adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>International and political events may adversely affect our
operations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A significant portion of our revenue will
be derived from foreign operations, which exposes us to risks inherent in doing business in each of the countries where we transact
business. The occurrence of any of the risks described below could have a material adverse effect on our business operations and
financial performance. With respect to any particular country, these risks may include:</P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>expropriation and nationalization of our assets in that country;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>political and economic instability;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>civil unrest, acts of terrorism, force majeure, war, or other armed conflict;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>currency fluctuations, devaluations, and conversion restrictions;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>confiscatory taxation or other adverse tax policies;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>governmental activities that limit or disrupt markets, restrict payments, or limit the movement of funds;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>governmental activities that may result in the deprivation of contract rights; and</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>governmental activities that may result in the inability to obtain or retain licenses required for operation.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Due to the unsettled political conditions
in many oil-producing countries, our financial performance is subject to the adverse consequences of war, the effects of terrorism,
civil unrest, strikes, currency controls, and governmental actions. Our customer&rsquo;s operations are conducted in areas that
have significant amounts of political risk. In addition, military action or continued unrest in the Middle East could impact the
supply and price of oil, disrupt our customer&rsquo;s operations in the region and elsewhere, and increase our costs related to
security worldwide.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Economic and political developments
in Albania may adversely affect our business.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A significant portion of our operations
and assets are currently located in Albania. As a result, our financial condition, results of operations and business may be affected
by and are subject to the general condition of the Albanian economy, the devaluation of the Albania Lek as compared to the U.S.
Dollar, Albanian inflation, interest rates, regulation, taxation, social instability and other political, social and economic developments
in or affecting Albania, including changes in the laws and policies that govern foreign investment, as well as changes in United
States laws and regulations relating to foreign trade and investment, over which we have no control. There can be no assurance
as to the future effect of any such changes on our results of operations, financial condition, or cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The dangers inherent in our operations could cause disruptions
and could expose us to potentially significant losses, costs, or liabilities. Any significant interruptions in the operations of
any of our facilities could materially and adversely affect our business, financial condition, and results of operations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our operations are subject to significant hazards and risks
inherent in refining operations and in transporting and storing crude oil. These hazards and risks include, but are not limited
to, the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">natural disasters;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">weather-related disruptions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">fires;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">explosions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">pipeline ruptures and spills;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">third-party interference;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">disruption of natural gas deliveries;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">disruptions of electricity deliveries; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">mechanical failure of equipment at our refineries or third-party facilities</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Any of the foregoing could result in production
and distribution difficulties and disruptions, environmental pollution, personal injury or wrongful death claims, and other damage
to our properties and the properties of others. There is also risk of mechanical failure and equipment shutdowns both in general
and following unforeseen events.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our activities will initially be conducted
at our facility in Albania. This facility constitutes a significant portion of our operating assets. Because of the significance
to us of this operation, the occurrence of any of the events described above could significantly disrupt our processing of crude
oil, and any sustained disruption could have a material adverse effect on our business, financial condition, and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>We may incur significant costs to comply
with environmental and health and safety laws and regulations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our operations and properties are subject
to extensive national, state, and local environmental, health, and safety regulations governing, among other things, the generation,
storage, handling, use, and transportation of petroleum and hazardous substances, the emission and discharge of materials into
the environment, waste management, characteristics, and the monitoring, reporting, and control of greenhouse gas emissions. If
we fail to comply with these regulations, we may be subject to administrative, civil, and criminal proceedings by governmental
authorities, as well as civil proceedings by environmental groups and other entities and individuals. A failure to comply, and
any related proceedings, including lawsuits, could result in significant costs and liabilities, penalties, judgments against us,
or governmental or court orders that could alter, limit, or stop our operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, new environmental laws and
regulations, including new regulations relating to alternative energy sources, new regulations relating to fuel quality, and the
risk of global climate change regulation, as well as new interpretations of existing laws and regulations, increased governmental
enforcement, or other developments could require us to make additional unforeseen expenditures. Many of these laws and regulations
are becoming increasingly stringent, and the cost of compliance with these requirements can be expected to increase over time.
We are not able to predict the impact of new or changed laws or regulations or changes in the ways that such laws or regulations
are administered, interpreted, or enforced. The requirements to be met, as well as the technology and length of time available
to meet those requirements, continue to develop and change. To the extent that the costs associated with meeting any or all of
these requirements are substantial and not adequately provided for, there could be a material adverse effect on our business, financial
condition, and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>We may not have sufficient crude oil
to be able to run our Albania facility at full capacity.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Albania facility will process crude
oil from the local regions around the facility. To the extent sufficient local crude oil cannot be contracted to process and we
are unable to contract sufficient crude oil from non-local sources to supply the Albania facility, we may not have sufficient crude
oil to run the Albania facility at full capacity, which could have a material adverse impact on our business, financial condition,
and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>We could incur substantial costs or
disruptions in our business if we cannot obtain or maintain necessary permits and authorizations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our operations require numerous permits
and authorizations under various laws and regulations, including environmental and health and safety laws and regulations. These
authorizations and permits are subject to revocation, renewal, or modification and can require operational changes, which may involve
significant costs, to limit impacts or potential impacts on the environment and/or health and safety. A violation of these authorization
or permit conditions or other legal or regulatory requirements could result in substantial fines, criminal sanctions, permit revocations,
injunctions and/or refinery shutdowns. In addition, major modifications of our operations could require modifications to our existing
permits or expensive upgrades to our existing pollution control equipment, which could have a material adverse effect on our business,
financial condition, or results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Risks Associated with our Company
and our Securities</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>We will be required to incur significant
costs and require significant management resources to evaluate our internal control over financial reporting as required under
Section 404 of the Sarbanes-Oxley Act, and any failure to comply or any adverse result from such evaluation may have an adverse
effect on our stock price. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a smaller reporting company as defined
in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, we are required to evaluate our internal control over financial
reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (&ldquo;Section 404&rdquo;). Section 404 requires us to include an
internal control report with the Annual Report on Form 10-K. This report must include management&rsquo;s assessment of the effectiveness
of our internal control over financial reporting as of the end of the fiscal year. This report must also include disclosure of
any material weaknesses in internal control over financial reporting that we have identified. Failure to comply, or any adverse
results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect
on the trading price of our equity securities. Management believes that its internal controls and procedures are currently not
effective to detect the inappropriate application of U.S. GAAP rules. Management realize there are deficiencies in the design or
operation of our internal control that adversely affect our internal controls which management considers to be material weaknesses
including those described below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 21.6pt"></TD><TD STYLE="width: 23.75pt">i)</TD><TD>The Company&rsquo;s management is relying on external consultants for purposes of preparing its financial reporting package
and may not be able to identify errors and irregularities in the financial reporting package before its release as a continuous
disclosure document..</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-indent: -23.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 21.6pt"></TD><TD STYLE="width: 23.75pt">ii)</TD><TD>As the Company is governed by one officer who is also a director, there is an inherent lack of segregation of duties and lack
of independent governing board.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Achieving continued compliance with Section
404 may require us to incur significant costs and expend significant time and management resources. We cannot assure you that we
will be able to fully comply with Section 404 or that we and our independent registered public accounting firm would be able to
conclude that our internal control over financial reporting is effective at fiscal year end. As a result, investors could lose
confidence in our reported financial information, which could have an adverse effect on the trading price of our securities, as
well as subject us to civil or criminal investigations and penalties. In addition, our independent registered public accounting
firm may not agree with our management&rsquo;s assessment or conclude that our internal control over financial reporting is operating
effectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>All of our assets, and our sole officer
and director, are outside the United States, with the result that it may be difficult for investors to enforce within the United
States any judgments obtained against us or our directors and officers.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All of our assets are located outside the
United States. In addition, our sole officer and director is a national and resident of a country other than the United States,
and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors
to enforce within the United States any judgments obtained against us or our director and officers, including judgments predicated
upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be
effectively prevented from pursuing remedies under United States federal and state securities laws against us or our directors
and officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Our business is dependent on key executives
and the loss of any of our key executives could adversely affect our business, future operations and financial condition.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are dependent on the services of key
executives, including our Chief Executive Officer, Art Agolli. Mr. Agolli has many years of experience and an extensive background
in the oil industry in general. We may not be able to replace that experience and knowledge with other individuals. We do not have
&ldquo;Key-Man&rdquo; life insurance policies on our key executives. The loss of our key executives or our inability to attract
and retain additional highly skilled employees may adversely affect our business, future operations, and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>The elimination of monetary liability
against our directors, officers and employees under Nevada law and the existence of indemnification rights to our directors, officers
and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers
and employees.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Articles of Incorporation contain a
provision permitting us to eliminate the personal liability of our directors to our company and shareholders for damages for breach
of fiduciary duty as a director or officer to the extent provided by Nevada law.&nbsp;&nbsp;The foregoing indemnification obligations
could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors
and officers, which we may be unable to recoup.&nbsp;&nbsp;These provisions and resultant costs may also discourage our company
from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the
filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful,
might otherwise benefit our company and shareholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Our stock is categorized as a penny
stock.&nbsp;&nbsp;Trading of our stock may be restricted by the SEC&rsquo;s penny stock regulations which may limit a shareholder&rsquo;s
ability to buy and sell our stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our stock is categorized as a penny stock.&nbsp;&nbsp;The
SEC has adopted Rule 15g-9 which generally defines &ldquo;penny stock&rdquo; to be any equity security that has a market price
(as defined) less than US$ 5.00 per share or an exercise price of less than US$ 5.00 per share, subject to certain exceptions.&nbsp;&nbsp;Our
securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell
to persons other than established customers and accredited investors.&nbsp;&nbsp;The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document
in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock
market.&nbsp;&nbsp;The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer&rsquo;s account.&nbsp;&nbsp;The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer&rsquo;s confirmation.&nbsp;&nbsp;In addition, the penny
stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must
make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser&rsquo;s
written agreement to the transaction.&nbsp;&nbsp;These disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for the stock that is subject to these penny stock rules.&nbsp;&nbsp;Consequently, these penny
stock rules may affect the ability of broker-dealers to trade our securities.&nbsp;&nbsp;We believe that the penny stock rules
discourage investor interest in and limit the marketability of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>FINRA&nbsp;sales practice requirements
may also limit a shareholder&rsquo;s ability to buy and sell our stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition to the &ldquo;penny stock&rdquo;
rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must
have reasonable grounds for believing that the investment is suitable for that customer.&nbsp;&nbsp;Prior to recommending speculative
low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about
the customer&rsquo;s financial status, tax status, investment objectives and other information.&nbsp;&nbsp;Under interpretations
of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for
at least some customers.&nbsp;&nbsp;The FINRA requirements make it more difficult for broker-dealers to recommend that their customers
buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>To date, we have not paid any cash dividends
and no cash dividends will be paid in the foreseeable future.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We do not anticipate paying cash dividends
on our common stock in the foreseeable future and we may not have sufficient funds legally available to pay dividends.&nbsp;&nbsp;Even
if the funds are legally available for distribution, we may nevertheless decide not to pay any dividends.&nbsp;&nbsp;We presently
intend to retain all earnings for our operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>A limited public trading market exists
for our common stock, which makes it more difficult for our stockholders to sell their common stock in the public markets.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our common shares are currently traded
under the symbol &ldquo;PSON,&rdquo; but currently with low or no volume, based on quotations on the &ldquo;Over-the-Counter Bulletin
Board,&rdquo; meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given
time may be relatively small or non-existent.&nbsp;&nbsp;This situation is attributable to a number of factors, including the fact
that we are a small company which is still relatively unknown to stock analysts, stock brokers, institutional investors, and others
in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons,
they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase
of our shares until such time as we became more viable.&nbsp;&nbsp;Additionally, many brokerage firms may not be willing to effect
transactions in the securities.&nbsp;&nbsp;As a consequence, there may be periods of several days or more when trading activity
in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share price.&nbsp;&nbsp;We cannot give you any assurance
that a broader or more active public trading market for our common stock will develop or be sustained, or that trading levels will
be sustained.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Shareholders should be aware that, according
to SEC Release No. 34-29093, the market for &ldquo;penny stocks&rdquo; has suffered in recent years from patterns of fraud and
abuse.&nbsp;&nbsp;Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and
misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5)
the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level,
along with the resulting inevitable collapse of those prices and with consequent investor losses.&nbsp;&nbsp;Our management is
aware of the abuses that have occurred historically in the penny stock market.&nbsp;&nbsp;Although we do not expect to be in a
position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within
the confines of practical limitations to prevent the described patterns from being established with respect to our securities.&nbsp;&nbsp;The
occurrence of these patterns or practices could increase the future volatility of our share price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>If we issue additional shares in the
future, it will result in the dilution of our existing shareholders.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our articles of incorporation authorize
the issuance of up to 843,750,000 shares of common stock with a par value of $0.001 per share. Our Board of Directors may choose
to issue some or all of such shares to acquire one or more companies or properties and to fund our overhead and general operating
requirements. The issuance of any such shares may reduce the book value per share and may contribute to a reduction in the market
price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate
ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-transform: uppercase">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-transform: uppercase">DESCRIPTION
OF PROPERTY</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our head office is located at Suite 204, 205 &ndash; 9<SUP>th
</SUP>Avenue SE, Calgary, AB, Canada, T2G 0R3.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our director is letting the company use
his office free of charge in order to save costs until the company can lease an office when requisite funding is in place. Our
main telephone number is (403) 708-7869.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The company has an office in Fier, Albania
at same location where its processing plant is located. Albania&rsquo;s heavy oil upstream and downstream industries are located
in Fier and the facility is only a few miles away from the heavy oil producing fields. It is also located 35 kilometers away from
Albania&rsquo;s only deep sea port and export facility, the PIR Vlora terminal. The office is offered by the Albanian partner free
of charge until the company signs a lease agreement when requisite funding is in place.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-transform: uppercase; text-align: justify">Management&rsquo;s
Discussion and Analysis of Financial Condition and Results of Operations</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>The following discussion and analysis
of our results of operations and financial condition should be read in conjunction with our financial statements and the notes
to those financial statements that are included elsewhere in this Form 8-K. Our discussion includes forward-looking statements
based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.
Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a
result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements
and Business sections in this Form 8-K. We use words such as &ldquo;anticipate,&rdquo; &ldquo;estimate,&rdquo; &ldquo;plan,&rdquo;
&ldquo;project,&rdquo; &ldquo;continuing,&rdquo; &ldquo;ongoing,&rdquo; &ldquo;expect,&rdquo; &ldquo;believe,&rdquo; &ldquo;intend,&rdquo;
&ldquo;may,&rdquo; &ldquo;will,&rdquo; &ldquo;should,&rdquo; &ldquo;could,&rdquo; and similar expressions to identify forward-looking
statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are a development stage company focused
on the treatment and upgrading of heavy oil by sonicated solvent de-asphalting. We are in the process of bringing online our first
stand-alone facility located in Albania, which is expected to be able to process and de-asphalt up to 1,000 barrels per day of
heavy oil. We plan to generate revenue by both integrating our system into oil producer treatment facilities, as well as continuing
to develop our own standalone facilities, such as the Albania facility to capture further upside and long term value creation.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Comparison of the Three Months Ended March 31, 2012 and
2011</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">Sales</P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-style: normal">&nbsp;</FONT><FONT></P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-style: normal">We
had no sales for the three months ended March 31, 2012 or during the three months ended March 31, 2011.</FONT><FONT></FONT></P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-weight: normal"><I>Selling,
general and administrative expenses, and others</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-weight: normal"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our selling, general and administrative
expenses for the three months ended March 31, 2012 decreased to $2,764, from $10,126, for the three months ended March 31, 2011.
This decrease was primarily due to an overall decrease in operating activities due to the limited availability of working capital.
<FONT STYLE="color: black">We anticipate our operating expenses may increase as we ramp up our operations. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-weight: normal"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-weight: normal"><I>Net
loss</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-weight: normal"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-weight: normal">Our net
loss for the three months ended March 31, 2012 decreased to $2,764, from $10,126, for the three months ended March 31, 2011. This
decrease was due to a decrease in operating activities. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-weight: normal"><I>Effects
of foreign currency translation conversion</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-weight: normal"><I>&nbsp;</I></FONT></P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-style: normal">Foreign
currency translation adjustment for the three months ended March 31, 2012 decreased to $4,886 from $6,446 during the three months
ended March 31, 2011. This decrease was due to a decrease in operating expenses.</FONT><FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Liquidity and Capital Resources </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following information has been derived
from the financial information included herein as Exhibit 99.2.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As at March 31, 2012, we have $1,062 in
cash and $211,495 in current liabilities. As at March 31, 2012, our total assets were $715,156 and our total liabilities were $211,495.
Our net working deficit as at March 31, 2012 was $121,570.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our cash needs are primarily for working
capital to develop our operations.&nbsp; We presently finance our operations through debt and equity financings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We plan to rely on equity, debt and cash
flow from operations to fund its growth strategy. In addition, we plan to approach heavy oil producers to form joint ventures with
them and finance the cost of processing plants by the heavy oil producers. This would expand growth at minimal cost to us as it
is being carried by the heavy oil producers. In order to assemble our equipment and commission the plant in Albania we will need
to raise approximately $500,000 by August 2012. In addition, we will need to raise an additional approximately $500,000 to be able
to increase our processing capacity in Albania. Once we have secured processing contracts it is expected that we should be able
to largely fund growth from cash flow, although there may be a continued need to rely upon additional debt or equity financing.
There are no assurances that we will be successful in securing such financing or that we will obtain terms that are favorable to
us. If we fail to obtain any financing, that will have a material adverse effect on our business and may force us to cease operations
or sell certain assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Cash to Operating Activities</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the three month period ended March 31, 2012, operating
activities used cash of $1,986, compared to a net gain of cash of $75,339 in operating activities for the three month period ended
March 31, 2011. The gain in cash was primarily due to an increase in accounts payable during the period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Cash to Investing Activities</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the three month period ended March 31, 2012, investing
activities used cash of $7,307 compared to net cash used in investing activities of $104,593 for the three month period ended March
31, 2011, as the Company incurred costs towards a building in Albania during the period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Cash from Financing Activities</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the three month period ended March 31, 2012, financing
activities generated cash of $3,814, compared to $72,753 generated in cash for the three month period ended March 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Contractual Obligations and Off-Balance Sheet Arrangements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the terms of the Purchase Agreement,
in exchange for the Assets, we issued to Sonoro a convertible debenture in the principal amount of $250,000 (the &ldquo;Debenture&rdquo;).
The Debenture has a term of two years and is non-interest bearing. Sonoro may demand early repayment of the Debenture if the Company
completes a financing yielding aggregate gross proceeds of at least $1,750,000. At any time after we have completed an equity or
convertible debenture financing yielding aggregate proceeds of at least $500,000 (a &ldquo;Qualified Financing&rdquo;), the Debenture
is convertible at the holders option into shares of our common stock. The conversion price of the Debenture will be equal to the
price per share of the shares sold in the Qualified Financing or the conversion price of the shares issuable upon conversion of
the convertible debentures sold in the Qualified Financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 11, 2012, we entered into an agreement
with our President for a convertible debenture valued at $200,000 for funds advanced. The convertible debenture expires on June
11, 2013 ( the &ldquo;Maturity Date&rdquo;) and bears interest at 10% per annum. At any time prior to the Maturity Date, if we
complete an equity or convertible debenture financing yielding aggregate proceeds of at least $500,000 (&ldquo;Qualified Financing&rdquo;),
our President may elect to convert the debenture in whole or in part into common shares of the Company at a price equal to the
price per share at which common shares of the Company are sold in the Qualified Financing, or in the case of a convertible debenture,
the price of the shares issuable upon conversion of the convertible debentures sold in the Qualified Financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 26, 2012, we entered into an agreement
with Sierra Growth, Inc. (a non-related party) whereby Sierra Growth, Inc. (&ldquo;Sierra&rdquo;) advanced to us $50,000. The debenture
bears interest at 10% per annum and is due March 26, 2013. Until the due date, Sierra may elect to convert the debenture in whole
or in part into common shares of the Company at a conversion rate equal to the price of any aggregate financing exceeding five
hundred thousand ($500,000) dollars less a discount of 25% per share. On April 18, 2012 Sierra advanced a further $25,000 to the
Company. The debenture matures on April 18, 2013 and bears interest at 10% per annum with the same conversion features as the debenture
issued on March 26, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 6, 2012, Westlake Advisors Corp.
(a non-related party) advanced to us $50,000 for a convertible debenture. The debenture has a Maturity Date of one year from the
date of issuance and bears an interest rate at 10% per annum. At any time on or before the Maturity Date, Westlake Advisors Corp.
may elect to convert the debenture in whole or in part into common shares of the Company at a conversion rate equal to the price
of any aggregate financing exceeding five hundred thousand ($500,000) dollars less a discount of 25% per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 21, 2012, Jackson Bennett LLC (a
non-related party) advanced $40,000 to us by way of a convertible debenture which matures June 21, 2013 and bears an interest at
10% per annum. At any time up to and including the Maturity Date, Jackson Bennett LLC may elect to convert the debenture in whole
or in part into common shares of the Company at a conversion rate equal to the price of any aggregate financing exceeding five
hundred thousand ($500,000) dollars less a discount of 25% per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table outlines payments due
under our significant contractual obligations over the periods shown, exclusive of interest:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" 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="18" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Payments&nbsp;Due&nbsp;by&nbsp;Period</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">Contractual&nbsp;Obligations</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"></TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Less&nbsp;than</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"></TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"></TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">More&nbsp;than</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">At&nbsp;December&nbsp;31,&nbsp;2012</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;Total</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">1&nbsp;Year</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;1-3&nbsp;years</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;3-5&nbsp;years</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt; border-bottom: Black 1pt solid">5&nbsp;years</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 45%; text-align: left">Debenture with Sonoro Energy Ltd.</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">250,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">250,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Debenture with Art Agolli</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Debentures with non-related parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">165,000</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"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">165,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></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; padding-left: 19.8pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">615,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">615,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The above table outlines our obligations
as of July 27, 2012 and does not reflect any changes in our obligations that have occurred after that date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">Except as set
forth above, we have </FONT>no significant contractual obligations, long-term debt or purchase obligations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have not entered into any other financial
guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative
contracts that are indexed to its shares and classified as shareholder&rsquo;s equity or that are not reflected in its consolidated
financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated
entity that provides financing, liquidity, market risk or credit support to it or engages in leasing, hedging or research and development
services with us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Critical Accounting Estimates</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Property and equipment, net</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment are carried at the
cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repair
and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve
the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains
and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over
the estimated useful lives of the assets, which are 3 to 5 years. The Company has not recognized depreciation since inception as
none of the equipment has been used in operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Research and development</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Costs incurred in connection with the development
of new products and manufacturing methods are charged to selling, general and administrative expenses as incurred. During the years
ended December 31, 2011 and 2010, $-0- and $10,704, respectively, were expensed as research and development costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Recently Issued Accounting Pronouncements
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company does not expect the adoption of any recently issued
accounting pronouncements to have a significant effect on its consolidated financial position or results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITY OWNERSHIP OF CERTAIN</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;BENEFICIAL OWNERS AND MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Security Ownership</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has only one class of stock outstanding, its common
stock. The following table sets forth certain information as of July 27, 2012, with respect to the beneficial ownership of our
common stock for (i) each director and officer, (ii) all of our directors and officers as a group, and (iii) each person known
to us to own beneficially five percent (5%) or more of the outstanding shares of our common stock. As of July 27, 2012, there were
64,649,000 shares of common stock outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To our knowledge, except as indicated in the footnotes to this
table or pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with
respect to the shares of common stock indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>Name and Address of</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Shares Beneficially</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Percentage Beneficially</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid">Beneficial Owner (1)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Owned</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Owned</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Directors and Executive Officers</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(204,255,204)">
    <TD STYLE="text-align: left">Art Agolli, Chief Executive Officer, President and Director</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(204,255,204)">
    <TD STYLE="text-align: left">57 Valley Woods Way, NW</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(204,255,204)">
    <TD STYLE="width: 62%; text-align: left">Calgary AB T3B 6A5</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 16%; text-align: right">20,000,003</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 16%; text-align: right">30.94</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(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">All Officers and Directors as a Group</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">20,000,003</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</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">30.94</TD><TD STYLE="font-weight: bold; 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(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Principal Stockholders</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Gerhard Schlombs</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(204,255,204)">
    <TD STYLE="text-align: left">92 Wishing Well Drive</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(204,255,204)">
    <TD STYLE="text-align: left">Toronto, ON M1T 1J9</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,625,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22.62</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">SGP Group Inc. (2)</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(204,255,204)">
    <TD STYLE="text-align: left">2<SUP>nd</SUP> Terrace W. Centreville</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(204,255,204)">
    <TD STYLE="text-align: left">P.O. Box 10567</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(204,255,204)">
    <TD STYLE="text-align: left">Nassau, Bahamas</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;4,276,284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;6.61</TD><TD STYLE="text-align: left">%&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the
SEC, shares of common stock which an individual or group has a right to acquire within 60 days pursuant to the exercise of options
or warrants are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but
are not deemed to be beneficially owned and outstanding for the purpose of computing the percentage ownership of any other person
shown in the table.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>Josephine Agotilla has dispositive and voting control for SGP Group Inc.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DIRECTORS AND EXECUTIVE OFFICERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Current Management</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table sets forth certain information for each
executive officer of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse; margin-left: 0.5in">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 35%; border-bottom: windowtext 1pt solid; font-weight: bold">Name</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 8%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Age</TD>
    <TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 55%; border-bottom: windowtext 1pt solid; font-weight: bold">Position</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Art Agolli</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">41</TD>
    <TD>&nbsp;</TD>
    <TD>President, Chief Executive Officer, Chief Financial Officer</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Officers and Directors:</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Art Agolli &ndash; President, Chief Executive Officer,
Chief Financial Officer, Director</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Mr. Agolli has more than 16 years of successful
experience in developing heavy oil projects. He is currently CEO of BA Capital, a Calgary based merchant bank serving the energy,
mining and technology sectors. Mr. Agolli is co-founder and former Vice President of Bankers Petroleum Ltd., a Toronto and London
Stock Exchange listed oil and gas company, Mr. Agolli played a key role in building Bankers Petroleum since day one. From a start
up in 2004, Bankers Petroleum grew to a $2.3 billion market capitalization company during his time with the company. Bankers Petroleum
has a 100% working interest and is the operator of the largest onshore heavy oil field in Europe (Albania) with original oil in
place of 8.5 billion barrels. Mr. Agolli also played an important role with BNK Petroleum, a Toronto Stock Exchange listed company
that was spun off from Bankers Petroleum in 2008. Mr. Agolli played a key role in BNK Petroleum&rsquo;s entry into Poland where
the company has one of the largest shale gas land positions in the country and in Europe. BNK Petroleum grew from a start up to
a $700 million market capitalization company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Mr. Agolli is also co-founder of Sonoro
Energy, TSX listed company that has recently signed a major oil deal in Iraq. Sonoro has exclusive rights to development of all
heavy oil of Salah ad Din Province in Iraq. Mr. Agolli has also been an international business and corporate development executive
with Koch Industries Inc, the largest privately held company in North America from 1998-201. From 2001-2003 he was CEO of Anonima
Petroli Italiana (Albania), a subsidiary company of Api Spa, one of the largest refining and trading oil companies in Italy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Mr. Agolli started his career as a consultant
for the World Bank in Washington DC in 1997. Mr. Agolli holds a Masters Degree in Management from Grand Valley State University
(Michigan, USA) and an International Relations and Business Degree from the same university. He is a member of the Association
of International Petroleum Negotiators (Houston, USA).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Terms of Office</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s directors are appointed
for a one-year term to hold office until the next annual general meeting of the Company&rsquo;s stockholders or until removed from
office in accordance with the Company&rsquo;s bylaws and the provisions of the Nevada Revised Statutes. The Company&rsquo;s directors
hold office after the expiration of his or her term until his or her successor is elected and qualified, or until he or she resigns
or is removed in accordance with the Company&rsquo;s bylaws and the provisions of the Nevada Revised Statutes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s officers are appointed
by the Company&rsquo;s Board of Directors and hold office until removed by the Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Involvement in Certain Legal Proceedings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Other than as set forth above, no director,
executive officer, significant employee or control person of the Company has been involved in any legal proceeding listed in Item
401(f) of Regulation S-K in the past 10 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Family Relationships</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are no family relationships between
or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Committees of the Board</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Board of Directors held no formal meetings
during the 12 month period ended December 31, 2011. All proceedings of the Board of Directors were conducted by resolutions consented
to in writing by the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in
writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada Revised
Statutes and the bylaws of our company, as valid and effective as if they had been passed at a meeting of the directors duly called
and held. We do not presently have a policy regarding director attendance at meetings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We do not currently have standing audit,
nominating or compensation committees, or committees performing similar functions. Due to the size of our board, our Board of Directors
believes that it is not necessary to have standing nominating or compensation committees at this time because the functions of
such committees are adequately performed by our Board of Directors. We do not have a nominating or compensation committee charter
as we do not currently have such committees. We do not have a policy for electing members to the board. Art Agolli is not an independent
director.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Mr. Agolli cannot be considered an &ldquo;audit
committee financial expert&rdquo; as defined in Item 401 of Regulation S-K. The Company does not presently have, among its officers
and directors, a person meeting these qualifications and given our financial circumstances, does not anticipate seeking an audit
committee financial expert to joint the committee in the foreseeable future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since inception on June 11, 2008, our Board
of Directors have conducted their business entirely by consent resolutions and have not met, as such.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">It is anticipated that the Board of Directors
will form separate audit, compensation and nominating committees at such time as the Company&rsquo;s operations have expanded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Section 16(a) Beneficial Ownership Reporting
Compliance </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based solely upon a review of Forms 3,
4 and 5 delivered to us as filed with the Securities Exchange Commission, our executive officers and directors, and persons who
own more than 10% of our Common Stock timely filed all required reports pursuant to Section 16(a) of the Securities Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Nominations to the Board of Directors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our directors take a critical role in guiding
our strategic direction and oversee the management of the Company. Board candidates are considered based upon various criteria,
such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for
the long-term interests of the stockholders, diversity, and personal integrity and judgment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, directors must have time available
to devote to Board activities and to enhance their knowledge in the growing business. Accordingly, we seek to attract and retain
highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In carrying out its responsibilities, the
Board will consider candidates suggested by stockholders. If a stockholder wishes to formally place a candidate&rsquo;s name in
nomination, however, he or she must do so in accordance with the provisions of the Company&rsquo;s Bylaws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Compensation Committee Interlocks and
Insider Participation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">No interlocking relationship exists between
our board of directors and the board of directors or compensation committee of any other company, nor has any interlocking relationship
existed in the past.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>EXECUTIVE COMPENSATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Board Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have no standard arrangement to compensate
directors for their services in their capacity as directors. Directors are not paid for meetings attended. However, we intend to
review and consider future proposals regarding board compensation. All travel and lodging expenses associated with corporate matters
are reimbursed by us, if and when incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Executive Compensation - Executive Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following summary compensation table
indicates the cash and non-cash compensation earned during the fiscal years ended December 31, 2010 and December 31, 2011 by our
executive officers and each of the other two highest paid executives or directors, if any, whose total compensation exceeded $100,000
during those periods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Summary Compensation Table</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Non-Equity</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Name&nbsp;and&nbsp;Principal</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Stock</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Option</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Incentive&nbsp;Plan</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">All&nbsp;Other</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Position</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Year</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Salary</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Bonus</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Awards</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Awards</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Compensation</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Compensation</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt">Total(1)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 12%; text-align: left"><FONT STYLE="font-size: 8pt">Art Agolli</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">2011</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 3.95pt"><FONT STYLE="font-size: 8pt">Chief Executive Officer, Chief Financial Officer,
    Director</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">2010</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; vertical-align: top"><FONT STYLE="font-size: 8pt">0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 37.4pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD></TR></TABLE>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top"><TD STYLE="width: 0"></TD><TD STYLE="width: 37.4pt">(1)</TD><TD>The dollar value in this column for each named executive officer or director represents the sum of all compensation reflected
in the previous columns.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 37.4pt; text-indent: -37.4pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 37.4pt; text-indent: -37.4pt"><I>Employment Agreements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We do not currently have an employment
agreement with our executive officer and the manner and amount of his compensation has not yet been determined.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Potential Payments Upon Termination
or Change-in-Control</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">SEC regulations state that we must disclose
information regarding agreements, plans or arrangements that provide for payments or benefits to our executive officers in connection
with any termination of employment or change in control of the company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We currently have no employment agreements
nor any compensatory plans or arrangements with any of our executive officers that may result from the resignation, retirement
or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer&rsquo;s
responsibilities following a change-in-control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AND DIRECTOR INDEPENDENCE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Certain Relationships and Transactions</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 17, 2012, the Company entered
into an Assignment Agreement (the &ldquo;Assignment Agreement&rdquo;) with Art Agolli, the Company&rsquo;s sole officer and member
of our board of directors (the &ldquo;Board&rdquo;), pursuant to which Mr. Agolli agreed to convey to the Company, all of his right,
title, and interest in and to a certain letter of intent between Mr. Agolli and Sonoro Energy Ltd., in consideration for the issuance
of 20,000,003 (1,777,778 pre-split )fully paid and assessable restricted shares of the Company&rsquo;s common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 6, 2012, $42,000 was repaid to
our former President for funds previously advanced to the Company for additional working capital.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 11, 2012, we entered into an agreement
with Art Agolli, our President, for a convertible debenture valued at $200,000 for funds advanced. The convertible debenture expires
on June 11, 2013 (the &ldquo;Maturity Date&rdquo;) and bears interest at 10% per annum. At any time prior to the Maturity Date,
if we complete an equity or convertible debenture financing yielding aggregate proceeds of at least $500,000 (&ldquo;Qualified
Financing&rdquo;), our President may elect to convert the debenture in whole or in part into common shares of the Company at a
price equal to the price per share at which common shares of the Company are sold in the Qualified Financing, or in the case of
a convertible debenture, the price of the shares issuable upon conversion of the convertible debentures sold in the Qualified Financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Review, Approval or Ratification of
Transactions with Related Persons</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">We rely on our
Board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our Board reviews a transaction
in light of the affiliations of the director, officer or employee and the affiliation&rsquo;s of such person&rsquo;s immediate
family. Transactions are presented to our Board for approval before they are entered into or, if this is not possible, for ratification
after the transaction has occurred. If our Board finds that a conflict of interest exists, then it will determine the appropriate
remedial action, if any. Our Board approves or ratifies a transaction if it determines that the transaction is consistent with
</FONT>the best interests of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Director Independence</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended December 31, 2011,
we had no independent directors. Our current sole director, Art Agolli, is not independent. We evaluate independence by the standards
for director independence established by applicable laws, rules, and listing standards including, without limitation, the standards
for independent directors established by The New York Stock Exchange, Inc., The NASDAQ National Market, and the Securities and
Exchange Commission.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Subject to some exceptions, these standards
generally provide that a director will not be independent if (a) the director is, or in the past three years has been, an employee
of ours; (b) a member of the director&rsquo;s immediate family is, or in the past three years has been, an executive officer of
ours; (c) the director or a member of the director&rsquo;s immediate family has received more than $120,000 per year in direct
compensation from us other than for service as a director (or for a family member, as a non-executive employee); (d) the director
or a member of the director&rsquo;s immediate family is, or in the past three years has been, employed in a professional capacity
by our independent public accountants, or has worked for such firm in any capacity on our audit; (e) the director or a member of
the director&rsquo;s immediate family is, or in the past three years has been, employed as an executive officer of a company where
one of our executive officers serves on the compensation committee; or (f) the director or a member of the director&rsquo;s immediate
family is an executive officer of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month
period during the past three years, exceeds the greater of $1,000,000 or two percent of that other company&rsquo;s consolidated
gross revenues.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL PROCEEDINGS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">None.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MARKET PRICE OF AND DIVIDENDS ON COMMON
EQUITY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AND RELATED SHAREHOLDER MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Market Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our common stock is not listed on any stock
exchange. Although our common stock is listed on the Over-the-Counter Bulletin Board (&ldquo;OTCBB&rdquo;) under the symbol &ldquo;PSON,&rdquo;
there is no established public market for shares of our common stock, and there has been a limited number of trades of our common
stock on the OTCBB during the last two fiscal years. There is not currently a bid or ask price information for shares of our common
stock on the OTCBB.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Holders</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of July 27, 2012, there were approximately
51 shareholders of record of our common stock based upon the shareholders&rsquo; listing provided by our transfer agent. Our transfer
agent is Signature Stock Transfer, Inc. The transfer agent&rsquo;s address is 2632 Coachlight Court, Plano, Texas 75093 and its
phone number is (972) 612-4120.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Dividends</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have never paid cash dividends on our
common stock. We intend to keep future earnings, if any, to finance the expansion of our business, and we do not anticipate that
any cash dividends will be paid in the foreseeable future. Our future payment of dividends will depend on our earnings, capital
requirements, expansion plans, financial condition and other relevant factors that our board of directors may deem relevant. Our
retained earnings deficit currently limits our ability to pay dividends.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>RECENT SALES OF UNREGISTERED SECURITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Reference is made to Item 3.02 of this
Form 8-K for a description of recent sales of unregistered securities, which is hereby incorporated by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF SECURITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following information describes our
capital stock and provisions of our articles of incorporation and our bylaws, all as in effect upon the Closing of the Transaction.
This description is only a summary. You should also refer to our articles of incorporation, bylaws and articles of amendment which
have been incorporated by reference or filed with the Securities and Exchange Commission as exhibits to this Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our authorized capital stock consists of
843,750,000 shares of common stock at a par value of $0.001 per share. Holders of common stock are entitled to one vote for each
share on all matters submitted to a shareholder vote. Holders of common stock do not have cumulative voting rights. Holders of
common stock are entitled to all dividends that the board of directors, in its discretion, declares from legally available funds.
In the event of our liquidation, dissolution or winding up, each outstanding share entitles its holder to participate in all assets
that remain after payment of liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Holders of common stock have no conversion,
preemptive or other subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock.
The rights of the holders of common stock are subject to any rights that may be fixed for holders of preferred stock, when and
if any preferred stock is authorized and issued. All outstanding shares of common stock are duly authorized, validly issued, fully
paid and non-assessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INDEMNIFICATION OF DIRECTORS AND OFFICERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Nevada Law</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Section 78.7502 of the Nevada Revised Statutes
permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys&rsquo; fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(a)</TD><TD>is not liable pursuant to Nevada Revised Statute 78.138, or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(b)</TD><TD>acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, Section 78.7502 permits a
corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including
amounts paid in settlement and attorneys&rsquo; fees actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(a)</TD><TD>is not liable pursuant to Nevada Revised Statute 78.138; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(b)</TD><TD>acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To the extent that a director, officer,
employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding
referred to above, or in defense of any claim, issue or matter, the corporation is required to indemnify him against expenses,
including attorneys&rsquo; fees, actually and reasonably incurred by him in connection with the defense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Section 78.752 of the Nevada Revised Statutes
allows a corporation to purchase and maintain insurance or make other financial arrangements on behalf of any person who is or
was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted
against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out
of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Other financial arrangements made by the corporation pursuant
to Section 78.752 may include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(a)</TD><TD>the creation of a trust fund;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(b)</TD><TD>the establishment of a program of self-insurance;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(c)</TD><TD>the securing of its obligation of indemnification by granting a security interest or other lien on any assets of the corporation;
and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(d)</TD><TD>the establishment of a letter of credit, guaranty or surety</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">No financial arrangement made pursuant
to Section 78.752 may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals,
to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses
or indemnification ordered by a court.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Any discretionary indemnification pursuant
to NRS 78.7502, unless ordered by a court or advanced pursuant to an undertaking to repay the amount if it is determined by a court
that the indemnified party is not entitled to be indemnified by the corporation, may be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances.
The determination must be made:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(a)</TD><TD>by the stockholders;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(b)</TD><TD>by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or
proceeding;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(c)</TD><TD>if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by
independent legal counsel in a written opinion, or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 74.8pt; text-indent: -37.4pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 37.4pt"></TD><TD STYLE="width: 37.4pt">(d)</TD><TD>if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Reference is made to the financial statements and supplementary
data included in Exhibits 99.1, 99.2 and 99.3, which is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AND FINANCIAL DISCLOSURE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">None.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Section 3 &ndash; Securities and Trading Markets</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 3.02.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unregistered
Sales of Equity Securities.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the terms of the Purchase Agreement,
in exchange for the Assets, we issued to Sonoro a convertible debenture in the principal amount of $250,000 (the &ldquo;Debenture&rdquo;).
The Debenture has a term of two years and is non-interest bearing. At any time after we have completed an equity or convertible
debenture financing yielding aggregate proceeds of at least $500,000 (a &ldquo;Qualified Financing&rdquo;), the Debenture is convertible
at the holders option into shares of our common stock. The conversion price of the Debenture will be equal to the price per share
of the shares sold in the Qualified Financing or the conversion price of the shares issuable upon conversion of the convertible
debentures sold in the Qualified Financing. <FONT STYLE="color: black">The Debenture was issued to Sonoro pursuant to the exemption
from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transaction took place outside
the United States of America with a non-US person.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Subsequent to the preparation of the March
31, 2012 and 2011 financial statements, we have issued several Convertible Debentures to raise $165,000 for general working capital.
Debentures for $50,000, $25,000, $50,000 and $40,000 were issued to three non-related parties. The debentures bear interest at
10% per annum and mature one year from the issuance date. Until the due date, the holder(s) may elect to convert the debenture
in whole or in part into common shares of the Company at a conversion rate equal to the price of any aggregate financing exceeding
five hundred thousand ($500,000) dollars less a discount of 25% per share. The convertible notes were offered <FONT STYLE="color: black">pursuant
to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions
took place outside the United States of America with non-US persons.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Furthermore, on June 11, 2012, we entered
into an agreement with our President for a convertible debenture valued at $200,000 for funds advanced. The convertible debenture
matures June 11, 2013 and bears interest at 10%. At any time prior to the Maturity Date, if we complete an equity or convertible
debenture financing yielding aggregate proceeds of at least $500,000 (&ldquo;Qualified Financing&rdquo;), our President may elect
to convert the debenture in whole or in part into common shares of the Company at a price equal to the price per share at which
common shares of the Company are sold in the Qualified Financing, or in the case of a convertible debenture, the price of the shares
issuable upon conversion of the convertible debentures sold in the Qualified Financing.<FONT STYLE="color: black"> The Debenture
was issued to Mr. Agolli pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as
amended, in that the transaction took place outside the United States of America with a non-US person.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Section 5 &ndash; Corporate Governance and Management</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 5.06 Change in Shell Company Status</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Following the consummation of the Transaction in Item 2.01 of
this Current Report on Form 8-K, which is incorporated by reference herein, we believe that we are not a shell corporation as that
term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act. From and after the Closing Date, our primary
operations consist of utilizing the Assets to develop a business relating to the treatment and upgrading of heavy oil by sonicated
solvent de-asphalting and operating the business of AlbaniaCo.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Section 9 &ndash; Financial Statement and Exhibits</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 9.01. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial
Statement and Exhibits.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Reference is made to the Transaction under the Purchase Agreement,
as described in Item 2.01 above, which is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>(a)</B> <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial
Statements of the Business Acquired</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The audited financial statements of Petrosonic
Albania Sha. for the for the twelve months ended December 31, 2011 and unaudited financial statements for the period from January
1, 2012 to March 31, 2012, including the notes to such financial statements, are incorporated herein by reference to Exhibit 99.1
and 99.2 of this Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><B>(b)</B> <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro
Forma Financial Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Incorporated by reference to Exhibit 99.3
attached hereto.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><B>(c)</B> <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shell
Company Transactions </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Reference is made to Items 9.01(a) and
9.01(b) above and the exhibits referred to therein, which are incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><B>(d)</B> <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; border-bottom: windowtext 1pt solid; font-weight: bold">Exhibit No.</TD>
    <TD STYLE="width: 2%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 86%; border-bottom: windowtext 1pt solid; font-weight: bold">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>2.1</TD>
    <TD>&nbsp;</TD>
    <TD>Asset Purchase and Sale Agreement dated July 27, 2012*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>3.1</TD>
    <TD>&nbsp;</TD>
    <TD>Articles of Incorporation of the Registrant (incorporated by reference from Registrant&rsquo;s Registration Statement on Form S-1 filed on December 19, 2008)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>3.2</TD>
    <TD>&nbsp;</TD>
    <TD>Amendment to Articles of Incorporation of the Registrant (incorporated by reference from Registrant&rsquo;s Current Report on Form 8-K filed on May 18, 2012)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>3.3</TD>
    <TD>&nbsp;</TD>
    <TD>Bylaws of the Registrant (incorporated by reference from Registrant&rsquo;s Registration Statement on Form S-1 filed on December 19, 2008)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.1</TD>
    <TD>&nbsp;</TD>
    <TD>Assignment Agreement, dated as of April 17, 2012 (incorporated by reference from Registrant&rsquo;s Current Report on Form 8-K filed on April 20, 2012)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.2</TD>
    <TD>&nbsp;</TD>
    <TD>Sonoro Convertible Debenture, dated July 27, 2012*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.3</TD>
    <TD>&nbsp;</TD>
    <TD>Non-Compete Agreement, dated July 27, 2012*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.4</TD>
    <TD>&nbsp;</TD>
    <TD>Consulting Agreement, dated July 27, 2012*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.5</TD>
    <TD>&nbsp;</TD>
    <TD>Share Purchase Agreement, dated July 27, 2012*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.6</TD>
    <TD>&nbsp;</TD>
    <TD>Iraq License Agreement, dated July 27, 2012*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>99.1</TD>
    <TD>&nbsp;</TD>
    <TD>Audited Financial Statements of Petrosonic Albania Sha. for the twelve months ended December 31, 2011 *</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>99.2</TD>
    <TD>&nbsp;</TD>
    <TD>Unaudited Financial Statements of Petrosonic Albania Sha. for the period from January 1, 2012 to March 31, 2012*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>99.3</TD>
    <TD>&nbsp;</TD>
    <TD>Pro Forma Financial Information*</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">* Filed herewith</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">Date:&nbsp; July 27, 2012</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">Petrosonic Energy, Inc.</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 45%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 4%; text-align: justify">By: </TD>
    <TD STYLE="width: 40%; border-bottom: windowtext 1pt solid; text-align: justify">/<I>s/ ART AGOLLI</I></TD>
    <TD STYLE="width: 11%; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Art Agolli</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">Chief Executive Officer</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
</TABLE>
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[{"type": "8-K", "sequence": "1", "filename": "v319861_8k.htm", "description": "FORM 8-K", "secsgml_size_bytes": 374672}]
{"company-data": {"conformed-name": "PETROSONIC ENERGY, INC.", "cik": "0001451654", "assigned-sic": "1000", "irs-number": "980585718", "fiscal-year-end": "1031"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-53881", "film-number": "12995944"}, "business-address": {"street1": "SUITE 300, 714 - 1ST STREET, SE", "city": "CALGARY", "state": "A0", "zip": "T2G 2G8", "phone": "(403) 708-7869"}, "mail-address": {"street1": "SUITE 300, 714 - 1ST STREET, SE", "city": "CALGARY", "state": "A0", "zip": "T2G 2G8"}, "former-company": {"former-conformed-name": "Bearing Mineral Exploration, Inc.", "date-changed": "20081209"}}
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
July 27, 2012
PETROSONIC ENERGY, INC.
(Exact name of registrant as specified in
its charter)
Nevada
000-53881
98-0585718
(State or other jurisdiction
of incorporation)
(Commission File
Number)
(IRS Employer
Identification No.)
Suite 204, 205 – 9
th
Avenue SE , Calgary, AB, Canada, T2G 0R3
(Address of Principal Executive Offices)
(403) 708-7869
(Issuer's Telephone Number)
Suite 300, 714 – 1
st
Street, SE, Calgary, AB CANADA, T2G 2G8
(Former name or former address if changed
since last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Cautionary Notice Regarding Forward-Looking
Statements
This Current Report on Form 8-K ("Form
8-K") and other reports filed by the Registrant from time to time with the Securities and Exchange Commission (collectively
the "Filings") contain or may contain forward-looking statements and information that are based upon beliefs of, and
information currently available to, the Registrant's management as well as estimates and assumptions made by the Registrant's
management. When used in the filings the words "anticipate", "believe", "estimate", "expect",
"future", "intend", "plan" or the negative of these terms and similar expressions as they relate
to the Registrant or the Registrant's management identify forward-looking statements. Such statements reflect the current
view of the Registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including
the risks contained in the section of this report entitled "Risk Factors") relating to the Registrant's industry,
the Registrant's operations and results of operations and any businesses that may be acquired by the Registrant. Should one
or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated, expected, intended or planned.
Although the Registrant believes that the
expectations reflected in the forward looking statements are reasonable, the Registrant cannot guarantee future results, levels
of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States,
the Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results. The
following discussion should be read in conjunction with the Registrant's pro forma financial statements and the related notes
filed with this Form 8-K.
Unless otherwise indicated, in this Form
8-K, references to "we," "our," "us," the "Company" or the "Registrant"
refer to Petrosonic Energy, Inc. (previously Bearing Mineral Exploration, Inc.), a Nevada corporation and its majority-owned subsidiary,
Petrosonic Albania Sha, a body corporate under the laws of Albania ("AlbaniaCo").
Unless otherwise indicated, all monetary
references are to Canadian dollars.
Section 1 – Registration's
Business and Operations
Item 1.01 Entry into a Material Definitive
Agreement.
The information contained in Item 2.01
below is incorporated by reference herein.
Section 2 – Financial Information
Item 2.01 Completion of Acquisition
or Disposition of Assets.
On July 27, 2012 (the "Closing Date"),
we acquired certain assets (the "Assets") from Sonoro Energy Ltd., ("Sonoro"), including (i) certain technology
relating to the treatment and upgrading of heavy oil by sonicated solvent de-asphalting, (ii) 60,000 shares of AlbaniaCo pursuant
to a share purchase agreement (the "Share Purchase Agreement"), and (iii) sonic reactors located in Albania and Richmond,
British Columbia and a solvent recovery system located in or around Turin, Italy (the "Transaction"), pursuant to the
terms of the Asset Purchase and Sale Agreement, dated July 27, 2012 (the "Purchase Agreement").
2
Pursuant to the terms of the Purchase Agreement,
in exchange for the Assets, we agreed to pay to Sonoro the following consideration: (i) $250,000, (ii) a convertible debenture
in the principal amount of $250,000 (the "Debenture") and (iii) a 10% royalty interest in our realized net revenues
for a period of 10 years from the time we commence commercial operations, which is defined as the date upon which we process an
average of 50 barrels of feed stock per day over a period of 30 consecutive days utilizing the technology acquired.
The Purchase
Agreement contains customary representations, warranties, and
conditions to closing. The foregoing description of the terms
and conditions of the Purchase Agreement and the transactions contemplated thereunder that are material to the Company does not
purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement. Pursuant to the
Purchase Agreement, certain key personnel will enter into a non-competition and non-solicitation agreement with the Company (the
"Non-Compete Agreement") and the Company and Sonoro will enter into a consulting agreement (the "Consulting Agreement").
Prior to the Transaction, we were a public
reporting "shell company," as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended and the rules
and regulations promulgated thereunder ("Exchange Act"). Accordingly, pursuant to the requirements of Item 2.01(a)(f)
of Form 8-K, set forth below is the information that would be required if the Registrant were filing a general form for registration
of securities on Form 10 under the Exchange Act, for the Registrant's common stock, which is the only class of its securities
subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act upon consummation of the Transaction.
Contemporaneous with the completion of
the Transaction, we have entered into a license agreement with Sonoro (the "Iraq License Agreement") for commercialization
of the Company's technology in the Republic of Iraq, provided that under the terms of the Iraq License Agreement, Sonoro
shall not be obligated to pay the Company any license fees or royalty payments.
The Debenture, the Non-Compete Agreement,
the Consulting Agreement, the Share Purchase Agreement, and the Iraq License Agreement are attached to this report as Exhibits
10.2 through 10.6, respectively, and the terms and conditions are incorporated herein. The foregoing statements are not intended
to be a complete description of all terms and conditions.
From and after the Closing Date, our primary
operations will consist of utilizing the Assets to develop a business relating to the treatment and upgrading of heavy oil by sonicated
solvent de-asphalting and operating the business of AlbaniaCo (the "Business"). Therefore, we disclose information
about the Business in this Form 8-K.
For accounting
purposes, the Purchase Agreement has been accounted for under the Purchase Method of accounting by the Registrant. The financial
statements of the Business are set forth in Exhibit 99.1 and Exhibit 99.2 of this Current Report. For pro forma financial information,
see Exhibit 99.3 of this Current Report.
3
DESCRIPTION OF BUSINESS
History
We were incorporated under the laws of
the State of Nevada on June 11, 2008, under the name "Bearing Mineral Exploration, Inc.", with authorized capital stock
of 75,000,000 shares at $0.001 par value. We were organized for the purpose of
conducting
gold exploration activities on a mineral claim located in the Province of Newfoundland, Canada.
We were not able to establish
the existence of a commercially minable gold deposit and therefore have acquired the Business and shifted our focus to opportunities
in the treatment and upgrading of heavy oil by sonicated solvent de-asphalting.
On April 17, 2012, we issued 20,000,003
(1,777,778 pre-split) shares of our common stock to Art Agolli, our sole officer and director, in exchange for all of his right,
title and interest in a letter of intent with Sonoro for the purchase of the Assets.
On April 18, 2012, concurrent with his
resignation as a director of the Company, Gerhard Schlombs surrendered 22,500,000 (2,000,000 pre-split) shares of the Company's
common stock to the corporate treasury for cancellation.
On May 16, 2012, we effected an 11.25-for-1
forward stock split of our Common Stock and an increase in our authorized number of common shares to 843,750,000. Additionally,
on May 16, 2012, we changed our name to "Petrosonic Energy, Inc." and on July 27, 2012 we entered into the Purchase
Agreement to acquire the Assets from Sonoro (the "Purchase Agreement").
Overview
Petrosonic
has developed a commercial process which improves heavy oil densities by 6 to 15 API
1
from as low as 8 API, reduces viscosities of oil by 99% to pipeline specifications and reduces sulphur and heavy metals by over
50%.
This process is especially beneficial to producers with the
following intrinsic challenges:
·
Stranded heavy oil due to transportation issues
·
Diluent supply issues
·
Limited refining markets (light oil refiners struggle with heavy oil)
·
Heavy discounts due to
o
Density adjustments
o
High sulphur content
o
High metals content
1
The American Petroleum Institute gravity,
or
API gravity
, is a measure of how heavy or light a petroleum liquid is compared to water; one of the qualitative
measures for crude oil
4
Depending on regional markets, traditional
heavy oil discounts (10 API oil with >2% sulfur) are 35-40% and we believe such discounts could be reduced to only 10-20% through
our process. On 5,000 barrels of oil per day ("bopd") this would equate to increased revenues of approximately $6/barrel
(bbl) or around $11 million per year (based on $100/bbl brent oil). Capital costs are expected to be between $0.5-1 million per
1,000 bbls capacity. Operating costs will be between $2-3 per bbl on a stand alone facility basis.
Petrosonic plans to have its first 1,000
bopd stand-alone facility operational by September 2012 in Albania. Expected annual cashflows from the initial 1,000 bopd facility
are expected to reduce heavy oil price discounts historically received in Albania from 40% to 20% as a result of achieving a 18-23
API oil. Petrosonic believes that with significant heavy oil production growth anticipated from the approximately 8 billion barrels
of oil reserves believed to be present in Albania, if we are able to successfully capture a portion of this processing business,
Petrosonic expects to expand its facilities over the next 3-5 years to 15,000 bopd as Albanian oil production increases.
If we are able to successfully establish
our first commercial facility, we believe heavy oil producers will want to integrate the Petrosonic system at their cost into their
treatment facilities. Petrosonic would sell the process solution and retain a royalty fee under this type of development. While
revenue per facility will be less (estimated at 50%), no capital and minimal support will be required. This strategy would allow
for faster growth. Petrosonic may also choose to develop its own stand alone facilities to capture further upside and long term
value creation.
Further upside opportunities exist in several
other applications which the Company is in advanced stage of development, including, heavy oil sands separation (both from oil
sands and ecology pits), and oil separations from drill cuttings.
Vision
and Strategy
·
Petrosonic hopes to provide its shareholders with returns and cash flow growth by leveraging its
experience and intellectual property within the heavy oil business.
·
Petrosonic plans to use an initial model of building its own stand-alone facilities to prove, optimize
and develop business growth opportunities with small to medium sized producers. To achieve higher returns and growth, the Company
will license out on a fee for service basis or royalty basis its processes to be integrated into producer's treatment facilities.
·
Where there is a distinct advantage Petrosonic may capture heavy oil resources prospects or participate
jointly in them. Any resource level participation would require higher returns on investment and be required to stand on its own
prior to the benefits of applying Petrosonic's technology.
·
We believe Petrosonic's leadership in oil processing technology compiled with a strong background
in the heavy oil industry is expected to result in a superior rate of return to shareholders from direct and indirect operations.
This will be further leveraged if the Company is able to financially participate in the underlying oil assets, especially by acquiring
these in advance.
5
Key
Success Factors
The Company's success will be dependent upon:
·
Our ability to attract and develop numerous
projects once the first project is complete;
·
Access to an ample producer oil supply
and our ability to find equitable profit distribution;
·
Our development and distribution of asphalt
within the market;
·
Our ability to minimize the technical
risk through avoidance of scale up issues;
·
Alleviation of market risk through the
use of strategic partners which can gain quick access to markets; and
·
Alleviation of financial risk through
partnering.
Priorities
Immediate priorities
of the Company are;
·
Strengthening the operations and management
of the Company as it moves forward in the oil sector;
·
Moving ahead with the processing facility
in Albania;
·
Establishing a second country oil processing
project; and
·
Building a firm backlog of projects with
financing commitments.
The Industry
Traditional
Heavy Oil Opportunities
Crude oil is the world's most actively
traded commodity. Heavy crude oil is a type of highly viscous crude oil that does not flow easily (sometimes referred to as non-conventional
oil). Typically, it is defined as crude oil with an API gravity of less than 22 API. For example, Canadian extra-heavy crude (Athabasca
bitumen) has a viscosity of 10,000+ cP (the
cgs
physical
unit
for dynamic viscosity is the
poise
(P). It
is more commonly expressed, particularly in
ASTM
standards,
as
centipoise
(cP). Water at 20 °C has a viscosity of 1.0020 cP
)
, about the same
as cold molasses, and API gravity between 8-14 API. In comparison, WTI, a type of light crude oil used as a benchmark in oil pricing
of New York Mercantile Exchange's oil futures, has an API of approximately 39.6. Naturally, heavy oils can be upgraded to
high quality light synthetic oils using specialized refining processing.
Heavy oil is a relative term, compared
to light crude oil, but relates to specific technical issues of its own on production, transportation, and refining. Usually a
diluent is added to carry heavy crude to facilitate its flow in pipelines.
6
Global
Need, Supply and Production
The
exact number of reserves of heavy oil varies according to different sources, but it is generally accepted that the amount of recoverable
heavy oil is greater than remaining reserves of conventional oil. According to Schlumberger, the current world oil reserves consist
of 9-13 trillion barrels of oil, 30% of which are conventional sources, 40% heavy and extra-heavy sources and 30% oil sands bitumen
sources.
2
Estimated
heavy oil production is around 5 million barrels per day and growing. The projected reduction in conventional oil in the next
few years is focusing the industry towards the more effective exploitation of non conventional reserves, heavy oil resources in
particular.
3
Source: (http://www.slb.com/content/services/solutions/reservoir/heavy_oil.asp)
Production and transportation of heavy
oil has unique challenges that must be overcome in order for it to become a significant contributor to the production gap left
by conventional oil and global growing demand.
Heavy Oil
Bitumen
North America
35.3
530.9
South America
265.7
0.1
Africa
7.2
43
Middle East
78.2
0.0
Asia
29.6
42.8
Russia
13.4
33.7
Western Hemi
301
531
Eastern Hemi
128.4
119.5
Worldwide*
429.4
650.5
*Does not include extra-heavy
and oil sand sources of bitumen (i.e. Canada,Venezuela)
Source: US Geological Survey
2
http://www.slb.com/content/services/solutions/reservoir/heavy_oil.asp
3
http://www.slb.com/content/services/solutions/reservoir/heavy_oil.asp
7
According to a US Geological Survey, heavy
oils are found around the world, with an estimated 69% of the world's technically recoverable heavy oil and 82% percent of
the technically recoverable natural bitumen located in the Western Hemisphere. The Eastern Hemisphere, however, contains an estimated
85% of the world's light oil reserves.
Among
the more notable heavy oil reserves are: Venezuela's Orinoco Heavy Oil Belt; Canada's Athabasca Oil Sands; Russia's
Volga-Ural Basin; Brazil's offshore Campos Basin; Alaska's Prudhoe Bay; and China's Luda field in Bohai Bay.
4
Significance of Traditional
Heavy Oil for Petrosonic
Around
the globe, some of the most prolific oilfields are reaching maturity and have begun to experience reduced production rates.
5
What large conventional oilfields remain lie mostly in the lands
of Middle Eastern, OPEC nations. At the same time, the world's demand for oil continues to grow every year, fueled in part
by the rapidly growing economies of China and India. This declining availability of conventional oil combined with rising demand
has driven up oil prices and put more pressure on the search for alternate energy sources.
Into the picture come the tremendous deposits
of heavy oil and bitumen that are found in the Western hemisphere. These non-conventional resources are more difficult to extract,
so they have barely been touched in the past. With the price of oil reaching new highs in 2005 and 2006, investments in these more
challenging oil deposits are rapidly accelerating.
In fact, the U.S. oil industry alone has
invested $86 billion in "frontier hydrocarbons" since 2000 (Heavy Oil Magazine, Aug 2006), developing technologies
to recover and convert inferior grades of oil, such as heavy oil and bitumen, into a more usable form for refineries, and to turn
waste and residue hydrocarbons into high-value products.
The worldwide importance of heavy oils
will continue to emerge as the price of oil remains high and the demand for it remains strong. For example, the tight worldwide
oil supply is expected to continue to force crude prices higher and turn Canada's oil sands into the single largest contributor
to net new global supply by the end of the decade, according to CIBC World Markets:
"All of the net increase in oil production
is expected to come from non-conventional sources,"
says Jeff Rubin, chief economist at CIBC World Markets, "
While
deepwater oil is the primary source today, we forecast that the Canadian oil sands will become the single largest contributor to
incremental global supply by 2010."
Industry Trends in Production
and Transport of Heavy Oil
The market factors behind Petrosonic upgrading
derive from the oil industry's needs relative to the production and refining infrastructure. As production shifts more to
heavier oil it becomes necessary for refining capacity to adapt to it, either by pre-upgrading the oil or by major refining changes.
Until then heavy oil producers face a penalty due to refining and pipeline infrastructure limitations driven by:
·
The ability to produce and transport heavy
oil within the same systems as that established for conventional oil, i.e. using existing transport pipelines;
·
The need to maintain low capital costs
and operating costs;
·
Delivery of heavy oil to the point of
sale with reduced expenditures on diluents;
4
http://www.slb.com/content/services/solutions/reservoir/heavy_oil.asp
5
http://www.slb.com/content/services/solutions/reservoir/heavy_oil.asp
8
·
Production and transportable technology
that allows the exploitation of heavy oil reserves at lower total cost, particularly for smaller fields – without massive
infrastructure expenditures.
Issues for Heavy Oil Producers
Pursuant to the aforementioned
industry pressures, heavy oil producers, especially small to medium size ones face price penalties:
·
Traditional heavy oil is both more viscous
and dense than conventional oil;
·
API similar to bitumen from oil sands
(Canadian Athabasca bitumen API between 8-14 API);
·
Peaking global supply increases the production
of less attractive and higher cost oil resources;
·
Smaller producers face high costs due
need to blend heavy oil with diluents for pipeline transportation or face penalties for failure to meet pipeline specifications
for viscosity and API (approximately 22 API);
·
Fixed producer "upgrading"
facilities to increase the API have been limited by the poor economics of small scale and short production life;
·
Upgrading is generally limited to de-asphalting
(removal of heavy asphaltene components – up to 16% by mass) and vis-breaking (low temperature cracking).
Oil
Sands
The
world's two largest sources of bitumen (and related extraction and recovery operations) are in Canada and in Venezuela.
There is also known oil shale or bituminous reserves in USA, Mexico, South America, Africa, Kazakhstan and other locations.
In Canada, oil sands are found in three
locations in the province of Alberta: The Athabasca, Peace River and Cold Lake regions. They cover 141,000 square kilometers (Camp,
1976, 1977; Cameron Engineers, 1978; Alberta Energy, 2002). The Athabasca is the largest deposit area, located in the northeast
part of Alberta. The total bitumen in place in Alberta is estimated at 1.7 to 2.5 trillion barrels (Morgan, 2001; Alberta Energy,
2002).
In 2005 about 1 million barrels of oil
per day were being produced from oil sands primarily from three projects: Suncor, Syncrude joint venture and Albion Sands (Athabasca
Oil Sands Project) joint venture. It is estimated that production will triple to 2.8-3 million barrels per day by 2015. About 300
billion barrels are estimated to be recoverable using current open pit mining and in-situ technologies (Mathieson and Stenason,
2001). The amount of this reserve is equivalent to over $30 trillion at current prices of oil.
9
Oil Sands Production in
Canada
The Canadian oil sands industry is dominated
by large integrated multi-national companies, including Albion Sands Energy Inc., Canadian Natural Resources Limited, Chevron,
EnCana Corporation Husky Energy Inc. Imperial Oil Resources Limited Petro-Canada (Fort Hills), Shell Canada Limited, Suncor Energy
Inc. and Syncrude Canada Ltd.
Upcoming players include (with projects
under development or already underway) TOTAL (Joslyn), Exxon Mobil, Synenco, Fort Hills (UTS), Kearl Lake Project with Imperial
Oil Resources Limited, and BP (British Petroleum).
Alberta's
oil sands (1.74 trillion barrels)
6
are not only the
world's largest capital project but now represent 60 per cent of the world's investable oil reserves.
7
But to produce one million barrels of oil a day, industry requires
withdrawals of enough water from the Athabasca River to sustain a city of two million people every year.
8
Despite some recycling, the majority of this water never returns to the river and is pumped into some of the world's largest
man-made dykes containing toxic waste.
9
By 2015, the
Canadian Association of Petroleum Producers predicts that oil sands production may total as much as three million barrels a day.
10
Oil
sands extraction usually takes at least two tons of oil sand to fill one barrel of upgraded synthetic crude oil. Furthermore, for
every barrel of synthetic oil produced in Alberta, more than 80 kg of greenhouse gases are released into the atmosphere, and 3
to 5 barrels of waste water are dumped into tailing ponds.
11
Production waste streams released into ponds have still relatively large amounts of unrecovered bitumen and expensive diluents
(as much as 4%). In large volumes typical for the oil extraction, these waste streams pose major environmental burden as well as
lost economic potential, creating a multibillion dollar opportunity.
Bitumen and naphtha recovery processes
involve separation of the complex mixtures of mineral matter (sand, clay), water and small amounts of soluble organic from the
bitumen. Current operators use a combination of energy (hydro-transport, heat, conventional mixing) chemical (caustic) addition,
flotation and light solvent dilation to achieve the necessary separations.
Petrosonic Opportunity
We believe Petrosonic will be able to take
advantage of an opportunity that traditional upgrading technology cannot address – upstream upgrading on smaller scales.
The viability of upgrading is constantly changing due to production mix, refining infrastructure costs, and oil pricing. However,
there are three markets for small upgraders that make sense:
·
Pipeline systems where access to the pipeline
requires blending of heavy oil. Condensate prices and heavy oil differentials have been stable for some time and long term projections
indicate that low condensate prices following the global economic slow-down will be short-lived;
·
Heavy oil producers in markets where light
oil dominates refinery infrastructure. Internationally there are several markets like this; and
6
Alberta Energy:http://www.energy.gov.ab.ca/1876.asp.
7
CIBC World Markets, December 8, 2000, p 1.
8
Down to the Last Drop: The Athabasca River and
the Oil Sands, Pembina Institute, March 2006, p.ii.
9
Canada's Oil Sands: Opportunities and Challenges
to 2015: An Update, NEB, June 2006, p.38.
10
Canadian Oil Sands Outlook, EIA 2007 Annual Energy
Outlook, March 2007.
11
Environmental Research and Studies Centre, University
of Alberta, 2007.
10
·
Markets where upgrading asphalt by-products
can command premium prices. This is especially attractive in North America given the economic infrastructure stimulus measures
being implemented.
To take advantage of these opportunities
Petrosonic must be able to:
·
Economically upgrade heavy oil from small
and medium sized producers right in the field;
·
Add value and allow producers to capture
a larger share of the market price for refinery products;
·
Provide operating plants to heavy oil
producers in return for tolling process fees or purchase heavy oil at a premium to blenders;
Upgraded oil provides uplift in crude's
value and eliminates issues related to transport of crude oil to pipeline and refinery companies.
The Petrosonic Process
The Petrosonic heavy oil process will enable
heavy sour oil (HSO) and bitumen (from most heavy oil and oil sands fields in the world) to be converted from nominally an API
gravity of 8-14 degrees to a value-added synthetic crude oil of between 18 and 23 API. This is achieved through the reduction of
undesirable constituents of the raw heavy oil and/or bitumen. The process incorporates two stages: solvent de-asphalting and distillation.
While solvent de-asphalting and distillation
are both proven and well known technologies, the innovation associated with the Petrosonic upgrading process lies in the rapid
de-asphalting achieved by sonication of the de-asphalting phase with the Petrosonic reactor stage.
Petrosonic
Test Data
The
Company has completed an extensive test program of heavy oils both in house and independently with the complete Petrosonic upgrading
process which has shown to consistently achieve the target improvements in API.
The tests were carried out in our R&D
site in Richmond, British Columbia (in house) and the lab work for the specifics of the de-asphalted oil and asphaltenes generated
was carried out by Alberta Research Council in their laboratory (independent) in Edmonton, Alberta. The tests were carried out
during 2010 and 2011.
For Canadian bitumen samples this represents an upgrade from nominally 10°
API to 25° API. The test program included heavy oils and bitumen from the Canadian Athabasca and Lloydminster fields, heavy
oil from USA refineries, and crude oil from two international oil producers. The testing was conducted at Petrosonic's Sonoprocess™
Facility in Richmond, British Columbia and at the Petrosonic Facility located in Albania. The Petrosonic upgraded oil quality is
typically:
○
Density -
from 23° to 28° API gravity, meeting pipeline specifications;
○
Viscosity -
less than 100 cSt at 25°C (greater than 99% reduction), meeting pipeline
specifications;
○
Liquid yields -
From 85% to 92% by volume depending on the quantity and quality of asphaltene
by-product required;
○
Sulphur -
reduction by up to 40% by mass;
○
Heavy Metals -
typical reduction of Vanadium up to 80% and Nickel by up to 88% by mass.
11
The following table illustrates some of the
data from the extensive test program that PETROSONIC has conducted. This is critical in establishing the application of the Petrosonic
process on a broad basis.
The table below (Table 1) shows key performance
parameters for Alberta/Cold Lake Oil:
Table 1
Analysis
Raw Bitumen
Upgraded Oil
[Petrosonic ID: 090309E-2]
Total Acid Number (TAN)
1.24
1.18
API Gravity
14.4
26.0
Density @15
o
C
0.9690
0.8982
Nickel
46
17
Vanadium
95
38
Sulphur
3.62
2.46
Table 2 shows a PONA (fundamental heavy
oil testing of paraffins, olefins, napthenes and aromatics) summary by hydrocarbon group for Alberta/Cold Lake oil using commercially
available light naphtha:
Table 2
Raw Bitumen
Upgraded Oil
[Petrosonic ID: 090309E-2]
Group
% Wt
% Mol
% Wt
% Mol
Aromatics
14.175
14.871
17.318
18.545
i-Paraffins
25.572
23.856
24.912
24.031
Naphthenes
30.728
33.450
19.017
20.217
Olefins
11.431
11.147
5.064
4.837
Paraffins
4.715
4.695
30.547
29.677
Oxygenates
0.000
0.000
0.000
0.000
Unidentified
13.380
11.981
3.142
2.694
Plus
0.000
0.000
0.000
0.000
TOTAL
100.00
100.00
100.00
100.00
Table 3 shows a PONA summary by carbon
number for Alberta/Cold Lake oil. Table 3 reflects the effectiveness of the Petrosonic upgrading process through the clear reduction
in the oil's carbon number from C9/C10 to C7/C8, which indicates clearly the generation of new lighter end fractions, each
having a lower density and thus serving to increase the API. Given the high sensitivity of the API calculation to density, even
small changes in density create significant gains in API quality.
12
Table 3
Carbon #
Raw Bitumen
Upgraded Oil
[Petrosonic Code 090309E-2]
% Wt
% Mol
% Wt
% Mol
C4
0.001
0.002
-
-
C5
0.060
0.100
0.079
0.125
C6
3.063
4.296
2.979
4.053
C7
17.245
21.005
21.711
25.435
C8
17.245
18.619
33.183
33.915
C9
29.209
27.721
25.799
23.367
C10
17.940
15.127
10.057
8.179
C11
1.511
1.149
2.512
1.868
C12
-
-
0.478
0.328
C13
-
-
0.049
0.030
C14
-
-
0.010
0.006
>C15
13.726
11.981
3.143
2.694
TOTAL
100.00
100.00
100.00
100.00
The following table (Table 4) illustrates
some of the data from the extensive test program that Petrosonic has conducted. This is critical in establishing the application
of the Petrosonic process on a broad basis.
Table 4
Raw
Upgraded
Country
Specific
Source
API
Vanadium
(g)
Nickel
(g)
Sulphur
(%)
Total Acid
Number
(TAN)
API
Vanadium
(g)
Nickel (g)
Sulphur
(%)
Total Acid
Number
(TAN)
Canada
CP
10.6
169.0
80.0
4.5
0.98
24.5
29.2
12.0
2.64
0.73
Canada
CDL
14.4
95.0
46.0
3.62
1.24
26.0
38.0
17.0
2.46
1.18
US (Texas)
TG
17.4
12.0
5.4
3.73
0.59
27.9
4.2
1.9
2.78
0.99
US (Texas)
TK
14.9
15.0
16.0
3.85
0.56
27.5
4.4
4.2
2.51
0.58
US (Texas)
TQ
11.2
15
16
3.33
1.71
25.9
2.9
3.1
2.51
0.55
Albania
AB
10.8
348.4
68.5
5.96
0.56
25.1
56
8.6
3.96
0.3
Albania
AD
10.2
287.0
57.0
3.98
0.52
29.0
65.9
12.2
3.27
0.73
Albania
AM
21.0
110.0
19.0
2.43
1.07
31.9
48.4
7.7
2.88
0.85
Venezuela
VP
9.4
492.0
105.0
4.26
5.26
21.7
220
45.4
2.96
3.68
US (Utah)
US
14.5
23.8
12.2
1.18
3.19
32.5
1.7
1.0
0.62
0.26
13
Stages
in the Petrosonic Process
Step 1: Solvent De-asphalting
The primary process of solvent de-asphalting
dissolves bitumen in a common paraffinic solvent. The solvent is selected to ensure complete dissolution of the oil-soluble component
of the bitumen with the solvent to form a De-asphalted Oil (DAO) while the insoluble hydrocarbon component known as asphaltenes
are readily filtered through simple separation. This asphaltene fraction is concentrated with heavy metals such as nickel and vanadium
as well as sulphur.
The Petrosonic reactor, using its patented
low-frequency / high-energy / high-amplitude reactor design, allows for significant improvement in the mass transfer efficiency
of the solvent de-asphalting step in particular, cutting the de-asphalting time required from 6 to 10+ hours to 2 minutes.
Step 2: Solvent Recovery
At the completion of the two-stage Petrosonic
upgrading process, the upgraded oil is required to be separated from the solvent through a standard solvent recovery process such
as an evaporator or distillation column. Given the significant differential in boiling points of the upgraded oil and the solvent
for recovery, the separation process is economical and readily applicable to recover solvent with a solvent residual of less than
4% remaining in the oil and probably below 2%. Such a small solvent residual in the oil is well within the expected quality parameters
for pipeline and refinery specifications. The recovered solvent is reused at the solvent de-asphalting stage to complete the closed
loop on the Petrosonic upgrading process.
14
Petrosonic's
Technology
SonoProcess
We believe Petrosonic's
technology advantage is based upon the use of our Petrosonic reactor technology and the unique cavitational and enhanced mass transfer
effects that it provides. Petrosonic has developed a unique competency in the design of enhanced mass transfer energy processes
and the proprietary applications that result from this.
In recent years the use
of cavitational technologies and ultrasound has been researched extensively for oil processing – usually in the context of
desulphurization or "cold cracking". Our own research does not support this and we make no claims that it can create
a unique upgrading process. The chemistries used in the Petrosonic process are established and our advantage is that we make these
more effective.
The Company looks to
maintain its initial technical advantage derived from the Petrosonic Sonoprocess™ for heavy oil by adding complementary proprietary
process technologies to this.
The Petrosonic reactor
has been designed and built in a variety of configurations but all Petrosonic process development is undertaken on full scale units:
·
Petrosonic reactors are based on low-frequency
/ high-amplitude Petrosonic energy reactors;
·
A patented electromagnetic drive puts
a massive steel bar into resonance and this allows efficient transfer of energy to the reaction chambers;
·
There are no moving parts and so Petrosonic
reactors have a high reliability and operational availability;
·
The reaction chambers are attached at
the mid-node points one half wavelength from the drive system, enabling the reactors to apply Petrosonic energy to physical, chemical
and biological processes;
·
Petrosonic reactors are thus able to achieve
more sustainable processes – better reactivity, less reagents, less energy, greater effectiveness and more product for overall
economic advantage.
Direct Sonicated Separation
The previous holder of the technology has
also carried out independent tests on oil sands to determine if the technology could be effective in a low cost primary separation
process. Preliminary tests with a proprietary process protocol produced results comparable with existing technology.
However, the effectiveness of this technology
is but a first step due to the massive scale of oil sands projects. At this time the Company believes the volume of material that
would need to be processed requires a "next generation" of Petrosonic reactor technology. Existing scale technology
may be applicable to small scale oil sands production.
The Company has directed its efforts towards
a more immediate but directly related application – the treatment of drill cuttings. This is not the same scale of opportunity
but offers immediate access to market and cash flow generation based on modest investment of capital.
15
Petrosonic
Heavy Oil Process Patents
As part of the transaction with Sonoro
Energy the company has acquired the following Heavy Oil Process provisional and PCT applications based on the Company's Sonoprocess™:
·
Patent/Application No: WO2009111871.
Jurisdiction: WIPO. Title: Method for Treating Heavy Crude Oil. Application Status: Published.
·
Patent/Application No: EA201071060.
Jurisdiction: Eurasisa. Title: Method for Treating Heavy Crude Oil. Status: Pending.
·
Patent/Application No: EP2260089. Jurisdiction:
Europe. Title: Method for Treating Heavy Crude Oil. Status: Pending.
·
Patent/Application No: 2156/MUMNP/2010.
Jurisdiction: India. Title: Method for Treating Heavy Crude Oil. Status: Pending.
·
Patent/Application No: US 61/035,690.
Jurisdiction: United States. Title: Method for Treating Heavy Crude Oil. Status: Company will appeal the expired priority claim
to reinstate the priority claim.
Competition
Currently heavy oil is upgraded by refineries
and upgraders (refineries that upgrade crude to synthetic crude grade level but not to full end products such as diesel, jet fuel
etc). These facilities refine large quantities of crude from 60,000 to 500,000 bbl/day and they are capital intensive, require
long lead times, significant engineering and intensive water use.
There have been other technologies introduced
that upgrade heavy oil via other methods such as Headwaters Incorporated's proprietary HCAT technology or Ivanhoe Energy's
HTL heavy oil upgrading technology. However, these technologies upgrade heavy crudes in smaller volumes and are also very complex,
capital intensive and require intense use of energy and water. They also have the associated environmental downsides such as carbon
emissions.
Disadvantages of Petrosonic Process/Technology
There are few inherent disadvantages to
the Petrosonic process.  The technology has been proven on other applications but long-term 24 hour operations have not been
attempted as prior successful commercialization efforts did not require long-term, 24 hour operations. In addition, one sonicator
at current dimensions can process up to 500 barrels of heavy oil per day. While this processing capacity can be an advantage for
small and medium size operations it may be considered as a disadvantage for larger operations.
In addition, there are
technical and logistical risks associated with the heavy oil upgrading technology rollout in Albania.  These risks can be
attributed to two general categories of risk:  operational and logistical, which are influenced by the market risk factors
which are presented separately.
The
design of the equipment was based on an estimation of both the required solvent as well as
the regional heavy crude oil
expected to be upgraded at site.  Any changes and variations in either the solvent or the heavy oil will impact the overall
ability to commission the project.  Remaining
equipment to be ordered is minor in scope but
any delays or problems in sources of supply from European sources could lead to minor delays.
16
The ability to procure
suitable safe installation for commissioning the equipment is critical given the limited number of suitable contractors available
in Albania.  The ability to source and deliver piping, equipment could cause commissioning or optimization delays.  The
equipment to be assembled into a continuous heavy oil upgrading process has not been operated in the proposed configuration elsewhere.
The process is expected to operate as designed but unforeseen assembly and commissioning situations are normal and expected.  Remaining
equipment to be ordered is minor in scope but any delays or problems in sources of supply from European sources could lead to minor
delays.
Marketing
and Sales Strategy
Petrosonic's business model is to
provide integrated upgrading systems to heavy oil producers in exchange for revenue sharing in the economic uplift produced as
a result of the Sonoprocessing™. Given the relative ease of integration and transportation, the process is designed to be
easily applicable to the upstream and midstream constituents. The immediate marketing and sales strategy is to sell our processing
services on toll or joint venture basis to heavy oil upstream producers directly. As a result, business models can take on various
forms:
·
Oil Producers: Decrease viscosity and need for diluents; improve quality; increase marketability; increase price
·
Pipeline Operators: Decrease viscosity and need for diluent resulting in increased throughput
·
Storage & Blending Operators: Increase yield and quality
·
Refiners
:
Increase yield and quality. Rapid de-asphalting with less diluent and less cost. De-bottleneck refinery
Customers
Our target customers are heavy oil producers, industrial groups
that consume heavy oil and refineries that refine heavy oil. In addition, our potential customers consist of heavy oil trading
companies and asphalt producers and consumers of asphalt products such as construction companies that require asphaltenes as raw
material for production of asphalt. Currently the Company has no customers.
Employees
We have currently
2 full-time employees and 3 part-time employees, as well as, several independent consultants.
We plan to hire a Chief Financial
Officer and three local operations staff in Albania during the first year of its operations. The Company has identified potential
candidates for such positions, and expects to proceed with such hires once it has secured the requisite financing.
17
Environmental Laws and Regulations
The Company may be subject to various environmental
laws and regulations in the countries in which it operates. With respect to Albania, the Company will require an environmental
permit for its facility and a fire safety permit. The Company has prepared all the necessary paperwork and information and has
applied for the environmental permit and is in discussion with all governmental authorities regarding the issuance of the permit
by the end of August 2012. Since the Company does not require any use of water, extensive energy or generate any emissions it does
not fall under more complicated and lengthy environmental permit requirements typical for refineries or upgraders. The Company
plans to install all necessary equipment required for anti-fire measures and regulations in the country.
Procurement of Equipment
The Company will rely on a third party
contractor to manufacture the sonicators and other related equipment according to its patented design and specifications. The company
has received quotes from the third party manufacturer and expects that it will be able to obtain all the necessary equipment to
grow its processing capacity in the future. The manufacturer has the production and financial capability and capacity to fulfill
our orders in the future. In addition, the company has access to several local and international fabricators and engineering firms
to carry out the necessary assembly of the equipment and increase capacity of its processing plant in the future.
RISK FACTORS
You should carefully consider the risks
described below together with all of the other information included in this Form 8-K before making an investment decision with
regard to our securities. The statements contained in or incorporated into this Form 8-K that are not statements of historic or
present facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking statements. If any of the following events described in these
risk factors actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading
price of our common stock could decline, and you may lose all or part of your investment.
Risks Related to our Business
We have incurred losses in prior periods
and may incur losses in the future.
We cannot be assured that we can achieve
or sustain profitability on a quarterly or annual basis in the future.  Our operations are subject to the risks and competition
inherent in the establishment of a business enterprise.  There can be no assurance that future operations will be profitable.  We
may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us.
18
Our future is dependent upon our ability
to obtain financing.  If we do not obtain such financing, we may have to cease our activities and investors could lose
their entire investment.
There is no assurance that we will operate
profitably or generate positive cash flow in the future.  We will require additional financing in order to proceed beyond
the establishment of our own stand-alone facilities, including the processing facility in Albania.  We will also require
additional financing to pay the fees and expenses necessary to become and operate as a public company.  We will also need
more funds if the costs of the development and operation of our existing technologies are greater than we have anticipated.  We
will also require additional financing to sustain our business operations if we are not successful in earning revenues. We may
not be able to obtain financing on commercially reasonable terms or terms that are acceptable to us when it is required.  Our
future is dependent upon our ability to obtain financing.  If we do not obtain such financing, our business could fail
and investors could lose their entire investment.
Because we may never earn revenues from
our operations, our business may fail and investors may lose all of their investment in our Company.
We have no history of revenues from operations.  We
have yet to generate positive earnings and there can be no assurance that we will ever operate profitably.  Our company
has a limited operating history.  If our business plan is not successful and we are not able to operate profitably, then
our stock may become worthless and investors may lose all of their investment in our company.
Prior to completion of the oil processing
facility in Albania, we anticipate that we will incur increased operating expenses without realizing any revenues.  We
therefore expect to incur significant losses into the foreseeable future.  We recognize that if we are unable to generate
significant revenues from our processing facilities in the future, we will not be able to earn profits or continue operations.  There
is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide no assurance
that we will generate any revenues or ever achieve profitability.  If we are unsuccessful in addressing these risks,
our business will fail and investors may lose all of their investment in our company.
We may not be fully indemnified against
financial losses in all circumstances where damage to or loss of property, personal injury, death or environmental harm occur.
As is customary in our industry, our contracts
will typically provide that our customers indemnify us for claims arising from the injury or death of their employees, the loss
or damage of their equipment, damage to the reservoir and pollution emanating from the customer's equipment or from the reservoir
(including uncontained oil flow from a reservoir). Conversely, we will typically indemnify our customers for claims arising from
the injury or death of our employees, the loss or damage of our equipment, or pollution emanating from our equipment. Our contracts
will typically provide that our customer will indemnify us for claims arising from catastrophic events, such as a well blowout,
fire or explosion.
Our indemnification arrangements may not
protect us in every case. For example, from time to time we may enter into contracts with less favorable indemnities or perform
work without a contract that protects us; our indemnity arrangements may be held unenforceable in some courts and jurisdictions;
or we may be subject to other claims brought by third parties or government agencies. Furthermore, the parties from which we seek
indemnity may not be solvent, may become bankrupt, may lack resources or insurance to honor their indemnities, or may not otherwise
be able to satisfy their indemnity obligations to us. The lack of enforceable indemnification could expose us to significant potential
losses.
Further, our assets generally are not insured
against loss from political violence such as war, terrorism or civil commotion. If any of our assets are damaged or destroyed as
a result of an uninsured cause, we could recognize a loss of those assets.
19
Our operations are subject to environmental
and other laws and regulations that may expose us to significant liabilities and could reduce our business opportunities and revenues.
We are subject to various laws and regulations
relating to the energy industry in general and the environment in particular. An environmental claim could arise with respect to
one or more of our current businesses, products or services, or a business or property that one of our predecessors owned or used,
and such claims could involve material expenditures. Generally, environmental laws have in recent years become more stringent and
have sought to impose greater liability on a larger number of potentially responsible parties. The scope of regulation of our industry
and our products and services may increase further following the April 2010 accident in the Gulf of Mexico, including possible
increases in liabilities or funding requirements imposed by governmental agencies. We also cannot ensure that our future business,
if any, will be profitable in light of new regulations that have been and may continue to be promulgated and in light of the current
risk environment and insurance markets. Additional regulation could increase the costs of conducting our business and could materially
reduce our business opportunities and revenues if our customers decrease their levels of activity in response to such regulation.
We are subject to significant foreign
exchange and currency risks that could adversely affect our operations and our ability to reinvest earnings from operations, as
well as mitigate our foreign exchange risk through hedging transactions may be limited.
Since we currently conduct a significant
portion our operations outside the United State of America, our business is subject to foreign currency risks, including currency
exchange rates fluctuations and difficulties in converting local currencies into U.S. dollars. The exchange rates between the Albanian
Lek, the Canadian dollar, the Euro and the U.S. dollar and other foreign currencies is affected by, among other things, changes
in local political and economic conditions. Such currency fluctuations may materially affect the Company's financial position
and results of operations and a material change in currency rates in our markets could affect our future results as well as affect
the carrying values of our assets.
We generally attempt to denominate our
contracts in U.S. dollars or in the currencies of our costs. However, we may enter into contracts that subject us to currency risk
exposure, primarily when our contract revenue is denominated in a currency different than the contract costs. We anticipate that
a significant portion of our consolidated revenue and consolidated operating expenses will be in foreign currencies. As a result,
we will be subject to significant foreign currency risks, including risks resulting from changes in foreign exchange rates and
limitations on our ability to reinvest earnings from operations in one country to fund the financing requirements of our operations
in other countries.
Customer credit risks could result in
losses.
The concentration of our future customers
in the energy industry may impact our overall exposure to credit risk as customers may be similarly affected by prolonged changes
in economic and industry conditions. Those countries that rely heavily upon income from hydrocarbon exports would be hit particularly
hard by a drop in oil prices. Further, laws in some jurisdictions in which we may operate could make collection difficult or time
consuming. We will perform ongoing credit evaluations of our customers and generally do not plan to require collateral in support
of our trade receivables. While we may maintain reserves for potential credit losses, we cannot assure such reserves will be sufficient
to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations.
Global political, economic and market
conditions could affect projected results.
Our operating results are based on our
current assumptions about oil supply and demand, oil prices, rig count and other market trends. Our assumptions on these matters
are in turn based on currently available information, which is subject to change. The oil industry is extremely volatile and subject
to change based on political and economic factors outside our control. A weakened global economic climate generally results in
lower demand and lower prices for oil, which reduces drilling, processing and production activity, which in turn results in lower
revenues and income for us. Worldwide drilling activity and global demand for oil may also be affected by changes in governmental
policies and sovereign debt, laws and regulations related to environmental or energy security matters, including those addressing
alternative energy sources and the risks of global climate change. Worldwide economic conditions, and the related demand for oil,
may in future periods be significantly weaker than we have assumed.
20
We may be unable to recognize our expected
revenues from current and future contracts.
Our potential customers, some of whom may
be national oil companies, often have significant bargaining leverage over us and may elect to cancel or revoke contracts, not
renew contracts, modify the scope of contracts or delay contracts, in some cases preventing us from realizing expected revenues
and/or profits.
Increases in the prices and availability
of our raw materials could affect our results of operations.
We use significant amounts of raw materials
(including steel and other metals, chemicals, plastics, polymers and energy inputs) for manufacturing our products, facilities
and some of our fixed assets. The price of these raw materials has a significant impact on our cost of producing products for sale
or constructing fixed assets used in our business. There can be no assurance that the prices of our raw materials will remain within
a manageable range and will be readily available. If we are unable to obtain necessary raw materials or if we are unable to minimize
the impact of increased raw material costs or to realize the benefit of cost decreases in a timely fashion through our supply chain
initiatives or pricing, our margins and results of operations could be adversely affected.
Our long-term growth depends upon technological
innovation and commercialization.
Our ability to deliver our long-term
growth strategy depends in part on the commercialization of new technology. A central aspect of our growth strategy is to improve
our products and services through innovation, to obtain technologically advanced products through internal research and development
and/or acquisitions, to protect proprietary technology from unauthorized use and to expand the markets for new technology by leveraging
our infrastructure. Our success will depend on our ability to commercialize the technology that we have acquired and demonstrate
the enhanced value our technology brings to our customers' operations. Our major technological advances include, but are
not limited to, those related to the design of enhanced mass transfer energy processes and reactors. We cannot be assured of the
successful commercialization of, and above-average growth from, our new products and services, as well as legal protection of our
intellectual property rights. Any failure in the commercialization of our technology could adversely affect our business and results
of operations.
If we are unable to enforce our intellectual
property rights or if our intellectual property rights become obsolete, our competitive position could be adversely impacted.
We utilize a variety of intellectual property
rights in our services. We view our portfolio of process and design technologies as one of our competitive strengths and we use
it as part of our efforts to differentiate our service offerings. We may not be able to successfully preserve these intellectual
property rights in the future and these rights could be invalidated, circumvented, challenged or infringed upon. In addition, the
laws of some foreign countries in which our services may be sold do not protect intellectual property rights to the same extent
as the laws of the United States. If we are unable to protect and maintain our intellectual property rights, or if there are any
successful intellectual property challenges or infringement proceedings against us, our ability to differentiate our service offerings
could diminish. In addition, if our intellectual property rights or work processes become obsolete, we may not be able to differentiate
our service offerings and some of our competitors may be able to offer more attractive services to our customers. As a result,
our business and financial performance could be materially and adversely affected.
21
International and political events may adversely affect our
operations.
A significant portion of our revenue will
be derived from foreign operations, which exposes us to risks inherent in doing business in each of the countries where we transact
business. The occurrence of any of the risks described below could have a material adverse effect on our business operations and
financial performance. With respect to any particular country, these risks may include:
·
expropriation and nationalization of our assets in that country;
·
political and economic instability;
·
civil unrest, acts of terrorism, force majeure, war, or other armed conflict;
·
currency fluctuations, devaluations, and conversion restrictions;
·
confiscatory taxation or other adverse tax policies;
·
governmental activities that limit or disrupt markets, restrict payments, or limit the movement of funds;
·
governmental activities that may result in the deprivation of contract rights; and
·
governmental activities that may result in the inability to obtain or retain licenses required for operation.
Due to the unsettled political conditions
in many oil-producing countries, our financial performance is subject to the adverse consequences of war, the effects of terrorism,
civil unrest, strikes, currency controls, and governmental actions. Our customer's operations are conducted in areas that
have significant amounts of political risk. In addition, military action or continued unrest in the Middle East could impact the
supply and price of oil, disrupt our customer's operations in the region and elsewhere, and increase our costs related to
security worldwide.
Economic and political developments
in Albania may adversely affect our business.
A significant portion of our operations
and assets are currently located in Albania. As a result, our financial condition, results of operations and business may be affected
by and are subject to the general condition of the Albanian economy, the devaluation of the Albania Lek as compared to the U.S.
Dollar, Albanian inflation, interest rates, regulation, taxation, social instability and other political, social and economic developments
in or affecting Albania, including changes in the laws and policies that govern foreign investment, as well as changes in United
States laws and regulations relating to foreign trade and investment, over which we have no control. There can be no assurance
as to the future effect of any such changes on our results of operations, financial condition, or cash flows.
The dangers inherent in our operations could cause disruptions
and could expose us to potentially significant losses, costs, or liabilities. Any significant interruptions in the operations of
any of our facilities could materially and adversely affect our business, financial condition, and results of operations.
22
Our operations are subject to significant hazards and risks
inherent in refining operations and in transporting and storing crude oil. These hazards and risks include, but are not limited
to, the following:
·
natural disasters;
·
weather-related disruptions;
·
fires;
·
explosions;
·
pipeline ruptures and spills;
·
third-party interference;
·
disruption of natural gas deliveries;
·
disruptions of electricity deliveries; and
·
mechanical failure of equipment at our refineries or third-party facilities
Any of the foregoing could result in production
and distribution difficulties and disruptions, environmental pollution, personal injury or wrongful death claims, and other damage
to our properties and the properties of others. There is also risk of mechanical failure and equipment shutdowns both in general
and following unforeseen events.
Our activities will initially be conducted
at our facility in Albania. This facility constitutes a significant portion of our operating assets. Because of the significance
to us of this operation, the occurrence of any of the events described above could significantly disrupt our processing of crude
oil, and any sustained disruption could have a material adverse effect on our business, financial condition, and results of operations.
We may incur significant costs to comply
with environmental and health and safety laws and regulations.
Our operations and properties are subject
to extensive national, state, and local environmental, health, and safety regulations governing, among other things, the generation,
storage, handling, use, and transportation of petroleum and hazardous substances, the emission and discharge of materials into
the environment, waste management, characteristics, and the monitoring, reporting, and control of greenhouse gas emissions. If
we fail to comply with these regulations, we may be subject to administrative, civil, and criminal proceedings by governmental
authorities, as well as civil proceedings by environmental groups and other entities and individuals. A failure to comply, and
any related proceedings, including lawsuits, could result in significant costs and liabilities, penalties, judgments against us,
or governmental or court orders that could alter, limit, or stop our operations.
23
In addition, new environmental laws and
regulations, including new regulations relating to alternative energy sources, new regulations relating to fuel quality, and the
risk of global climate change regulation, as well as new interpretations of existing laws and regulations, increased governmental
enforcement, or other developments could require us to make additional unforeseen expenditures. Many of these laws and regulations
are becoming increasingly stringent, and the cost of compliance with these requirements can be expected to increase over time.
We are not able to predict the impact of new or changed laws or regulations or changes in the ways that such laws or regulations
are administered, interpreted, or enforced. The requirements to be met, as well as the technology and length of time available
to meet those requirements, continue to develop and change. To the extent that the costs associated with meeting any or all of
these requirements are substantial and not adequately provided for, there could be a material adverse effect on our business, financial
condition, and results of operations.
We may not have sufficient crude oil
to be able to run our Albania facility at full capacity.
Our Albania facility will process crude
oil from the local regions around the facility. To the extent sufficient local crude oil cannot be contracted to process and we
are unable to contract sufficient crude oil from non-local sources to supply the Albania facility, we may not have sufficient crude
oil to run the Albania facility at full capacity, which could have a material adverse impact on our business, financial condition,
and results of operations.
We could incur substantial costs or
disruptions in our business if we cannot obtain or maintain necessary permits and authorizations.
Our operations require numerous permits
and authorizations under various laws and regulations, including environmental and health and safety laws and regulations. These
authorizations and permits are subject to revocation, renewal, or modification and can require operational changes, which may involve
significant costs, to limit impacts or potential impacts on the environment and/or health and safety. A violation of these authorization
or permit conditions or other legal or regulatory requirements could result in substantial fines, criminal sanctions, permit revocations,
injunctions and/or refinery shutdowns. In addition, major modifications of our operations could require modifications to our existing
permits or expensive upgrades to our existing pollution control equipment, which could have a material adverse effect on our business,
financial condition, or results of operations.
Risks Associated with our Company
and our Securities
We will be required to incur significant
costs and require significant management resources to evaluate our internal control over financial reporting as required under
Section 404 of the Sarbanes-Oxley Act, and any failure to comply or any adverse result from such evaluation may have an adverse
effect on our stock price.
As a smaller reporting company as defined
in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, we are required to evaluate our internal control over financial
reporting under Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404"). Section 404 requires us to include an
internal control report with the Annual Report on Form 10-K. This report must include management's assessment of the effectiveness
of our internal control over financial reporting as of the end of the fiscal year. This report must also include disclosure of
any material weaknesses in internal control over financial reporting that we have identified. Failure to comply, or any adverse
results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect
on the trading price of our equity securities. Management believes that its internal controls and procedures are currently not
effective to detect the inappropriate application of U.S. GAAP rules. Management realize there are deficiencies in the design or
operation of our internal control that adversely affect our internal controls which management considers to be material weaknesses
including those described below:
24
i)
The Company's management is relying on external consultants for purposes of preparing its financial reporting package
and may not be able to identify errors and irregularities in the financial reporting package before its release as a continuous
disclosure document..
ii)
As the Company is governed by one officer who is also a director, there is an inherent lack of segregation of duties and lack
of independent governing board.
Achieving continued compliance with Section
404 may require us to incur significant costs and expend significant time and management resources. We cannot assure you that we
will be able to fully comply with Section 404 or that we and our independent registered public accounting firm would be able to
conclude that our internal control over financial reporting is effective at fiscal year end. As a result, investors could lose
confidence in our reported financial information, which could have an adverse effect on the trading price of our securities, as
well as subject us to civil or criminal investigations and penalties. In addition, our independent registered public accounting
firm may not agree with our management's assessment or conclude that our internal control over financial reporting is operating
effectively.
All of our assets, and our sole officer
and director, are outside the United States, with the result that it may be difficult for investors to enforce within the United
States any judgments obtained against us or our directors and officers.
All of our assets are located outside the
United States. In addition, our sole officer and director is a national and resident of a country other than the United States,
and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors
to enforce within the United States any judgments obtained against us or our director and officers, including judgments predicated
upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be
effectively prevented from pursuing remedies under United States federal and state securities laws against us or our directors
and officers.
Our business is dependent on key executives
and the loss of any of our key executives could adversely affect our business, future operations and financial condition.
We are dependent on the services of key
executives, including our Chief Executive Officer, Art Agolli. Mr. Agolli has many years of experience and an extensive background
in the oil industry in general. We may not be able to replace that experience and knowledge with other individuals. We do not have
"Key-Man" life insurance policies on our key executives. The loss of our key executives or our inability to attract
and retain additional highly skilled employees may adversely affect our business, future operations, and financial condition.
The elimination of monetary liability
against our directors, officers and employees under Nevada law and the existence of indemnification rights to our directors, officers
and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers
and employees.
Our Articles of Incorporation contain a
provision permitting us to eliminate the personal liability of our directors to our company and shareholders for damages for breach
of fiduciary duty as a director or officer to the extent provided by Nevada law.  The foregoing indemnification obligations
could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors
and officers, which we may be unable to recoup.  These provisions and resultant costs may also discourage our company
from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the
filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful,
might otherwise benefit our company and shareholders.
25
Our stock is categorized as a penny
stock.  Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a shareholder's
ability to buy and sell our stock.
Our stock is categorized as a penny stock.  The
SEC has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price
(as defined) less than US$ 5.00 per share or an exercise price of less than US$ 5.00 per share, subject to certain exceptions.  Our
securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell
to persons other than established customers and accredited investors.  The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document
in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock
market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account.  The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's confirmation.  In addition, the penny
stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must
make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently, these penny
stock rules may affect the ability of broker-dealers to trade our securities.  We believe that the penny stock rules
discourage investor interest in and limit the marketability of our common stock.
FINRA sales practice requirements
may also limit a shareholder's ability to buy and sell our stock.
In addition to the "penny stock"
rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must
have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative
low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about
the customer's financial status, tax status, investment objectives and other information.  Under interpretations
of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for
at least some customers.  The FINRA requirements make it more difficult for broker-dealers to recommend that their customers
buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
To date, we have not paid any cash dividends
and no cash dividends will be paid in the foreseeable future.
We do not anticipate paying cash dividends
on our common stock in the foreseeable future and we may not have sufficient funds legally available to pay dividends.  Even
if the funds are legally available for distribution, we may nevertheless decide not to pay any dividends.  We presently
intend to retain all earnings for our operations.
26
A limited public trading market exists
for our common stock, which makes it more difficult for our stockholders to sell their common stock in the public markets.
Our common shares are currently traded
under the symbol "PSON," but currently with low or no volume, based on quotations on the "Over-the-Counter Bulletin
Board," meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given
time may be relatively small or non-existent.  This situation is attributable to a number of factors, including the fact
that we are a small company which is still relatively unknown to stock analysts, stock brokers, institutional investors, and others
in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons,
they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase
of our shares until such time as we became more viable.  Additionally, many brokerage firms may not be willing to effect
transactions in the securities.  As a consequence, there may be periods of several days or more when trading activity
in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share price.  We cannot give you any assurance
that a broader or more active public trading market for our common stock will develop or be sustained, or that trading levels will
be sustained.
Shareholders should be aware that, according
to SEC Release No. 34-29093, the market for "penny stocks" has suffered in recent years from patterns of fraud and
abuse.  Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and
misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5)
the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level,
along with the resulting inevitable collapse of those prices and with consequent investor losses.  Our management is
aware of the abuses that have occurred historically in the penny stock market.  Although we do not expect to be in a
position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within
the confines of practical limitations to prevent the described patterns from being established with respect to our securities.  The
occurrence of these patterns or practices could increase the future volatility of our share price.
If we issue additional shares in the
future, it will result in the dilution of our existing shareholders.
Our articles of incorporation authorize
the issuance of up to 843,750,000 shares of common stock with a par value of $0.001 per share. Our Board of Directors may choose
to issue some or all of such shares to acquire one or more companies or properties and to fund our overhead and general operating
requirements. The issuance of any such shares may reduce the book value per share and may contribute to a reduction in the market
price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate
ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.
DESCRIPTION
OF PROPERTY
Our head office is located at Suite 204, 205 – 9
th
Avenue SE, Calgary, AB, Canada, T2G 0R3.
Our director is letting the company use
his office free of charge in order to save costs until the company can lease an office when requisite funding is in place. Our
main telephone number is (403) 708-7869.
27
The company has an office in Fier, Albania
at same location where its processing plant is located. Albania's heavy oil upstream and downstream industries are located
in Fier and the facility is only a few miles away from the heavy oil producing fields. It is also located 35 kilometers away from
Albania's only deep sea port and export facility, the PIR Vlora terminal. The office is offered by the Albanian partner free
of charge until the company signs a lease agreement when requisite funding is in place.
Management's
Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis
of our results of operations and financial condition should be read in conjunction with our financial statements and the notes
to those financial statements that are included elsewhere in this Form 8-K. Our discussion includes forward-looking statements
based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.
Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a
result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements
and Business sections in this Form 8-K. We use words such as "anticipate," "estimate," "plan,"
"project," "continuing," "ongoing," "expect," "believe," "intend,"
"may," "will," "should," "could," and similar expressions to identify forward-looking
statements.
Overview
We are a development stage company focused
on the treatment and upgrading of heavy oil by sonicated solvent de-asphalting. We are in the process of bringing online our first
stand-alone facility located in Albania, which is expected to be able to process and de-asphalt up to 1,000 barrels per day of
heavy oil. We plan to generate revenue by both integrating our system into oil producer treatment facilities, as well as continuing
to develop our own standalone facilities, such as the Albania facility to capture further upside and long term value creation.
Comparison of the Three Months Ended March 31, 2012 and
2011
Sales
We
had no sales for the three months ended March 31, 2012 or during the three months ended March 31, 2011.
Selling,
general and administrative expenses, and others
Our selling, general and administrative
expenses for the three months ended March 31, 2012 decreased to $2,764, from $10,126, for the three months ended March 31, 2011.
This decrease was primarily due to an overall decrease in operating activities due to the limited availability of working capital.
We anticipate our operating expenses may increase as we ramp up our operations.
Net
loss
Our net
loss for the three months ended March 31, 2012 decreased to $2,764, from $10,126, for the three months ended March 31, 2011. This
decrease was due to a decrease in operating activities.
Effects
of foreign currency translation conversion
Foreign
currency translation adjustment for the three months ended March 31, 2012 decreased to $4,886 from $6,446 during the three months
ended March 31, 2011. This decrease was due to a decrease in operating expenses.
28
Liquidity and Capital Resources
The following information has been derived
from the financial information included herein as Exhibit 99.2.
As at March 31, 2012, we have $1,062 in
cash and $211,495 in current liabilities. As at March 31, 2012, our total assets were $715,156 and our total liabilities were $211,495.
Our net working deficit as at March 31, 2012 was $121,570.
Our cash needs are primarily for working
capital to develop our operations.  We presently finance our operations through debt and equity financings.
We plan to rely on equity, debt and cash
flow from operations to fund its growth strategy. In addition, we plan to approach heavy oil producers to form joint ventures with
them and finance the cost of processing plants by the heavy oil producers. This would expand growth at minimal cost to us as it
is being carried by the heavy oil producers. In order to assemble our equipment and commission the plant in Albania we will need
to raise approximately $500,000 by August 2012. In addition, we will need to raise an additional approximately $500,000 to be able
to increase our processing capacity in Albania. Once we have secured processing contracts it is expected that we should be able
to largely fund growth from cash flow, although there may be a continued need to rely upon additional debt or equity financing.
There are no assurances that we will be successful in securing such financing or that we will obtain terms that are favorable to
us. If we fail to obtain any financing, that will have a material adverse effect on our business and may force us to cease operations
or sell certain assets.
Cash to Operating Activities
During the three month period ended March 31, 2012, operating
activities used cash of $1,986, compared to a net gain of cash of $75,339 in operating activities for the three month period ended
March 31, 2011. The gain in cash was primarily due to an increase in accounts payable during the period.
Cash to Investing Activities
During the three month period ended March 31, 2012, investing
activities used cash of $7,307 compared to net cash used in investing activities of $104,593 for the three month period ended March
31, 2011, as the Company incurred costs towards a building in Albania during the period.
Cash from Financing Activities
During the three month period ended March 31, 2012, financing
activities generated cash of $3,814, compared to $72,753 generated in cash for the three month period ended March 31, 2011.
Contractual Obligations and Off-Balance Sheet Arrangements
Pursuant to the terms of the Purchase Agreement,
in exchange for the Assets, we issued to Sonoro a convertible debenture in the principal amount of $250,000 (the "Debenture").
The Debenture has a term of two years and is non-interest bearing. Sonoro may demand early repayment of the Debenture if the Company
completes a financing yielding aggregate gross proceeds of at least $1,750,000. At any time after we have completed an equity or
convertible debenture financing yielding aggregate proceeds of at least $500,000 (a "Qualified Financing"), the Debenture
is convertible at the holders option into shares of our common stock. The conversion price of the Debenture will be equal to the
price per share of the shares sold in the Qualified Financing or the conversion price of the shares issuable upon conversion of
the convertible debentures sold in the Qualified Financing.
29
On June 11, 2012, we entered into an agreement
with our President for a convertible debenture valued at $200,000 for funds advanced. The convertible debenture expires on June
11, 2013 ( the "Maturity Date") and bears interest at 10% per annum. At any time prior to the Maturity Date, if we
complete an equity or convertible debenture financing yielding aggregate proceeds of at least $500,000 ("Qualified Financing"),
our President may elect to convert the debenture in whole or in part into common shares of the Company at a price equal to the
price per share at which common shares of the Company are sold in the Qualified Financing, or in the case of a convertible debenture,
the price of the shares issuable upon conversion of the convertible debentures sold in the Qualified Financing.
On March 26, 2012, we entered into an agreement
with Sierra Growth, Inc. (a non-related party) whereby Sierra Growth, Inc. ("Sierra") advanced to us $50,000. The debenture
bears interest at 10% per annum and is due March 26, 2013. Until the due date, Sierra may elect to convert the debenture in whole
or in part into common shares of the Company at a conversion rate equal to the price of any aggregate financing exceeding five
hundred thousand ($500,000) dollars less a discount of 25% per share. On April 18, 2012 Sierra advanced a further $25,000 to the
Company. The debenture matures on April 18, 2013 and bears interest at 10% per annum with the same conversion features as the debenture
issued on March 26, 2012.
On June 6, 2012, Westlake Advisors Corp.
(a non-related party) advanced to us $50,000 for a convertible debenture. The debenture has a Maturity Date of one year from the
date of issuance and bears an interest rate at 10% per annum. At any time on or before the Maturity Date, Westlake Advisors Corp.
may elect to convert the debenture in whole or in part into common shares of the Company at a conversion rate equal to the price
of any aggregate financing exceeding five hundred thousand ($500,000) dollars less a discount of 25% per share.
On June 21, 2012, Jackson Bennett LLC (a
non-related party) advanced $40,000 to us by way of a convertible debenture which matures June 21, 2013 and bears an interest at
10% per annum. At any time up to and including the Maturity Date, Jackson Bennett LLC may elect to convert the debenture in whole
or in part into common shares of the Company at a conversion rate equal to the price of any aggregate financing exceeding five
hundred thousand ($500,000) dollars less a discount of 25% per share.
The following table outlines payments due
under our significant contractual obligations over the periods shown, exclusive of interest:
Payments Due by Period
Contractual Obligations
Less than
More than
At December 31, 2012
Total
1 Year
1-3 years
3-5 years
5 years
Debenture with Sonoro Energy Ltd.
$
250,000
$
250,000
Debenture with Art Agolli
200,000
200,000
Debentures with non-related parties
165,000
165,000
Total
$
615,000
$
615,000
The above table outlines our obligations
as of July 27, 2012 and does not reflect any changes in our obligations that have occurred after that date.
Except as set
forth above, we have
no significant contractual obligations, long-term debt or purchase obligations.
30
We have not entered into any other financial
guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative
contracts that are indexed to its shares and classified as shareholder's equity or that are not reflected in its consolidated
financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated
entity that provides financing, liquidity, market risk or credit support to it or engages in leasing, hedging or research and development
services with us.
Critical Accounting Estimates
Property and equipment, net
Property and equipment are carried at the
cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repair
and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve
the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains
and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over
the estimated useful lives of the assets, which are 3 to 5 years. The Company has not recognized depreciation since inception as
none of the equipment has been used in operations.
Research and development
Costs incurred in connection with the development
of new products and manufacturing methods are charged to selling, general and administrative expenses as incurred. During the years
ended December 31, 2011 and 2010, $-0- and $10,704, respectively, were expensed as research and development costs.
Recently Issued Accounting Pronouncements
The Company does not expect the adoption of any recently issued
accounting pronouncements to have a significant effect on its consolidated financial position or results of operations.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership
The Company has only one class of stock outstanding, its common
stock. The following table sets forth certain information as of July 27, 2012, with respect to the beneficial ownership of our
common stock for (i) each director and officer, (ii) all of our directors and officers as a group, and (iii) each person known
to us to own beneficially five percent (5%) or more of the outstanding shares of our common stock. As of July 27, 2012, there were
64,649,000 shares of common stock outstanding.
To our knowledge, except as indicated in the footnotes to this
table or pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with
respect to the shares of common stock indicated.
31
Name and Address of
Shares Beneficially
Percentage Beneficially
Beneficial Owner (1)
Owned
Owned
Directors and Executive Officers
Art Agolli, Chief Executive Officer, President and Director
57 Valley Woods Way, NW
Calgary AB T3B 6A5
20,000,003
30.94
%
All Officers and Directors as a Group
20,000,003
30.94
%
Principal Stockholders
Gerhard Schlombs
92 Wishing Well Drive
Toronto, ON M1T 1J9
14,625,000
22.62
%
SGP Group Inc. (2)
2
nd
Terrace W. Centreville
P.O. Box 10567
Nassau, Bahamas
4,276,284
6.61
%
(1)
Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the
SEC, shares of common stock which an individual or group has a right to acquire within 60 days pursuant to the exercise of options
or warrants are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but
are not deemed to be beneficially owned and outstanding for the purpose of computing the percentage ownership of any other person
shown in the table.
(2)
Josephine Agotilla has dispositive and voting control for SGP Group Inc.
DIRECTORS AND EXECUTIVE OFFICERS
Current Management
The following table sets forth certain information for each
executive officer of the Company.
Name
Age
Position
Art Agolli
41
President, Chief Executive Officer, Chief Financial Officer
32
Officers and Directors:
Art Agolli – President, Chief Executive Officer,
Chief Financial Officer, Director
Mr. Agolli has more than 16 years of successful
experience in developing heavy oil projects. He is currently CEO of BA Capital, a Calgary based merchant bank serving the energy,
mining and technology sectors. Mr. Agolli is co-founder and former Vice President of Bankers Petroleum Ltd., a Toronto and London
Stock Exchange listed oil and gas company, Mr. Agolli played a key role in building Bankers Petroleum since day one. From a start
up in 2004, Bankers Petroleum grew to a $2.3 billion market capitalization company during his time with the company. Bankers Petroleum
has a 100% working interest and is the operator of the largest onshore heavy oil field in Europe (Albania) with original oil in
place of 8.5 billion barrels. Mr. Agolli also played an important role with BNK Petroleum, a Toronto Stock Exchange listed company
that was spun off from Bankers Petroleum in 2008. Mr. Agolli played a key role in BNK Petroleum's entry into Poland where
the company has one of the largest shale gas land positions in the country and in Europe. BNK Petroleum grew from a start up to
a $700 million market capitalization company.
Mr. Agolli is also co-founder of Sonoro
Energy, TSX listed company that has recently signed a major oil deal in Iraq. Sonoro has exclusive rights to development of all
heavy oil of Salah ad Din Province in Iraq. Mr. Agolli has also been an international business and corporate development executive
with Koch Industries Inc, the largest privately held company in North America from 1998-201. From 2001-2003 he was CEO of Anonima
Petroli Italiana (Albania), a subsidiary company of Api Spa, one of the largest refining and trading oil companies in Italy.
Mr. Agolli started his career as a consultant
for the World Bank in Washington DC in 1997. Mr. Agolli holds a Masters Degree in Management from Grand Valley State University
(Michigan, USA) and an International Relations and Business Degree from the same university. He is a member of the Association
of International Petroleum Negotiators (Houston, USA).
Terms of Office
The Company's directors are appointed
for a one-year term to hold office until the next annual general meeting of the Company's stockholders or until removed from
office in accordance with the Company's bylaws and the provisions of the Nevada Revised Statutes. The Company's directors
hold office after the expiration of his or her term until his or her successor is elected and qualified, or until he or she resigns
or is removed in accordance with the Company's bylaws and the provisions of the Nevada Revised Statutes.
The Company's officers are appointed
by the Company's Board of Directors and hold office until removed by the Board.
Involvement in Certain Legal Proceedings
Other than as set forth above, no director,
executive officer, significant employee or control person of the Company has been involved in any legal proceeding listed in Item
401(f) of Regulation S-K in the past 10 years.
Family Relationships
There are no family relationships between
or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
33
Committees of the Board
Our Board of Directors held no formal meetings
during the 12 month period ended December 31, 2011. All proceedings of the Board of Directors were conducted by resolutions consented
to in writing by the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in
writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada Revised
Statutes and the bylaws of our company, as valid and effective as if they had been passed at a meeting of the directors duly called
and held. We do not presently have a policy regarding director attendance at meetings.
We do not currently have standing audit,
nominating or compensation committees, or committees performing similar functions. Due to the size of our board, our Board of Directors
believes that it is not necessary to have standing nominating or compensation committees at this time because the functions of
such committees are adequately performed by our Board of Directors. We do not have a nominating or compensation committee charter
as we do not currently have such committees. We do not have a policy for electing members to the board. Art Agolli is not an independent
director.
Mr. Agolli cannot be considered an "audit
committee financial expert" as defined in Item 401 of Regulation S-K. The Company does not presently have, among its officers
and directors, a person meeting these qualifications and given our financial circumstances, does not anticipate seeking an audit
committee financial expert to joint the committee in the foreseeable future.
Since inception on June 11, 2008, our Board
of Directors have conducted their business entirely by consent resolutions and have not met, as such.
It is anticipated that the Board of Directors
will form separate audit, compensation and nominating committees at such time as the Company's operations have expanded.
Section 16(a) Beneficial Ownership Reporting
Compliance
Based solely upon a review of Forms 3,
4 and 5 delivered to us as filed with the Securities Exchange Commission, our executive officers and directors, and persons who
own more than 10% of our Common Stock timely filed all required reports pursuant to Section 16(a) of the Securities Exchange Act.
Nominations to the Board of Directors
Our directors take a critical role in guiding
our strategic direction and oversee the management of the Company. Board candidates are considered based upon various criteria,
such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for
the long-term interests of the stockholders, diversity, and personal integrity and judgment.
In addition, directors must have time available
to devote to Board activities and to enhance their knowledge in the growing business. Accordingly, we seek to attract and retain
highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to the Company.
In carrying out its responsibilities, the
Board will consider candidates suggested by stockholders. If a stockholder wishes to formally place a candidate's name in
nomination, however, he or she must do so in accordance with the provisions of the Company's Bylaws.
Compensation Committee Interlocks and
Insider Participation
No interlocking relationship exists between
our board of directors and the board of directors or compensation committee of any other company, nor has any interlocking relationship
existed in the past.
34
EXECUTIVE COMPENSATION
Board Compensation
We have no standard arrangement to compensate
directors for their services in their capacity as directors. Directors are not paid for meetings attended. However, we intend to
review and consider future proposals regarding board compensation. All travel and lodging expenses associated with corporate matters
are reimbursed by us, if and when incurred.
Executive Compensation - Executive Officers
The following summary compensation table
indicates the cash and non-cash compensation earned during the fiscal years ended December 31, 2010 and December 31, 2011 by our
executive officers and each of the other two highest paid executives or directors, if any, whose total compensation exceeded $100,000
during those periods.
Summary Compensation Table
Non-Equity
Name and Principal
Stock
Option
Incentive Plan
All Other
Position
Year
Salary
Bonus
Awards
Awards
Compensation
Compensation
Total(1)
Art Agolli
2011
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Chief Executive Officer, Chief Financial Officer,
    Director
2010
$
0
$
0
$
0
$
0
$
0
$
0
$
0
(1)
The dollar value in this column for each named executive officer or director represents the sum of all compensation reflected
in the previous columns.
Employment Agreements
We do not currently have an employment
agreement with our executive officer and the manner and amount of his compensation has not yet been determined.
Potential Payments Upon Termination
or Change-in-Control
SEC regulations state that we must disclose
information regarding agreements, plans or arrangements that provide for payments or benefits to our executive officers in connection
with any termination of employment or change in control of the company.
We currently have no employment agreements
nor any compensatory plans or arrangements with any of our executive officers that may result from the resignation, retirement
or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer's
responsibilities following a change-in-control.
35
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AND DIRECTOR INDEPENDENCE
Certain Relationships and Transactions
On April 17, 2012, the Company entered
into an Assignment Agreement (the "Assignment Agreement") with Art Agolli, the Company's sole officer and member
of our board of directors (the "Board"), pursuant to which Mr. Agolli agreed to convey to the Company, all of his right,
title, and interest in and to a certain letter of intent between Mr. Agolli and Sonoro Energy Ltd., in consideration for the issuance
of 20,000,003 (1,777,778 pre-split )fully paid and assessable restricted shares of the Company's common stock.
On April 6, 2012, $42,000 was repaid to
our former President for funds previously advanced to the Company for additional working capital.
On June 11, 2012, we entered into an agreement
with Art Agolli, our President, for a convertible debenture valued at $200,000 for funds advanced. The convertible debenture expires
on June 11, 2013 (the "Maturity Date") and bears interest at 10% per annum. At any time prior to the Maturity Date,
if we complete an equity or convertible debenture financing yielding aggregate proceeds of at least $500,000 ("Qualified
Financing"), our President may elect to convert the debenture in whole or in part into common shares of the Company at a
price equal to the price per share at which common shares of the Company are sold in the Qualified Financing, or in the case of
a convertible debenture, the price of the shares issuable upon conversion of the convertible debentures sold in the Qualified Financing.
Review, Approval or Ratification of
Transactions with Related Persons
We rely on our
Board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our Board reviews a transaction
in light of the affiliations of the director, officer or employee and the affiliation's of such person's immediate
family. Transactions are presented to our Board for approval before they are entered into or, if this is not possible, for ratification
after the transaction has occurred. If our Board finds that a conflict of interest exists, then it will determine the appropriate
remedial action, if any. Our Board approves or ratifies a transaction if it determines that the transaction is consistent with
the best interests of the Company.
Director Independence
During the year ended December 31, 2011,
we had no independent directors. Our current sole director, Art Agolli, is not independent. We evaluate independence by the standards
for director independence established by applicable laws, rules, and listing standards including, without limitation, the standards
for independent directors established by The New York Stock Exchange, Inc., The NASDAQ National Market, and the Securities and
Exchange Commission.
Subject to some exceptions, these standards
generally provide that a director will not be independent if (a) the director is, or in the past three years has been, an employee
of ours; (b) a member of the director's immediate family is, or in the past three years has been, an executive officer of
ours; (c) the director or a member of the director's immediate family has received more than $120,000 per year in direct
compensation from us other than for service as a director (or for a family member, as a non-executive employee); (d) the director
or a member of the director's immediate family is, or in the past three years has been, employed in a professional capacity
by our independent public accountants, or has worked for such firm in any capacity on our audit; (e) the director or a member of
the director's immediate family is, or in the past three years has been, employed as an executive officer of a company where
one of our executive officers serves on the compensation committee; or (f) the director or a member of the director's immediate
family is an executive officer of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month
period during the past three years, exceeds the greater of $1,000,000 or two percent of that other company's consolidated
gross revenues.
36
LEGAL PROCEEDINGS
None.
MARKET PRICE OF AND DIVIDENDS ON COMMON
EQUITY
AND RELATED SHAREHOLDER MATTERS
Market Information
Our common stock is not listed on any stock
exchange. Although our common stock is listed on the Over-the-Counter Bulletin Board ("OTCBB") under the symbol "PSON,"
there is no established public market for shares of our common stock, and there has been a limited number of trades of our common
stock on the OTCBB during the last two fiscal years. There is not currently a bid or ask price information for shares of our common
stock on the OTCBB.
Holders
As of July 27, 2012, there were approximately
51 shareholders of record of our common stock based upon the shareholders' listing provided by our transfer agent. Our transfer
agent is Signature Stock Transfer, Inc. The transfer agent's address is 2632 Coachlight Court, Plano, Texas 75093 and its
phone number is (972) 612-4120.
Dividends
We have never paid cash dividends on our
common stock. We intend to keep future earnings, if any, to finance the expansion of our business, and we do not anticipate that
any cash dividends will be paid in the foreseeable future. Our future payment of dividends will depend on our earnings, capital
requirements, expansion plans, financial condition and other relevant factors that our board of directors may deem relevant. Our
retained earnings deficit currently limits our ability to pay dividends.
RECENT SALES OF UNREGISTERED SECURITIES
Reference is made to Item 3.02 of this
Form 8-K for a description of recent sales of unregistered securities, which is hereby incorporated by reference.
37
DESCRIPTION OF SECURITIES
The following information describes our
capital stock and provisions of our articles of incorporation and our bylaws, all as in effect upon the Closing of the Transaction.
This description is only a summary. You should also refer to our articles of incorporation, bylaws and articles of amendment which
have been incorporated by reference or filed with the Securities and Exchange Commission as exhibits to this Form 8-K.
Common Stock
Our authorized capital stock consists of
843,750,000 shares of common stock at a par value of $0.001 per share. Holders of common stock are entitled to one vote for each
share on all matters submitted to a shareholder vote. Holders of common stock do not have cumulative voting rights. Holders of
common stock are entitled to all dividends that the board of directors, in its discretion, declares from legally available funds.
In the event of our liquidation, dissolution or winding up, each outstanding share entitles its holder to participate in all assets
that remain after payment of liabilities.
Holders of common stock have no conversion,
preemptive or other subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock.
The rights of the holders of common stock are subject to any rights that may be fixed for holders of preferred stock, when and
if any preferred stock is authorized and issued. All outstanding shares of common stock are duly authorized, validly issued, fully
paid and non-assessable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Nevada Law
Section 78.7502 of the Nevada Revised Statutes
permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he:
(a)
is not liable pursuant to Nevada Revised Statute 78.138, or
(b)
acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
In addition, Section 78.7502 permits a
corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including
amounts paid in settlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he:
38
(a)
is not liable pursuant to Nevada Revised Statute 78.138; or
(b)
acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation.
To the extent that a director, officer,
employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding
referred to above, or in defense of any claim, issue or matter, the corporation is required to indemnify him against expenses,
including attorneys' fees, actually and reasonably incurred by him in connection with the defense.
Section 78.752 of the Nevada Revised Statutes
allows a corporation to purchase and maintain insurance or make other financial arrangements on behalf of any person who is or
was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted
against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out
of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses.
Other financial arrangements made by the corporation pursuant
to Section 78.752 may include the following:
(a)
the creation of a trust fund;
(b)
the establishment of a program of self-insurance;
(c)
the securing of its obligation of indemnification by granting a security interest or other lien on any assets of the corporation;
and
(d)
the establishment of a letter of credit, guaranty or surety
No financial arrangement made pursuant
to Section 78.752 may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals,
to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses
or indemnification ordered by a court.
Any discretionary indemnification pursuant
to NRS 78.7502, unless ordered by a court or advanced pursuant to an undertaking to repay the amount if it is determined by a court
that the indemnified party is not entitled to be indemnified by the corporation, may be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances.
The determination must be made:
(a)
by the stockholders;
(b)
by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or
proceeding;
(c)
if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by
independent legal counsel in a written opinion, or
(d)
if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
39
FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
Reference is made to the financial statements and supplementary
data included in Exhibits 99.1, 99.2 and 99.3, which is incorporated herein by reference.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
Section 3 – Securities and Trading Markets
Item 3.02.       Unregistered
Sales of Equity Securities.
Pursuant to the terms of the Purchase Agreement,
in exchange for the Assets, we issued to Sonoro a convertible debenture in the principal amount of $250,000 (the "Debenture").
The Debenture has a term of two years and is non-interest bearing. At any time after we have completed an equity or convertible
debenture financing yielding aggregate proceeds of at least $500,000 (a "Qualified Financing"), the Debenture is convertible
at the holders option into shares of our common stock. The conversion price of the Debenture will be equal to the price per share
of the shares sold in the Qualified Financing or the conversion price of the shares issuable upon conversion of the convertible
debentures sold in the Qualified Financing.
The Debenture was issued to Sonoro pursuant to the exemption
from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transaction took place outside
the United States of America with a non-US person.
Subsequent to the preparation of the March
31, 2012 and 2011 financial statements, we have issued several Convertible Debentures to raise $165,000 for general working capital.
Debentures for $50,000, $25,000, $50,000 and $40,000 were issued to three non-related parties. The debentures bear interest at
10% per annum and mature one year from the issuance date. Until the due date, the holder(s) may elect to convert the debenture
in whole or in part into common shares of the Company at a conversion rate equal to the price of any aggregate financing exceeding
five hundred thousand ($500,000) dollars less a discount of 25% per share. The convertible notes were offered
pursuant
to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions
took place outside the United States of America with non-US persons.
Furthermore, on June 11, 2012, we entered
into an agreement with our President for a convertible debenture valued at $200,000 for funds advanced. The convertible debenture
matures June 11, 2013 and bears interest at 10%. At any time prior to the Maturity Date, if we complete an equity or convertible
debenture financing yielding aggregate proceeds of at least $500,000 ("Qualified Financing"), our President may elect
to convert the debenture in whole or in part into common shares of the Company at a price equal to the price per share at which
common shares of the Company are sold in the Qualified Financing, or in the case of a convertible debenture, the price of the shares
issuable upon conversion of the convertible debentures sold in the Qualified Financing.
The Debenture
was issued to Mr. Agolli pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as
amended, in that the transaction took place outside the United States of America with a non-US person.
40
Section 5 – Corporate Governance and Management
Item 5.06 Change in Shell Company Status
Following the consummation of the Transaction in Item 2.01 of
this Current Report on Form 8-K, which is incorporated by reference herein, we believe that we are not a shell corporation as that
term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act. From and after the Closing Date, our primary
operations consist of utilizing the Assets to develop a business relating to the treatment and upgrading of heavy oil by sonicated
solvent de-asphalting and operating the business of AlbaniaCo.
Section 9 – Financial Statement and Exhibits
Item 9.01.        Financial
Statement and Exhibits.
Reference is made to the Transaction under the Purchase Agreement,
as described in Item 2.01 above, which is incorporated herein by reference.
(a)
Financial
Statements of the Business Acquired
The audited financial statements of Petrosonic
Albania Sha. for the for the twelve months ended December 31, 2011 and unaudited financial statements for the period from January
1, 2012 to March 31, 2012, including the notes to such financial statements, are incorporated herein by reference to Exhibit 99.1
and 99.2 of this Form 8-K.
(b)
Pro
Forma Financial Information
Incorporated by reference to Exhibit 99.3
attached hereto.
(c)
Shell
Company Transactions
Reference is made to Items 9.01(a) and
9.01(b) above and the exhibits referred to therein, which are incorporated herein by reference.
(d)
Exhibits
Exhibit No.
Description
2.1
Asset Purchase and Sale Agreement dated July 27, 2012*
3.1
Articles of Incorporation of the Registrant (incorporated by reference from Registrant's Registration Statement on Form S-1 filed on December 19, 2008)
3.2
Amendment to Articles of Incorporation of the Registrant (incorporated by reference from Registrant's Current Report on Form 8-K filed on May 18, 2012)
3.3
Bylaws of the Registrant (incorporated by reference from Registrant's Registration Statement on Form S-1 filed on December 19, 2008)
10.1
Assignment Agreement, dated as of April 17, 2012 (incorporated by reference from Registrant's Current Report on Form 8-K filed on April 20, 2012)
10.2
Sonoro Convertible Debenture, dated July 27, 2012*
10.3
Non-Compete Agreement, dated July 27, 2012*
10.4
Consulting Agreement, dated July 27, 2012*
10.5
Share Purchase Agreement, dated July 27, 2012*
10.6
Iraq License Agreement, dated July 27, 2012*
99.1
Audited Financial Statements of Petrosonic Albania Sha. for the twelve months ended December 31, 2011 *
99.2
Unaudited Financial Statements of Petrosonic Albania Sha. for the period from January 1, 2012 to March 31, 2012*
99.3
Pro Forma Financial Information*
* Filed herewith
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date:  July 27, 2012
Petrosonic Energy, Inc.
By:
/
s/ ART AGOLLI
Art Agolli
Chief Executive Officer
42