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

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

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM S-1</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>REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933</B></P>

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

<P STYLE="font: 24pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AMBICOM HOLDINGS, INC.</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">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <TD STYLE="width: 34%; font-weight: bold; text-align: center">Nevada</TD>
    <TD STYLE="width: 32%; font-weight: bold; text-align: center">3829</TD>
    <TD STYLE="width: 34%; font-weight: bold; text-align: center">26-2964607</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">(State or other jurisdiction of</TD>
    <TD STYLE="text-align: center">(Primary Standard Industrial</TD>
    <TD STYLE="text-align: center">(I.R.S. Employer Identification No.)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">incorporation or organization)</TD>
    <TD STYLE="text-align: center">Classification Code)</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
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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>500&nbsp;&nbsp;Alder Drive, Milpitas,&nbsp;&nbsp;CA&nbsp;&nbsp;95035&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Telephone: (408) 321-0822</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Address and telephone number of Registrant's
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">State Agent and Transfer Syndicate, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">112 North Curry Street</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Carson City, Nevada&nbsp;&nbsp;89703</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(775) 882-1013</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;(Name, address, including zip code,
and telephone number, including area code, of agent for service)</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">Copies of notices and other communications
should be sent to:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Approximate date of commencement of
proposed sale to the public: </B>From time to time after this Registration Statement is declared effective.</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">If
any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, please check the following box:&nbsp;&nbsp;</FONT><FONT STYLE="font-family: Wingdings">x</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">If
this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering.&nbsp;&nbsp;</FONT><FONT STYLE="font-family: Wingdings">&uml;</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">If
this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;</FONT><FONT STYLE="font-family: Wingdings">&uml;</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">If
this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;</FONT><FONT STYLE="font-family: Wingdings">&uml;</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">If
delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box: </FONT><FONT STYLE="font-family: Wingdings">&uml;</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">Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.&nbsp;&nbsp;See the
definitions of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer&rdquo; and &ldquo;smaller reporting company&rdquo;
in Rule 12b-2 of the Exchange Act.&nbsp;&nbsp;(Check one):</P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 20%">Large Accelerated Filer</TD>
    <TD STYLE="width: 40%"><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD>
    <TD STYLE="width: 25%">Accelerated Filer</TD>
    <TD STYLE="width: 15%"><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Non-accelerated Filer</TD>
    <TD><FONT STYLE="font-family: Wingdings">&uml;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">(Do not check if smaller reporting company)</FONT></TD>
    <TD>Smaller reporting company</TD>
    <TD><FONT STYLE="font-family: Wingdings">x</FONT></TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&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: center"><B>CALCULATION OF REGISTRATION FEE</B></P>

<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 NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Title of Each Class of<BR> Securities to be Registered</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount to<BR> be<BR> Registered</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Proposed<BR> Maximum<BR> Offering<BR> Price Per<BR> Share (1)</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Proposed<BR> Maximum<BR> Aggregate<BR> Offering<BR> Price (1)</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount of<BR> Registration<BR> Fee</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="3">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="3">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="3">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="3">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; padding-bottom: 1pt">Common Stock, $0.001 par value per share (1)</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">20,000,000</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">0.127</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">2,400,000</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">275.04</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">TOTAL</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&nbsp;&nbsp;</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.12</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,400,000</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">275.04</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">(1) The shares of our Common Stock being
registered hereunder are being registered for (i) resale by Kodiak Capital Group, LLC in accordance with the terms of an investment
agreement between Kodiak Capital Group, LLC and the Company. The number of shares of our Common Stock registered hereunder represents
a good faith estimate by us of the number of shares of our Common Stock issuable upon delivery of a &ldquo;put&rdquo; notice.&nbsp;&nbsp;&nbsp;Should
the number of shares being registered be an insufficient number of shares to fully utilize the credit facility, the Company will
not rely upon Rule 416, but will file a new registration statement to cover the resale of such additional shares should that become
necessary.</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">(2) Estimated solely for purposes of calculating
the registration fee under Rule 457 under the Securities Act, using the last closing price as reported on the Over-the-Counter
Bulletin Board (the &ldquo;OTCBB&rdquo;) on July 5, 2012, which was $0.12 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">In the event of a stock split, stock dividend,
or similar transaction involving the common stock, the number of shares registered shall automatically be increased to cover the
additional shares of common stock issuable pursuant to Rule 416 under the Securities Act.</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>The Registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act, or until this registration statement shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.&nbsp;</B></P>

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

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<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>THE INFORMATION IN THIS PROSPECTUS IS
NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.</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; text-align: center"><B>PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
DATED JULY 5, 2012</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>AMBICOM HOLDINGS, INC.</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">20,000,000 Shares of Common Stock, par value
$0.001</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; text-indent: 0.5in">This prospectus relates
to the offering from time to time of up to 20,000,000 shares of the common stock of AmbiCom Holdings, Inc., a Nevada corporation
(&ldquo;AmbiCom&rdquo;, &ldquo;we&rdquo;, &ldquo;our&rdquo;, &ldquo;us&rdquo;, or &ldquo;Company&rdquo;), to and by Kodiak Capital
Group, LLC, a Delaware limited liability company (&ldquo;Kodiak&rdquo; or&nbsp;&nbsp;&ldquo;Kodiak Capital&rdquo;)), and pursuant
to a &ldquo;put right&rdquo; under an investment agreement, also referred to as an equity line of credit that the Company has entered
into with Kodiak Capital.&nbsp;&nbsp;The investment agreement permits us to &ldquo;put&rdquo; up to $1,000,000 of shares of our
common stock to Kodiak Capital.&nbsp;&nbsp;Pursuant to registration rights granted to Kodiak Capital, we are obligated to register
the shares acquired by Kodiak Capital.&nbsp;&nbsp;AmbiCom is not selling any shares of common stock in that resale offering.&nbsp;&nbsp;We,
therefore, will not receive any proceeds from the sale of the shares by the selling shareholders.&nbsp;&nbsp;We will, however,
receive proceeds from the sale of securities pursuant to our exercise of the put right.</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; text-indent: 0.5in">The selling shareholders
may sell common stock from time to time in the principal market on which the stock will be traded at the prevailing market price
or in negotiated transactions.&nbsp;&nbsp;The selling shareholders have informed us that they do not have any agreement or understanding,
directly or indirectly, with any person to distribute their common stock. The selling shareholders may, however, be deemed underwriters
of the shares of common stock that they are offering.&nbsp;&nbsp;AmbiCom will pay the expenses of registering these shares.</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; text-indent: 0.5in">Upon the effective
date of this registration statement, Kodiak Capital will commit to purchase up to $1,000,000 worth of our common stock over a 24
month period.&nbsp;&nbsp;The amount that the Company shall be entitled to put to Kodiak shall be $25,000. The offering price of
these securities will equal 80% of the lowest closing highest posted bid price of the common stock of AmbiCom during the five consecutive
trading days immediately after the put date.&nbsp;&nbsp;There will be no underwriter discounts or commissions.</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; text-indent: 0.5in">Our common stock is
quoted on the Over-the-Counter Markets (&ldquo;OTC&rdquo;) under the symbol &ldquo;ABHI.OB&rdquo;. The last reported sale price
of our common stock on the OTCBB on July 5, 2012 was approximately $0.12 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; text-indent: 0.5in">NEITHER THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.</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>PLEASE REFER TO &quot;RISK FACTORS&quot;
BEGINNING ON PAGE 3.</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"><B>The purchase of the securities offered
through this prospectus involves a high degree of risk. You should invest in our common stock only if you can afford to lose your
entire investment. You should carefully read and consider the section of this prospectus titled &quot;Risk Factors&quot; beginning
on page 3 before buying any shares of our 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"><B>The information in this prospectus is
not complete and may be changed.&nbsp;&nbsp;The Selling Shareholder may not sell or offer these securities until the registration
statement of which this prospectus forms a part filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.</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">The date of this prospectus is July 5,
2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&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>TABLE OF CONTENTS</B></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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 93%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 6%; text-align: center">Page</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Prospectus Summary</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Risk Factors</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-decoration: none">Risk Specific to Us</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Risk Relating to the Securities Markets and Investments in Our Common Stock</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">3</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Risks Relating to this Offering</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">7</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Use of Proceeds</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">8</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Determination of Offering Price</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">8</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Dilution</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">8</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Selling Shareholders</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">9</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Investment Agreement</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">10</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Plan of Distribution</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">11</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Description of Securities</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">13</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Interest of Named Experts and Counsel</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">16</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Description of the Business</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">16</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Description of Property</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">20</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Legal Proceedings</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">20</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Market for Common Equity and Related Matters</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">20</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">23</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Changes in and Disagreements with Accountants</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">29</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Directors, Executive Officers and Control Persons</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">29</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Executive Compensation</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">30</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Security Ownership of Certain Beneficial Owners and Management</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">31</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Certain Relationships and Related Transactions</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">32</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Disclosure on Commission Position on Indemnification for Securities Act Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>ITEM II - Information Not Required in Prospectus</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Other Expenses of Issuance and Distribution</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">33</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Indemnification for Securities Act Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">33</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Recent Sales of Unregistered Securities</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">33</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Where You Can Find More Information</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">34</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Exhibits</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">34</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Undertakings</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">35</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Signatures</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">36</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Financial Statements</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">F-1</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&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: center"><B>FORWARD-LOOKING STATEMENTS</B></P>

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

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white">
<TR>
    <TD STYLE="width: 100%; border: black 1.5pt solid; padding: 1.2pt">
        <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; text-indent: 0.25in">This Prospectus contains
        forward-looking statements. Such forward-looking statements include statements regarding, among other things, (a) our projected
        sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans and
        (e) our anticipated needs for working capital. Forward-looking statements, which involve assumptions and describe our future plans,
        strategies, and expectations, are generally identifiable by use of the words &ldquo;may&rdquo;, &ldquo;will&rdquo;, &ldquo;should&rdquo;,
        &ldquo;expect&rdquo;, &ldquo;anticipate&rdquo;, &ldquo;estimate&rdquo;, &ldquo;believe&rdquo;, &ldquo;intend&rdquo; or &ldquo;project&rdquo;
        or the negative of these words or other variations on these words or comparable terminology. This information may involve known
        and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially
        different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements
        may be found under &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations&rdquo; and
        &ldquo;Business&rdquo; as well as in this Prospectus generally. Actual events or results may differ materially from those discussed
        in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under &ldquo;Risk
        Factors&rdquo; and matters described in this Prospectus generally. In light of these risks and uncertainties, there can be no assurance
        that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required
        to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required
        statements, in light of the circumstances under which they are made, not misleading.</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>ABOUT THIS PROSPECTUS</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: justify; text-indent: 0.5in">You should only rely
on the information contained in this prospectus.&nbsp;&nbsp;We have not authorized anyone to give any information or make any representation
about this offering that differs from, or adds to, the information in this prospectus or in its documents that are publicly filed
with the SEC.&nbsp;&nbsp;Therefore, if anyone does give you different or additional information, you should not rely on it.&nbsp;&nbsp;The
delivery of this prospectus does not mean that there have not been any changes in our condition since the date of this prospectus.&nbsp;&nbsp;If
you are in a jurisdiction where it is unlawful to offer the securities offered by this prospectus, or if you are a person to whom
it is unlawful to direct such activities, then the offer presented by this prospectus does not extend to you.&nbsp;&nbsp;This prospectus
speaks only as of its date except where it indicates that another date applies.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Market data and certain
industry forecasts used in this prospectus were obtained from market research, publicly available information and industry publications.
We believe that these sources are generally reliable, but the accuracy and completeness of such information is not guaranteed.
We have not independently verified this information, and we do not make any representation as to the accuracy of such information.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&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: center"><B>PROSPECTUS SUMMARY</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; text-indent: 0.5in"><I>This summary highlights
information contained elsewhere in this prospectus.&nbsp;&nbsp;This summary does not contain all of the information you should
consider before investing in our common stock. You should read the entire prospectus carefully, especially the &ldquo;Risk Factors&rdquo;
section and our financial statements and the related notes appearing at the end of this, before deciding to invest in our common
stock.&rdquo;</I></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"><B>The Offering</B></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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 18%; font-weight: bold">Common Stock Being Offered By Selling Shareholders</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 80%">20,000,000 shares of Common Stock issuable to Kodiak Capital Group, LLC pursuant to an Investment Agreement with us dated October 31, 2011 (the &ldquo;Investment Agreement&rdquo; or &ldquo;Equity Line of Credit&rdquo;)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">Terms of the Offering</TD>
    <TD>&nbsp;</TD>
    <TD>The Selling Shareholders will determine when and how they will sell the Common Stock offered in this prospectus.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">Termination of the Offering</TD>
    <TD>&nbsp;</TD>
    <TD>The offering will conclude upon the earliest of (i) such time as all of the Common Stock has been sold pursuant to the registration statement, (ii) two years or (iii) such time as all of the Common Stock become eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;), or any other rule of similar effect.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">Use of Proceeds</TD>
    <TD>&nbsp;</TD>
    <TD>We are not selling any shares of Common Stock in this offering and, as a result, will not receive any proceeds from this offering.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">Trading Symbol</TD>
    <TD>&nbsp;</TD>
    <TD>&ldquo;ABHI.OB&rdquo;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">Risk Factors</TD>
    <TD>&nbsp;</TD>
    <TD>The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See &ldquo;Risk Factors&rdquo; beginning on page 3.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&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: center"><B>RISK FACTORS</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 business, financial condition, operating
results and prospects are subject to the following risks. Additional risks and uncertainties not presently foreseeable to us may
also impair our business operations. If any of the following risks actually occurs, our business, financial condition or operating
results could be materially adversely affected. In such case, the trading price of our common stock could decline, and our shareholders
may lose all or part of their investment in the shares of our 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"><B>RISK FACTORS</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">Investing in the Company's common stock
involves a high degree of risk. Prospective investors should carefully consider the risks described below, together with all of
the other information included or referred to in this Registration, before purchasing shares of the Company's common stock. There
are numerous and varied risks, known and unknown, that may prevent the Company from achieving its goals. The risks described below
are not the only ones the Company will face. If any of these risks actually occur, the Company's business, financial condition
or results of operation may be materially adversely affected. In such case, the trading price of the Company's common stock could
decline and investors in the Company's common stock could lose all or part of their investment.</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>Risks Specific to Us</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"><B><I>If our products do not gain expected
market acceptance, prospects for our sales revenue and profit may be affected.</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">The healthcare industry&rsquo;s
relative unfamiliarity with wireless medical products may slow their market acceptance. Potential customers for our devices
and systems may be reluctant to adopt these as alternatives to traditional technologies because of regulatory and other
factors beyond the Company&rsquo;s control Obstacles to widespread adoption of our devices include inability to achieve
market penetration before they are rendered obsolete.</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>If we are not able to compete effectively
with other competitors, our prospects for future growth will be jeopardized.</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">There is significant competition in the
healthcare industry with more established companies. We are not only competing with other wireless device providers but also with
companies offering traditional medical products, which are usually more established and have greater resources to devote to research
and development, manufacturing and marketing.&nbsp;&nbsp;In addition, we compete with large companies such as Cisco which have
advantages of global marketing capabilities and substantially greater resources to devote to research and development and marketing.</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 competitors may promote devices which
are more readily accepted by customers and we may be required to reduce the prices of our products in order to remain competitive.</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>Downturns in general economic and
market conditions could materially and adversely affect our business.</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">A significant amount of medical device
purchases are related to the budgets and purchasing of medical facilities generally and hospitals in particular.&nbsp;&nbsp;A reduction
in spending and budgets would likely cause a reduction in the demand for our products.&nbsp;&nbsp;If these facilities have less
funds budgeted as a result of general economic conditions, sales of our wireless medical products for which they have budgeted
would likely be influenced by general economic downturns.</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><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If critical components become unavailable
or contract manufacturers delay their production, our business will be negatively impacted.</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">Stability of component supply is crucial
to determine our manufacturing process. As some critical devices and components are supplied by certain third-party manufacturers,
we may be unable to acquire necessary amounts of key components at competitive prices.</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">Outsourcing the production of certain parts and components is
one way to reduce manufacturing costs. We have selected these particular manufacturers based on their ability to consistently produce
these products according to our requirements in an effort to obtain the best quality product at the most cost effective price.
However, the loss of all or one of these suppliers or delays in obtaining shipments could have an adverse effect on our operations
until an alternative supplier could be found, if one may be located at all.&nbsp;&nbsp;This may cause us to breach our contracts
and lose sales.</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>If our contract manufacturers fail
to meet our requirements for quality, quantity and timeliness, our business growth could be harmed.</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">We design and outsource our products to
contract manufacturers.&nbsp;&nbsp;These manufacturers procure most of the raw materials for us and provide all necessary facilities
and labor to manufacture our products. If these companies were to terminate their agreements with us without adequate notice, or
fail to provide the required capacity and quality on a timely basis, we would be delayed in our ability or unable to process and
deliver our products to our customers.</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>Our products could contain defects
or they may be installed or operated incorrectly, which could reduce sales of those products or result in claims against us.</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">Although we have quality assurance practices
to ensure good product quality, defects still may be found in the future in our existing or future 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">End-users could lose their confidence in
our products and Company when they unexpectedly use defective products or use our products improperly.&nbsp;&nbsp;This could result
in loss of revenue, loss of profit margin, or loss of market share.&nbsp;&nbsp;Moreover, because our products are employed in the
healthcare industry, if one of our products is a cause, or perceived to be the cause, of injury or death to a patient, we would
likely be subject to a claim.&nbsp;&nbsp;If we were found responsible it could cause us to incur liability which could interrupt
or even cause us to terminate some or all of our 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>If we are unable to recruit and retain
qualified personnel, our business could be harmed.</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">Our growth and success highly depend on
qualified personnel. Competition in the industry could cause us difficulty in recruiting or retaining a sufficient number of qualified
technical personnel, which could harm our ability to develop new products. If we are unable to attract and retain necessary key
talents, it would harm our ability to develop competitive product and retain good customers and could adversely affect our business
and operating results.</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>Risks Related to the Securities Markets
and Investments in Our 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"><B><I>Because our common stock is quoted
on the &ldquo;Over the Counter Market,&rdquo; your ability to sell shares in the secondary trading market may be limited.</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">Our common stock is currently quoted on
the over-the-counter market on the OTC Electronic Bulletin Board. Consequently, the liquidity of our common stock is impaired,
not only in the number of shares that are bought and sold, but also through delays in the timing of transactions, and coverage
by security analysts and the news media, if any, of our company. As a result, prices for shares of our common stock may be lower
than might otherwise prevail if our common stock was quoted and traded on Nasdaq or a national securities exchange.</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>Because our shares are &quot;penny
stocks,&quot; you may have difficulty selling them in the secondary trading market.</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">Federal regulations under the Securities
Exchange Act of 1934 regulate the trading of so-called &quot;penny stocks,&quot; which are generally defined as any security not
listed on a national securities exchange or Nasdaq, priced at less than $5.00 per share and offered by an issuer with limited net
tangible assets and revenues. Since our common stock currently is quoted on the &quot;OTCBB&quot; at less than $5.00 per share,
our shares are &quot;penny stocks&quot; and may not be traded unless a disclosure schedule explaining the penny stock market and
the risks associated therewith is delivered to a potential purchaser prior to any trade.</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: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, the Securities and Exchange
Commission has adopted a number of rules to regulate &quot;penny stocks&quot;. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3,&nbsp;&nbsp;15g-4,&nbsp;&nbsp;15g-5,
15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended.&nbsp;&nbsp;Because our securities constitute
&ldquo;penny stocks&quot;, within the meaning of the rules, the rules would apply to us and to our securities.&nbsp;&nbsp;The rules
will further affect the ability of owners of shares to sell their securities in any market that might develop for them because
it imposes additional regulatory burdens on penny stock transactions.</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 Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter
or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
(iii) &quot;boiler room&quot; practices involving high-pressure sales tactics and unrealistic price projections by inexperienced
salespersons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale
dumping of the same securities by promoters and&nbsp;&nbsp;broker-dealers after prices have been manipulated to a desired level,
leaving investors with 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 the Company's securities.</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"><B><I>By virtue of being a public company, the company is subject
to certain regulations and expenses.</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; text-align: justify">The Company is publicly-traded and, accordingly,
subject to the information and reporting requirements of the U.S. securities laws. The U.S. securities laws require, among other
things, review, audit, and public reporting of the Company&rsquo;s financial results, business activities, and other matters.&nbsp;&nbsp;Recent
SEC regulation, including regulation enacted as a result of the Sarbanes-Oxley Act of 2002, has also substantially increased the
accounting, legal, and other costs related to becoming and remaining an SEC reporting company.&nbsp;&nbsp;The public company costs
of preparing and filing annual and quarterly reports, and other information with the SEC, and furnishing audited reports to shareholders
will cause the Company&rsquo;s expenses to be higher than if privately-held.&nbsp;&nbsp;In addition, the Company will incur substantial
expenses in connection with the preparation of the Registration Statement and related documents with respect to the registration
of the shares issued in the Offering. These increased costs may be material and may include the hiring of additional employees
and/or the retention of additional advisors and professionals. Failure by the Company to comply with the federal securities laws
could result in private or governmental legal action against the Company and/or our officers and directors, which could have a
detrimental effect on the Company's business and finances, the value of the Company&rsquo;s stock, and the ability of shareholders
to resell their stock.</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"><B><I>We may face a claim from the minority shareholders of
our operating subsidiaries.</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; text-align: justify">On May 21, 2009, AmbiCom Acquisition Corp.
acquired AmbiCom, Inc.&nbsp;&nbsp;AmbiCom, Inc. was unable to obtain the consent of all of its minority shareholders to the transaction.&nbsp;&nbsp;Accordingly,
pursuant to the provisions of California corporate law, there is a risk that one or all of these minority shareholders may attempt
to assert dissenter&rsquo;s rights in accordance with the transaction.&nbsp;&nbsp;While the Company believes it has taken steps
to protect itself against such an action, there is no guarantee that if an action were commenced against the Company that it could
be resolved or resolved on terms favorable 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"><B><I>Our stock price may be volatile and
your investment in our common stock could suffer a decline in value.</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">Trading activities in the Company&rsquo;s
common stock has been limited and prices volatile.&nbsp;&nbsp;There can be no assurance that a stable market will ever develop
in the Company&rsquo;s common stock in the future.&nbsp;&nbsp;If a stable market does not develop, investors could be unable to
sell their shares of the Company&rsquo;s common stock, possibly resulting in a complete loss of any funds invested.&nbsp;&nbsp;Should
a stable market develop, the price may fluctuate significantly in response to a number of factors, many of which are beyond our
control. These factors include:</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"></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: 4%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol; text-align: justify">&middot;</TD>
    <TD STYLE="width: 93%; text-align: justify">Acceptance of our products in the industry.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Announcements of technological innovations or new products by us or our competitors.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Government regulatory action affecting our products or our competitors' products.</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"></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: 4%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 93%">Developments or disputes concerning patent or proprietary rights.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Economic conditions in the United States or abroad.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Actual or anticipated fluctuations in our operating results.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Broad market fluctuations.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>Changes in financial estimates by securities analysts.</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"><B><I>A registration of a significant amount of our outstanding
restricted stock may have a negative effect on the trading price of our stock.</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; text-align: justify">At July 5, 2012, shareholders of the Company
had approximately 5,278,006 shares of restricted stock, or approximately 54% of the outstanding common stock. If we were to file
a registration statement including all of these shares, and the registration is allowed by the SEC, these shares would be freely
tradable upon the effectiveness of the registration statement. If investors holding a significant number of freely tradable shares
decide to sell them in a short period of time following the effectiveness of a registration statement, such sales could contribute
to significant downward pressure on the price of our 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"><B><I>We do not intend to pay any cash
dividends to common shareholders in the foreseeable future and, therefore, any return on your investment in our capital stock must
come from increases in the fair market value and trading price of the capital stock.</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">We have not paid any cash dividends on
our common stock and do not intend to pay cash dividends on our common stock in the foreseeable future.&nbsp;&nbsp;We intend to
retain future earnings, if any, for reinvestment in the development and expansion of our business.&nbsp;&nbsp;Any credit agreements,
which we may enter into with institutional lenders, may restrict our ability to pay dividends.&nbsp;&nbsp;Whether we pay cash dividends
in the future will be at the discretion of our board of directors and will be dependent upon our financial condition, results of
operations, capital requirements and any other factors that the board of directors decides is relevant.&nbsp;&nbsp;Therefore, any
return on your investment in our capital stock must come from increases in the fair market value and trading price of the capital
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"><B><I>We may issue additional equity shares
to fund the Company's operational requirements which would dilute your share ownership.</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">The Company's continued viability may depend
on its ability to raise capital.&nbsp;&nbsp;Changes in economic, regulatory or competitive conditions may lead to cost increases.&nbsp;&nbsp;Management
may also determine that it is in the best interest of the Company to develop new services or products. In any such case, additional
financing will likely be required for the Company to meet its operational requirements.&nbsp;&nbsp;There can be no assurances that
the Company will be able to obtain such financing on terms acceptable to the Company and at times required by the Company, if at
all.&nbsp;&nbsp;In such event, the Company may be required to materially alter its business plan or curtail all or a part of its
operational plans as detailed further in Management's Discussion and Analysis in this Form S-1. While the Company currently has
no offers to sell its securities to obtain financing, sale or the proposed sale of substantial amounts of our common stock in the
public markets may adversely affect the market price of our common stock and our stock price may decline substantially.&nbsp;&nbsp;In
the event that the Company is unable to raise or borrow additional funds, the Company may be required to curtail significantly
its operational plans as further detailed in Requirements for Additional Capital in the Management Discussion and Analysis of this
Form S-1.</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">Also, any new securities issued may have greater rights, preferences
or privileges than our existing common stock which may adversely affect the market price of our common stock and our stock price
may decline substantially.</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">&nbsp;The Company&rsquo;s Amended Articles
of Incorporation authorize the issuance of up to 1,050,000,000 total shares of capital stock without additional approval by shareholders.
As of July 5, 2012, we had 9,790,760 shares of common stock outstanding.</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><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Large amounts of our common stock
will be eligible for resale under Rule 144. </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">As of July 5, 2012, approximately 5,278,006
of the 9,790,760 issued and outstanding shares of the Company's common stock are restricted securities as defined under Rule 144
of the Securities Act of 1933, as amended (the &ldquo;Act&rdquo;) and under certain circumstances may be resold without registration
pursuant to Rule 144 or otherwise.</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 general, under Rule 144, a person (or
persons whose shares are aggregated) who has satisfied a six month holding period may, under certain circumstances, sell within
any three-month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common
stock or the average weekly trading volume of the class during the four calendar weeks prior to such sale. Rule 144 also permits,
under certain circumstances, the sale of securities, without any limitation, by a person who is not an Affiliate, as such term
is defined in Rule 144(a)(1), of the Company and who has satisfied a one year holding period. Any substantial sale of the Company's
common stock pursuant to Rule 144 may have an adverse effect on the market price of the Company's shares.&nbsp;&nbsp;Since the
Company has previously indicated in its filings with the Commission that it is a shell company, as that term is defined under the
Securities Act, pursuant to Rule 144, shareholders must wait at least one year from the date of the filing of this Form 10-K to
avail themselves of Rule 144 unless we file a registration statement for the sale of such shares prior thereto.</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>Our reporting requirements may utilize
a substantial portion of our cash.</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">We will incur ongoing costs and expenses
for SEC reporting and compliance.<B><I>&nbsp;</I></B>To be eligible for quotation on the OTCBB, issuers must remain current in
their filings with the SEC. Market Makers are not permitted to begin quotation of a security whose issuer does not meet this filing
requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following
a 30 or 60 day grace period if they do not make their required filing during that time.&nbsp;&nbsp;In order for us to remain in
compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our
available cash resources.</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>Rule 144 sales in the future may
have a depressive effect on the company's stock price.</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">All of the outstanding shares of common
stock held by the present officers, directors, and affiliate shareholders are &quot;restricted securities&quot; within the meaning
of Rule 144 under the Securities Act of 1933, as amended. As restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the
Act and as required under applicable state securities laws. Officers, directors and affiliates will be able to sell their shares
if this Registration Statement becomes effective. Rule 144 provides in essence that a person who is an affiliate or officer or
director who has held restricted securities for six months may, under certain conditions, sell every three months, in brokerage
transactions, a number of shares that does not exceed the greater of 1.0% of a company's outstanding common stock. There is no
limit on the amount of restricted securities that may be sold by a non-affiliate after the owner has held the restricted securities
for a period of six months if the company is a current, reporting company under the Exchange Act. A sale under Rule 144 or under
any other exemption from the Act, if available, or pursuant to subsequent registration of shares of common stock of present shareholders,
may have a depressive effect upon the price of the common stock in any market that may develop. In addition, if we are deemed a
shell company pursuant to Section 12(b)-2 of the Act, our &quot;restricted securities&quot;, whether held by affiliates or non-affiliates,
may not be re-sold for a period of 12 months following the filing of a Form 10 level disclosure or registration pursuant to the
Act.</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>Our shareholders may suffer future
dilution due to issuances of shares for various considerations in the future.</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">There may be substantial dilution to our
shareholders purchasing in future offerings as a result of future decisions of the Board to issue shares without shareholder approval
for cash, services, or acquisitions.</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"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Our stock will in all likelihood be thinly traded and,
as a result, investors may be unable to sell at or near ask prices or at all if they need to liquidate shares.</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; text-align: justify">Our shares of common stock may be thinly-traded
on the Over the Counter Market, meaning that the number of persons interested in purchasing our common shares at or near ask 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 it is a small company which is 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 the Company came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company such as ours or purchase
or recommend the purchase of any of our securities until such time as it became more seasoned and viable. As a consequence, there
may be periods of several days or more when trading activity in the our securities 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 the securities price. We cannot give investors any assurance that a broader or more active public trading market
for the Company's common securities will develop or be sustained, or that any trading levels will be sustained. Due to these conditions,
we can give investors no assurance that they will be able to sell their shares at or near ask prices or at all if they need money
or otherwise desire to liquidate their securities 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><I>Certain Nevada Corporation Law provisions
could prevent a potential takeover, which could adversely affect the market price of our stock.</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">We are incorporated in the State of Nevada.
Certain provisions of Nevada corporation law could adversely affect the market price of our common stock. Because Nevada corporation
law requires board approval of a transaction involving a change in our control, it would be more difficult for someone to acquire
control of us. Nevada corporate law also discourages proxy contests making it more difficult for you and other shareholders to
elect directors other than the candidate or candidates nominated by our board of directors.</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>Risks Related to this Offering</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"><B><I>We are registering an aggregate of
20,000,000 shares of common stock to be issued under the equity line of credit; the sale of such shares could depress the market
price of our common stock.</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">We are registering an aggregate of 20,000,000
shares of common stock under this registration statement for issuance pursuant to the equity line of credit. These shares may be
sold into the public market by Kodiak Capital or a transferee of it.&nbsp;&nbsp;As of June 20, 2012, there were 9,790,760 shares
of our common stock issued and outstanding, an 7,050,000 issuable upon the conversion of our outstanding Series A Preferred Stock
and 262,500 issuable upon conversion of our outstanding Series B Preferred Stock.</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"><B><I>Assuming the Company utilizes the maximum amount available
under the equity line of credit, existing shareholders could experience substantial dilution upon the issuance of common stock.</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; text-align: justify">Our equity line of credit with Kodiak Capital
contemplates the potential future issuance and sale of up to $1,000,000 of common stock to Kodiak Capital, subject to certain restrictions
and obligations. We are limiting this registration statement to 20,000,000 shares of common stock with respect to the equity line
of credit. The following table is an example of the number of shares that could be issued at various prices assuming we utilize
the maximum amount remaining available under the equity line of credit:</P>

<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; background-color: White">
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: center; border-bottom: Black 1pt solid">Price&nbsp;Per&nbsp;Share&nbsp;(1)</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: center; border-bottom: Black 1pt solid">No&nbsp;of&nbsp;Shares<BR> Issuable&nbsp;(2)&nbsp;</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: center; border-bottom: Black 1pt solid">Shares&nbsp;Outstanding<BR> After&nbsp;Issuance&nbsp;(3)&nbsp;</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: center; border-bottom: Black 1pt solid">Percent&nbsp;of&nbsp;Shares<BR> Outstanding&nbsp;(4)&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 23%; text-align: right">0.05</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 22%; text-align: right">20,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 22%; text-align: right">29,790,760</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 22%; text-align: right">67.1</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.09</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,111,111</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,901,871</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53.2</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,692,308</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,483,068</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44.0</TD><TD STYLE="text-align: left">%</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"></P>

<HR ALIGN="LEFT" NOSHADE SIZE="1" STYLE="color: Black; width: 30%; margin-top: 3pt; margin-bottom: 3pt">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%">(1)</TD>
    <TD STYLE="width: 94%">Assumes a price of 80% of the volume weighted price per share.</TD></TR>
</TABLE>
<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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%">(2)</TD>
    <TD STYLE="width: 94%">Represents the number of shares issuable if the entire commitment of $1,000,000 under the equity line of credit were drawn down at the indicated purchase prices.</TD></TR>
</TABLE>
<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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%">(3)</TD>
    <TD STYLE="width: 94%">Based on 9,790,760 shares of common stock outstanding as of July 5, 2012.</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>

<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: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%">(4)</TD>
    <TD STYLE="width: 94%">Percentage of our total outstanding shares of common stock represented by shares issued under the equity line of credit, after the issuance of the shares indicated.</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"><B><I>Kodiak will pay less than the then-prevailing market price
for our common stock.</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; text-align: justify">The common stock to be issued to Kodiak
pursuant to the Investment Agreement will be purchased at a eighty percent (80%) discount to the lowest closing &ldquo;best bid&rdquo;
price (the lowest posted bid price) of the common stock during the five consecutive trading days immediately following the date
of our notice to Kodiak of our election to put shares pursuant to the Investment Agreement. Kodiak has a financial incentive to
sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted
price and the market price. If Kodiak sells the shares, the price of our common stock could decrease. If our stock price decreases,
Kodiak may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact
on our stock price.</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"><B><I>The size of the put we are able to exercise will not permit
us to generate adequate funds.</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; text-align: justify">The Investment Agreement provides that
the dollar value that we will be permitted to put to Kodiak will be $25,000.&nbsp;&nbsp;Given our current rate of expenditures,
it is unlikely these puts may provide adequate funding for our planned operations.</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"><B><I>SHOULD ONE OR MORE OF THE FOREGOING 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</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; text-align: center"><B>USE OF PROCEEDS</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: justify; text-indent: 0.5in">This prospectus relates
to the sale of shares of our common stock to Kodiak Capital pursuant to the exercise of our put right under our Investment Agreement
with Kodiak Capital. The Company will receive proceeds from the sale of our common stock to Kodiak Capital pursuant to the investment
agreement. We will not receive any proceeds from the sales of stock by the other selling shareholders, including sales made by
Kodiak Capital. We will pay the cost of registering under the Securities Exchange Act of 1933 the shares offered by this prospectus.
The proceeds from the Company&rsquo;s exercise of the put right pursuant to the investment agreement will be used for working capital
and general corporate expenses. The Company anticipates the proceeds received from any &ldquo;Puts&rdquo; tendered to Kodiak under
the Equity Line of Credit to be used for working capital.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DETERMINATION OF OFFERING PRICE</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: justify">The offering price for the shares sold
to Kodiak under the Put will equal 80% of the lowest closing bid price of the common stock of the Company during the five consecutive
trading days immediately after the date that Kodiak receives a Put Notice of draw down by the Company of a portion of the equity
line of credit with Kodiak.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There will be no underwriter discounts or commissions.</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>DILUTION</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-indent: 0.5in">The difference between the price per share
pursuant to the exercise of the put right and the as adjusted pro forma net tangible book value per share of common stock after
this offering constitutes the dilution to investors in this offering.&nbsp;&nbsp;Net tangible book value per share is determined
by dividing the net tangible book value (total assets less intangible assets and total liabilities) by the number of outstanding
shares of common stock.</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: justify; text-indent: 0.5in">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of July 5, 2012, our pro forma net
tangible book value of was $51,349 or approximately $0.005 per share of common stock. Pro forma net tangible book value per share
consists of total assets less intangible assets and liabilities, divided by the total number of shares of common stock outstanding.
Without giving effect to any changes in such pro forma net tangible book value after July 5, 2012, other than to give effect to
sale of 10,416,667 shares of common stock at an assumed purchase price of $0.096 per share, the pro forma net tangible book value
at July 5, 2012, would have been $1,051,349 or approximately $0.052 per share. As of July 5, 2012, the net tangible book value
per share of common stock owned by our current shareholders would have increased by approximately $0.047 without any additional
investment on their part and the purchasers of common stock will incur an immediate dilution of approximately $0.044 per share
from the purchase price. &ldquo;Dilution&rdquo; means the difference between the offering price and the pro forma net tangible
book value per share after giving effect to the offering. Holders of common stock may be subjected to additional dilution if any
additional securities are issued as compensation or to raise additional financing. The following table illustrates the dilution
which investors participating in this offering will incur and the benefit to current shareholders as a result of this offering:</P>



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

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%">Price per share(1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.096</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Pro forma net tangible book value per share as of&nbsp; July 5, 2012 (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.005</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">Increase per share attributable to the exercise of the put right</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.047</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Pro forma net tangible book value after the exercise of the put right</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.052</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">Dilution per share to new investors</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.044</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; text-indent: 0"></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"></P>

<HR ALIGN="LEFT" NOSHADE SIZE="1" STYLE="color: Black; width: 30%; margin-top: 3pt; margin-bottom: 3pt">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%">(1)</TD>
    <TD STYLE="width: 94%">Assumes that $0.88 is 80% of the volume weighted price per share after the put right is exercised.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></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>SELLING SHAREHOLDERS</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: justify; text-indent: 0.5in">We agreed to register
for resale 20,0000,000 Shares that we will put to Kodiak Capital pursuant to the Investment Agreement. The Investment Agreement
with Kodiak Capital provides that Kodiak Capital is committed to purchase up to $1,000,000 of our common stock.&nbsp;&nbsp;We may
draw on the facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the
Investment Agreement. We will not receive any proceeds from the sale of these shares of common stock offered by Selling Security
Holder. However, we will receive proceeds from the sale of our Put Shares under the Investment Agreement. The proceeds will be
used for working capital or general corporate purposes.</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; text-indent: 0.5in">We are unable to estimate
the number of shares Kodiak Capital may sell under our put right.&nbsp;&nbsp;If Kodiak Capital is successful in selling all of
the shares it purchases from us, it will own none of our shares.</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; text-indent: 0.5in">The following table
details the name of the Selling Stockholder, the number of shares owned by that Selling Stockholder, and the number of shares that
may be offered by each Selling Stockholder for resale under this prospectus. Kodiak Capital Group, LLC is a broker-dealer. The
table assumes that pursuant to the Investment Agreement we will put to Kodiak and Kodiak and Kodiak will sell all 20,000,000 shares
of our Common Stock registered pursuant to this prospectus from time to time in one or more offerings under this prospectus. The
following table has been prepared on the assumption that all shares offered under this prospectus will be sold to parties unaffiliated
with the selling stockholders.</P>

<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 STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid">Name&nbsp;of&nbsp;selling&nbsp;security&nbsp;holder</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount&nbsp;of<BR> securities&nbsp;of&nbsp;the<BR> class&nbsp;owned&nbsp;by<BR> the&nbsp;security<BR> holder&nbsp;before<BR> this&nbsp;offering</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount&nbsp;to&nbsp;be<BR> offered&nbsp;for&nbsp;the<BR> security&nbsp;holder&rsquo;s<BR> account</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount&nbsp;and&nbsp;(if<BR> one&nbsp;percent&nbsp;or<BR> more)<BR> percentage&nbsp;of&nbsp;the<BR> class&nbsp;to&nbsp;be&nbsp;owned<BR> by&nbsp;security<BR> holder&nbsp;after&nbsp;the<BR> offering&nbsp;is<BR> complete</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 25%">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 19%; font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 19%; font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 26%; font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Kodiak Capital Group, LLC<SUB>(1)</SUB></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD COLSPAN="2" STYLE="text-align: right">20,000,000</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD COLSPAN="2" STYLE="text-align: right">20,000,000</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: right">0</TD>
    <TD>%</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">* For the purpose of the table set forth above, we have included
all shares of common stock beneficially owned by the selling security holder as of July 5, 2012.</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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%">(1)</TD>
    <TD STYLE="width: 96%; text-align: justify">Applicable percentage of ownership is based on 9,790,760 shares of our Common Stock issued and outstanding as of July 5, 2012, together with securities exercisable or convertible into shares of Common Stock within 60 days as of June 20, 2012 for the Selling Shareholders. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.&nbsp;&nbsp;Shares of common stock are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not as outstanding for the purpose of computing the percentage ownership of any other person.</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>INVESTMENT AGREEMENT</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: justify; text-indent: 0.5in">Pursuant to our investment
agreement with Kodiak Capital, we have the right to &ldquo;put&rdquo; to Kodiak Capital up to $1,000,000 million in price of shares
of our common stock (i.e., we can compel Kodiak Capital to purchase our common stock at a pre-determined formula). Accordingly,
this prospectus relates to the resale of up to 20,000,000 shares of our common stock by Kodiak Capital.</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; text-indent: 0.5in">In conjunction with
our investment agreement with Kodiak Capital, we issued a total of 500,000 shares of our common stock to Kodiak Capital and its
designee as a commitment fee.&nbsp;&nbsp;The shares are restricted stock as defined in Rule 144 under the Securities Act.</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; text-indent: 0.5in">For the purpose of
determining the number of shares of common stock to be offered by this prospectus, we have assumed that we will issue not more
than 20,000,000 shares pursuant to the exercise of the put right, although the number of shares that we will actually issue pursuant
to the put right may be more or less than 20,000,000, depending on the trading price of our common stock.&nbsp;&nbsp;We currently
do not intend to exercise the put right in a manner which would result in our issuance of more than 20,000,000 shares.</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; text-indent: 0.5in">The investment agreement
provides, in part, that following notice to Kodiak Capital, we may put to Kodiak Capital up to $1,000,000 in shares of our common
stock for a purchase price equal to 80% percent of the lowest closing &ldquo;best bid&rdquo; price (the highest posted bid price)
of the common stock during the five consecutive trading days immediately following the date of our notice to Kodiak Capital of
an election to put shares pursuant to the investment agreement.&nbsp;&nbsp;The aggregate dollar value that we will be permitted
to put to Kodiak will be $25,000.&nbsp;&nbsp;Kodiak Capital has indicated that it will resell those shares in the open market,
resell our shares to other investors through negotiated transactions, or hold our shares in its portfolio. This prospectus covers,
in part, the resale of our stock by Kodiak Capital either in the open market or to other investors through negotiated transactions.
Kodiak Capital&rsquo;s obligations under the investment agreement are not transferrable and this registration statement does not
cover sales of our common stock by transferees of Kodiak Capital.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Kodiak Capital will only purchase shares
when we meet the following conditions:</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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 11%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 3%; text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 86%; text-align: justify">a registration statement has been declared effective and remains effective for the resale of the common stock subject to the equity line of credit;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">our common stock has not been suspended from trading for a period of two consecutive trading days and we have not been notified of any pending or threatened proceeding or other action to delist or suspend our common stock;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>we have complied with our obligations under the investment agreement and the attendant registration rights agreement;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>no injunction has been issued and remains in force, and no action has been commenced by a governmental authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of our common stock; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>we have not filed a petition in bankruptcy, either voluntarily or involuntarily, and there shall not have been commenced any proceedings under any bankruptcy or insolvency laws.</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; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The investment agreement will terminate
when any of the following events occur:</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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 11%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 86%">Kodiak has purchased an aggregate of $1,000,000 of our common stock or twenty four months after the effective date;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>we file or otherwise enter an order for relief in bankruptcy; or</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>our common stock ceases to be registered under the Exchange Act.</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; text-indent: 0.5in">As we draw down on
the equity line of credit, shares of our common stock will be sold into the market by Kodiak Capital.&nbsp;&nbsp;The sale of these
additional shares could cause our stock price to decline.&nbsp;&nbsp;In turn, if the stock price declines and we issue more puts,
more shares will go into the market, which could cause a further drop in the stock price.&nbsp;&nbsp;You should be aware that there
is an inverse relationship between the market price of our common stock and the number of shares to be issued under the equity
line of credit.&nbsp;&nbsp;If our stock price declines, we will be required to issue a greater number of shares under the equity
line of credit.&nbsp;&nbsp;We have no obligation to utilize the full amount available under the equity line of credit.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PLAN OF DISTRIBUTION</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: justify">The selling shareholders and any of their
pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock
being offered under this prospectus on any stock exchange, market or trading facility on which shares of our common stock are traded
or in private transactions. These sales may be at fixed or negotiated prices. The selling shareholders may use any one or more
of the following methods when disposing of shares:</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="width: 7%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 3%; text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%; text-align: justify">ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">purchases by a broker-dealer as principal and resales by the broker-dealer for its account;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">an exchange distribution in accordance with the rules of the applicable exchange;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">privately negotiated transactions;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">to cover short sales made after the date that the registration statement of which this prospectus is a part is declared effective by the Commission;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">a combination of any of these methods of sale; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">any other method permitted pursuant to applicable law.</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 shares may also be sold under Rule
144 under the Securities Act of 1933, as amended (&quot;Securities Act&quot;), if available, rather than under this prospectus.
The selling shareholders have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if they
deem the purchase price to be unsatisfactory at any particular time.</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">The selling shareholders may pledge their
shares to their brokers under the margin provisions of customer agreements. If a selling security holder defaults on a margin loan,
the broker may, from time to time, offer and sell the pledged shares.</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">Broker-dealers engaged by the selling shareholders
may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling
shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated,
which commissions as to a particular broker or dealer may be in excess of customary commissions to the extent permitted by applicable
law.</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 sales of shares offered under this prospectus
are made to broker-dealers as principals, we would be required to file a post-effective amendment to the registration statement
of which this prospectus is a part. In the post-effective amendment, we would be required to disclose the names of any participating
broker-dealers and the compensation arrangements relating to such sales.</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 selling shareholders and any broker-dealers
or agents that are involved in selling the shares offered under this prospectus may be deemed to be &quot;underwriters&quot; within
the meaning of the Securities Act in connection with these sales. Commissions received by these broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities
Act. Any broker-dealers or agents that are deemed to be underwriters may not sell shares offered under this prospectus unless and
until we set forth the names of the underwriters and the material details of their underwriting arrangements in a supplement to
this prospectus or, if required, in a replacement prospectus included in a post-effective amendment to the registration statement
of which this prospectus is a part.</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 selling shareholders and any other
persons participating in the sale or distribution of the shares offered under this prospectus will be subject to applicable provisions
of the Exchange Act and the rules and regulations under that act, including Regulation M. These provisions may restrict activities
of and limit the timing of purchases and sales of any of the shares by the selling shareholders or any other person. Furthermore,
under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making
and other activities with respect to those securities for a specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares.</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 any of the shares of common stock offered
for sale pursuant to this prospectus are transferred other than pursuant to a sale under this prospectus, then subsequent holders
could not use this prospectus until a post-effective amendment or prospectus supplement is filed, naming such holders. We offer
no assurance as to whether any of the selling shareholders will sell all or any portion of the shares offered under this prospectus.</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 agreed to pay all fees and expenses
we incur incident to the registration of the shares being offered under this prospectus. However, each selling security holder
and purchaser are responsible for paying any discounts, commissions and similar selling expenses they incur.</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 selling shareholders and the issuer
have agreed to indemnify one another against certain losses, damages and liabilities arising in connection with this prospectus,
including liabilities under the Securities Act. Under the securities laws of certain states, the shares of common stock may be
sold in such states only through registered or licensed brokers or dealers. The selling shareholders are advised to ensure that
any brokers, dealers or agents effecting transactions on behalf of the selling shareholders are registered to sell securities in
all fifty states. In addition, in certain states the shares of common stock may not be sold unless the shares have been registered
or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.</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 will pay all the expenses incident to
the registration, offering and sale of the shares of common stock to the public hereunder other than commissions, fees and discounts
of brokers, dealers and agents. We estimate that the expenses of the offering to be borne by us will be approximately $40,255.42.
The estimated offering expenses consist of: a SEC registration fee of $255.42, accounting fees of $10,000, legal fees of $20,000
and printing miscellaneous expenses of $10,000. We will not receive any proceeds from the sale of any of the shares of common stock
by the selling shareholders.</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 selling shareholders should be aware
that the anti-manipulation provisions of Regulation M under the Securities Exchange Act of 1934 will apply to purchases and sales
of shares of common stock by the selling shareholders, and that there are restrictions on market-making activities by persons engaged
in the distribution of the shares. Under Regulation M, the selling shareholders or their agents may not bid for, purchase, or attempt
to induce any person to bid for or purchase, shares of common stock of the Company. while such selling shareholders are distributing
shares covered by this prospectus. Accordingly, except as noted below, the selling shareholders are not permitted to cover short
sales by purchasing shares while the offering is taking place. The selling shareholders are advised that if a particular offer
of common stock is to be made on terms constituting a material change from the information set forth above with respect to this
Plan of Distribution, then, to the extent required, a post-effective amendment to the accompanying registration statement must
be filed with the Securities and Exchange Commission.</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>Blue Sky Restrictions on Resale</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">If a selling security holder wants to sell
shares of our common stock under this registration statement in the United States, the selling shareholders will also need to comply
with state securities laws, also known as &ldquo;Blue Sky laws,&rdquo; with regard to secondary sales. All states offer a variety
of exemption from registration for secondary sales. Many states, for example, have an exemption for secondary trading of securities
registered under Section 12(g) of the Securities Exchange Act of 1934 or for securities of issuers that publish continuous disclosure
of financial and non-financial information in a recognized securities manual, such as Standard &amp; Poor&rsquo;s. The broker for
a selling security holder will be able to advise a selling security holder which states our common stock is exempt from registration
with that state for secondary sales.</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 person who purchases shares of our
common stock from a selling security holder under this registration statement who then wants to sell such shares will also have
to comply with Blue Sky laws regarding secondary sales.</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">When the registration statement becomes
effective, and a selling security holder indicates in which state(s) he desires to sell his shares, we will be able to identify
whether it will need to register or will rely on an exemption there from.</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>DESCRIPTION OF SECURITIES</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"><B><U>Common Stock</U></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: justify; text-indent: 0.5in"><B>Number of Authorized
and Outstanding Shares.</B> The securities subject to this registration statement are shares of common stock of the Company, par
value $0.008 per share (&ldquo;Common Stock&rdquo;). The Company's Amended and Restated Articles of Incorporation authorizes the
issuance of 125,000,000 shares of Common Stock, of which 9,790,760 shares of Common Stock outstanding on July 5, 2012, which were
held by 90 shareholders of record.</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; text-indent: 0.5in"><B>Voting Rights</B>.
Holders of shares of Common Stock are entitled to one vote for each share on all matters to be voted on by the shareholders. Holders
of Common Stock have no cumulative voting rights. Accordingly, the holders of in excess of 50% of the aggregate number of shares
of Common Stock outstanding will be able to elect all of the directors of the Company and to approve or disapprove any other matter
submitted to a vote of all shareholders.</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; text-indent: 0.5in"><B>Other</B>. No shareholder
has any preemptive right or other similar right to purchase or subscribe for any additional securities issued by the Company, and
no shareholder has any right to convert the common stock into other securities. No shares of common stock are subject to redemption
or any sinking fund provisions. All the outstanding shares of the Company's common stock are fully paid and non-assessable. Subject
to the rights of the holders of the preferred stock, if any, the Company's shareholders of common stock are entitled to dividends
when, as and if declared by the Board from funds legally available therefore and, upon liquidation, to a pro-rata share in any
distribution to shareholders. The Company does not anticipate declaring or paying any cash dividends on the common stock in the
foreseeable future.</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"><B><U>Preferred Stock</U></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: justify">The Company's Amended and Restated Articles
of Incorporation authorizes the issuance of 50,000,000 shares of &ldquo;Blank Check&rdquo; Preferred Stock, par value $0.001 per
share (&ldquo;Preferred Stock&rdquo;), subject to any limitations prescribed by law, without further vote or action by the shareholders,
to issue from time to time shares of preferred stock in one or more series. There are no shares of Preferred Stock issued and outstanding.&nbsp;&nbsp;Each
such series of Preferred Stock shall have such number of shares, designations, preferences, voting powers, qualifications, and
special or relative rights or privileges as shall be determined by the Company's board of directors, which may include, among others,
dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.</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"><B><U>Series A Convertible Preferred Stock</U></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: justify">The Company has authorized a total of 9,400,000
shares of Series A Convertible Preferred Stock (the &ldquo;Series A&rdquo;). The Series A is convertible at any time into shares
of the Company&rsquo;s common stock at the conversion rate of one share of Common Stock per each share of Series A converted.&nbsp;&nbsp;If
the Company reports net income in two of the four years following the Exchange, the Series A shall be convertible into Common Stock
at the conversion rate of two shares of Common Stock per each share of Series A converted.&nbsp;&nbsp;The Series A is treated on
an &ldquo;as converted&rdquo; basis for both voting and liquidation rights. There are currently 7,050,000 shares of Series A issued
and outstanding.</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"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Series B Convertible Preferred Stock</U></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: justify">The Company has authorized a total of 2,600,000
shares of 6% Series B Convertible, Redeemable Preferred Stock (the &ldquo;Series B&rdquo;).&nbsp;&nbsp;The Series B accrues annual
dividends at the rate of 6% per year in shares of Common Stock at the dividend conversion rate of $1.00.&nbsp;&nbsp;The Series
B, together with any unpaid dividends, is convertible at any time into shares of the Company&rsquo;s common stock at the conversion
rate of one share of Common Stock per each share of Series B converted.&nbsp;&nbsp;Following the second anniversary of the Exchange,
the Series B, together with any unpaid dividends, shall be convertible into Common Stock at the conversion price of forty cents
($0.40) or seventy percent (70%) of the daily volume weighted average price of the Common Stock for the twenty trading days immediately
prior to the conversion.&nbsp;&nbsp;The Series B is redeemable by the Company, at any time prior to December 31, 2015, in cash
at the redemption rate of $1.00 per share of Series B plus any accrued and unpaid dividends.&nbsp;&nbsp;On December 31, 2015, all
outstanding shares of Series B shall be redeemed by the Company at a per share redemption price equal to $1.00 per share of Series
B plus an amount of Common Stock equal to the amount of the accrued and unpaid dividend thereon.&nbsp;&nbsp;The Series B has a
liquidation preference of $2,600,000 and ranks prior to the Series A and the Common Stock.&nbsp;&nbsp;The Series B votes on an
&ldquo;as converted&rdquo; basis.&nbsp;&nbsp;There are currently 265,500 shares of Series B 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"><B><U>Warrants</U></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">As of July 5, 2012, there were warrants outstanding to
purchase 62,500 shares of Common Stock at the exercise price of $0.50.</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"><B><U>Options</U></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: justify">As of the July 5, 2012, there were no
options issued or 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"><B><U>Securities Authorized for Issuance Under Equity Compensation
Plans</U></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: justify">The Company has reserved 284,722 shares
of common stock for issuance under the terms of the AmbiCom Holdings 2010 Incentive Plan. The 2010 Plan is intended to promote
the interests of the Company by attracting and retaining exceptional employees, consultants, directors, officers and independent
contractors (collectively referred to as the &ldquo;Participants&rdquo;), and enabling such Participants to participate in the
long-term growth and financial success of the Company. Under the 2010 Plan, the Company may grant stock options, which are intended
to qualify as &ldquo;incentive stock options&rdquo; under Section 422 of the Internal Revenue Code of 1986, as amended (the &ldquo;Incentive
Stock Options&rdquo;), non-qualified stock options (the &ldquo;Nonqualified Stock Options&rdquo;), stock appreciation rights (&ldquo;SARs&rdquo;)
and restricted stock awards (the &ldquo;Restricted Stock Awards&rdquo;), which are restricted shares of Common Stock (the Incentive
Stock Options, the Nonqualified Stock Options, the SARs and the Restricted Stock Awards are collectively referred to as &ldquo;Incentive
Awards&rdquo;). Incentive Awards may be granted pursuant to the 2010 Plan for 10 years from the Effective Date.</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">From time to time, we may issue Incentive Awards pursuant to
the 2010 Plan.&nbsp;&nbsp;Each of the awards will be evidenced by and issued under a written agreement.</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">If an incentive award granted under the
2010 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive
award, the shares subject to such award and the surrendered shares will become available for further awards under the Plan.</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">The number of shares subject to the 2010
Plan, and the number of shares and terms of any Incentive Award may be adjusted in the event of any change in our outstanding Common
Stock by reason of any stock dividend, spin-off, stock split, reverse stock split, recapitalization, reclassification, merger,
consolidation, liquidation, business combination or exchange of shares, or similar transaction.</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"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Transfer Agent</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: justify">Shares of Common Stock are registered at
the transfer agent and are transferable at such office by the registered holder (or duly authorized attorney) upon surrender of
the Common Stock certificate, properly endorsed.&nbsp;&nbsp;No transfer shall be registered unless the Company is satisfied that
such transfer will not result in a violation of any applicable federal or state securities laws. The Company's transfer agent for
its Common Stock is VStock Transfer, LLC, 77 Spruce Street, Suite 201, Cedarhurst, New York, 11516, Telephone (212) 828-8436.</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"><B>Penny Stock</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: justify">The Securities and Exchange Commission
has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are
generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges
or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities
is provided by the exchange or system).</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 shares are considered penny stock under
the Securities and Exchange Act.&nbsp;&nbsp;The shares will remain penny stocks for the foreseeable future.&nbsp;&nbsp;The classification
of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult
for a purchaser to liquidate his/her investment.&nbsp;&nbsp;Any broker-dealer engaged by the purchaser for the purpose of selling
his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act.&nbsp;&nbsp;Rather than
creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.</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 penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document, which:</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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 94%">Contains a description of the nature and level of risk in the market for penny stock in both public offerings and secondary trading.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the Securities Act of 1934, as amended.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Contains a brief, clear, narrative description of a dealer market, including &quot;bid&quot; and &quot;ask&quot;&nbsp;&nbsp;price for the penny stock and the significance of the spread between the bid and ask price.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Contains a toll-free telephone number for inquiries on disciplinary actions.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Defines significant terms in the disclosure document or in the conduct of trading penny stocks.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation.</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">The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, to the customer:</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: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 94%">The bid and offer quotations for the penny stock.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>The compensation of the broker-dealer and its salesperson in the transaction.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>The number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Monthly account statements showing the market value of each penny stock held in the customer's&nbsp;&nbsp;account.</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">In addition, the penny stock rules require
that prior to a transaction in a penny stock not otherwise exempt from those 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 acknowledgment
of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated
copy of a written suitability statement.&nbsp;&nbsp;These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, shareholders may
have difficulty selling their securities.</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>Shares Available Under Rule 144</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 currently 5,278,006 shares
of common stock that are considered restricted securities under Rule 144 of the Securities Act of 1933.  2,701,596&nbsp;shares are held
by affiliates, as that term is defined in Rule 144(a)(1) and other shareholders. Under Rule 144, such shares can be publicly sold,
subject to volume restrictions and certain restrictions on the manner of sale, commencing six months after their acquisition for
those companies that have been subject to the reporting requirements of section 13 or 15(d) of the Exchange Act for a period of
at least 90 days before the sale.</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"><B>Dividend Policy</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: justify">We have not declared or paid dividends
on our Common Stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment
of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial
condition, results of operations, capital requirements and other factors deemed relevant by the board of directors. There are no
contractual restrictions on our ability to declare or pay dividends.</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>INTEREST OF NAMED EXPERT AND COUNSEL</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: justify">No expert or counsel named in this Prospectus
as having prepared or certified any part of this Prospectus or having given an opinion upon the validity of the securities being
registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency
basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in us or any of
our subsidiaries. Nor was any such person connected with us or any of our subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer or employee.</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"><B>Legal Matters</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: justify">The validity of the issuance of the shares
being offered hereby will be passed upon for us by Tarter Krinsky &amp; Drogin LLP, New York, New York.</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"><B>Experts</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 financial statements included in this prospectus to the
extent and for the fiscal year ended July 31, 2011 (as indicated in their reports) have been audited by Kim &amp; Lee Corporation,
Los Angeles, California an independent registered public accounting firm and are included herein in reliance upon the authority
as experts in giving said reports.</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>DESCRIPTION OF THE BUSINESS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Background</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"><B><I>Organization in the Last Five Years</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; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">AmbiCom
was organized under the laws of the State of Nevada on July 29, 2008.&nbsp;&nbsp;AmbiCom is a holding company whose operating company,
AmbiCom, Inc., is a designer and developer of wireless products focusing on the wireless medical industry.&nbsp;&nbsp;AmbiCom&rsquo;s
wireless modules and devices are based on the Company&rsquo;s innovative application software and Wi-Fi or Bluetooth</FONT><FONT STYLE="font-family: Symbol">&acirc;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">
technologies.</FONT></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 January 15, 2010, Med Control, Inc.
(the &ldquo;Registrant&rdquo;) authorized its Articles of Incorporation (the &ldquo;Amendment&rdquo;) to change its name to AmbiCom
Holdings, Inc., to increase the number of its authorized shares of capital stock from 75,000,000 to 1,050,000,000 shares of which
1,000,000,000 were designated common stock and 50,000,000 were designated preferred stock, par value $0.001 per share (the &ldquo;Preferred
Stock&rdquo;) and to effect a forward-split such that 131.2335958 shares of Common Stock were issued for every 1 share of Common
Stock issued and outstanding immediately prior to filing of the amendment (the &ldquo;Forward Split&rdquo;).&nbsp;&nbsp;The Registrant
also amended its Bylaws on January 15, 2010.&nbsp;&nbsp;On January 15, 2010, the Registrant entered into an Agreement and Plan
of Share Exchange (the &ldquo;Exchange Agreement&rdquo;) with AmbiCom Acquisition Corp., a Nevada corporation (&ldquo;AmbiCom&rdquo;),
whereby the Registrant acquired all of the issued and outstanding capital stock of AmbiCom in exchange (the &ldquo;Exchange&rdquo;)
for 20,000,000 newly issued shares of Common Stock (the &ldquo;Common Exchange Shares&rdquo;), 2,600,000 shares of Series B Preferred
Stock, options to purchase 5.5 million common shares and 2,350,000 shares of Series A Preferred Stock at the purchase price of
$.01 per share, and 500,000 warrants to purchase 500,000 shares of Common Stock at $0.50 per share.&nbsp;&nbsp;As a result of the
Exchange, the AmbiCom equity holders surrendered all of their issued and outstanding capital stock of AmbiCom in consideration
for the Exchange Shares, and AmbiCom Acquisition Corp. became a wholly-owned subsidiary of Med Control, Inc.</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">Simultaneously therewith, the Company accepted
subscriptions in an offering (the &ldquo;Offering&rdquo;) of its Common Stock at a price of $0.40 per share, offered pursuant to
Regulation D of the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;). The Company sold an aggregate of 1,250,000
shares of Common Stock for an aggregate offering price of $500,000.</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 Closing, our board of directors
was reconstituted by the appointment of John Hwang, Kenneth Cheng and Robert Radoff as directors immediately prior to the resignation
of Ms. Elaine Mayumi Kato from her role as sole principal officer and director of the Company. Our executive management team also
was reconstituted following the resignation of Ms. Kato, and Mr. Cheng and Mr. Hwang were appointed as president and CEO in place
of our former officers.</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 Exchange, the AmbiCom Holdings,
Inc. 2010 Incentive Plan (the &ldquo;Plan&rdquo;) was adopted by the Board and the Company&rsquo;s Stockholders. Under the Plan,
[284,722] shares of Common Stock were reserved for issuance as incentive awards to be granted to executive officers, key employees,
consultants and directors after the closing of the transactions described herein.</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 parties have taken the actions necessary
to provide that the Exchange is treated as a &ldquo;tax free exchange&rdquo; under Section 368 of the Internal Revenue Code of
1986, as amended.</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><I>The Offering</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; text-align: justify">Simultaneously upon the Closing, the Company
closed an offering (the &ldquo;Offering&rdquo;) of its Common Stock for a at a price of $0.40 per share for a minimum of 1,000,000
shares (the &ldquo;Minimum Offering&rdquo;) and a maximum offering of 1,500,000 shares (the &ldquo;Maximum Offering&rdquo;).&nbsp;&nbsp;The
Company accepted subscriptions for an aggregate of 1,250,000 shares of Common Stock for aggregate offering price of $500,000.&nbsp;&nbsp;The
shares of Common Stock were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities
Act and Rule 506 of Regulation D promulgated there under. The agreements executed in connection with this sale contain representations
to support the Registrant&rsquo;s reasonable belief that the investors had access to information concerning the Registrant&rsquo;s
operations and financial condition, the investors acquired the securities for their own account and not with a view to the distribution
thereof in the absence of an effective registration statement or an applicable exemption from registration, and that the investors
are sophisticated within the meaning of Section 4(2) of the Securities Act and are &ldquo;accredited investors&rdquo; (as defined
by Rule 501 under the Securities Act). In addition, the issuances did not involve any public offering; the Registrant made no solicitation
in connection with the sale other than communications with the investors; the Registrant obtained representations from the investors
regarding their investment intent, experience and sophistication; and the investors either received or had access to adequate information
about the Registrant in order to make an informed investment decision.</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>Split-Off Agreement</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">In addition, contemporaneously with the
Closing, the Company and our former principal stockholder, Ms. Kato, split-off&nbsp;&nbsp;its wholly owned subsidiary, MCI Acquisition
Corp., a newly-formed Nevada corporation (&ldquo;MCAC&rdquo;), whereby the Company assigned all of its previous operating assets
to MCAC in consideration for the assumption of all of the Company&rsquo;s liabilities to Ms. Kato, who is currently the principal
shareholder of MCI and the retirement and cancellation of Ms. Kato&rsquo;s 6,000,000 shares of Common Stock pursuant to the terms
and conditions of a split-off agreement by and among the Company, Ms. Kato, and MCAC (the &ldquo;Split-Off Agreement&rdquo;).</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"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Pro Forma Ownership</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; text-align: justify">Following the issuance of the Exchange
Shares and the retirement of Ms. Kato&rsquo;s shares pursuant to the Split-Off Agreement, the former stockholders of AmbiCom and/or
their designees now beneficially own approximately fifty-five percent (55%) of the total outstanding shares of Common Stock, and
after giving effect to the conversion of the Series B in accordance with their respective terms (and the satisfaction of certain
conditions to the conversion of such shares) seventy-six percent (76%) of the total outstanding shares of Common Stock on a fully-diluted
basis.&nbsp;&nbsp;For financial accounting purposes, the acquisition was a reverse acquisition of the Company by AmbiCom Acquisition
Corp., under the purchase method of accounting, and was treated as a recapitalization with AmbiCom Acquisition Corp. as the acquirer.&nbsp;&nbsp;Upon
consummation of the Exchange, the Company adopted the business plan of AmbiCom Acquisition Corp.</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>Company 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">AmbiCom Holdings, Inc. (&ldquo;AmbiCom
Holdings&rdquo; &ldquo;the Company&rdquo;, &ldquo;us&rdquo;, &ldquo;our&rdquo; or &ldquo;we,&rdquo;) was incorporated as Med Control,
Inc. in the State of Nevada as a for-profit company on July 1, 2008 and established a fiscal year end of July 31. Prior to the
Exchange, the Company was a development-stage company organized to sell a product called &ldquo;Med Time&rdquo;, an electronic
and portable device aimed to control the doses and schedules of medications taken by elderly individuals. As a result of the Exchange
with AmbiCom Acquisition Corp., we have adopted the business plan of AmbiCom Acquisition Corp&rsquo;s wholly-owned subsidiary,
AmbiCom, Inc., a California corporation, and now design and develop wireless products focusing on the wireless medical industry.</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">AmbiCom
is a designer and developer of wireless products focusing on the wireless medical industry.&nbsp;&nbsp;AmbiCom&rsquo;s wireless
modules and devices are based on the Company&rsquo;s innovative application software and Wi-Fi or Bluetooth</FONT><FONT STYLE="font-family: Symbol">&acirc;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">
technologies.&nbsp;&nbsp;While AmbiCom&rsquo;s focus is on the development of products for the healthcare industry, AmbiCom will
continue its plans to develop and explore solutions for non-healthcare applications.</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">Sales in the wireless medical device industry have grown at
a rapid pace in the past few years.&nbsp;&nbsp;AmbiCom believes the reason for this growth and its strategy to focus on this industry
includes:</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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 94%">Healthcare providers and insurers are seeking increased out-patient services.&nbsp;&nbsp;Wireless applications have the ability to provide &ldquo;virtual nurse&rdquo; services such as condition monitoring and alerts.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Wireless applications may eliminate or reduce the need for certain services that previously required a person, such as nurses, physicians, and billing positions.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Automated monitoring and alerts may produce improved patient outcomes and enable medical care providers to &ldquo;virtually&rdquo; monitor patients around the clock.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Improved usability may enhance quality of life and enable better, easier care provision.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Can enable or improve mobility and greater convenience.</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">AmbiCom&rsquo;s business strategy targets
and prioritizes areas of need and problems that could be improved or solved via the application of wireless capabilities.&nbsp;&nbsp;It
then attempts to develop solutions that combine existing hardware and new software applications which AmbiCom develops to customize
a device.&nbsp;&nbsp;AmbiCom&rsquo;s wireless device solutions and applications include infusion pumps, heart monitoring machines,
and glucose meters.</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">AmbiCom sells its products through multi-channel
distribution and original equipment manufacturer (&ldquo;OEM&rdquo;) channels.&nbsp;&nbsp;The Company delivers its medical device
modules to OEM companies such as CareFusion, and Roche.</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">AmbiCom will introduce wireless home medical
devices as well as non-healthcare related wireless devices during its upcoming fiscal year.</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 is headquartered in Milpitas,
California, where all corporate and design operations are based.&nbsp;&nbsp;AmbiCom&rsquo;s manufacturing operations and capacity
are highly scalable and cost effective via several manufacturing partners in Asia.</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>Business Strategy</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">AmbiCom&rsquo; s primary goal is to continue
to provide consumers high quality mobile wireless products.&nbsp;&nbsp;The Company is committed to wireless design and development
of software and hardware, and to bringing new and innovative products to the wireless medical and other wireless markets.</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">AmbiCom intends to grow both organically
and through selective acquisitions.&nbsp;&nbsp;The Company believes many medical devices lack the technological and operational
efficiency to succeed in today&rsquo;s advanced technology environment.&nbsp;&nbsp;The Company&rsquo;s internal growth objective
is to position AmbiCom as a leading designer of application software and hardware, via the following approaches and others:</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="width: 3%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 3%; text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 94%; text-align: justify">Leverage its current customer base</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">Capitalize on its competitive advantage of proprietary technology and software</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">Exploit the growing need for cost reduction</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">Build strategic partnerships for scalability, efficiencies and leverage</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: justify">Expand sales and marketing activities</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"><B>Our Competitive Advantages</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 believes its strengths include the following:</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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 94%"><B>Proven Results: </B>Deep domain expertise in wireless technologies and developing new product applications that innovatively leverage wireless technology to create innovative products with breakthrough functionalities<B>.&nbsp;&nbsp;</B>Since the year 2000, AmbiCom has sold over one million devices to customers worldwide.</TD></TR>
</TABLE>
<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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 94%"><B>Low Cost Operating Structure</B> &ndash; AmbiCom maintains a low cost operating structure, focusing resource allocation on its core corporate functions including sales, marketing, research and development, administration, and outsourcing manufacturing to several companies in Asia.&nbsp;&nbsp;This operating structure has allowed the Company to maintain strong gross margins.</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"><B>Products</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: justify">We expect our markets to remain competitive
and to reflect rapid technological evolution and continuously evolving customer and regulatory requirements.&nbsp;&nbsp;Our ability
to remain competitive depends in part upon our success in maintaining our intellectual knowledge base and developing new and enhanced
advanced wireless solutions and introducing these systems at competitive prices on a timely 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>Sales and Marketing</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 believe our intellectual capability,
technology, sales, and marketing efforts have established our reputation for providing innovative solutions that meet our customers&rsquo;
needs in a timely, cost-efficient manner. Our ability to leverage our distribution network will be an important factor in our success.
The sales and marketing of our products largely depends upon the type of product, location and target customer.</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>Manufacturing and Suppliers</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 currently outsource production of our
products primarily to manufacturers in Asia.&nbsp;&nbsp;Many of the key components and sub-components are purchased from third
party suppliers. We have selected such suppliers based on their ability to consistently produce these components per our specifications,
striving for the best quality product at the most cost effective price.</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>Research and Product Development</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 general focus of our research and development
team is the design and integration of wireless medical devices.&nbsp;&nbsp;Through these efforts, we constantly seek to enhance
our existing products, design new products and develop solutions for customer applications.&nbsp;&nbsp;We believe that our responsiveness
to current and perceived future customer demands differentiates us from many of our competitors, as we rapidly introduce new products
to address market needs.&nbsp;&nbsp;We intend to expand our research and development team as we believe that increased levels of
spending on research and development will be necessary to successfully develop products that will have a niche value.</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"><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">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of July 5, 2012, we had 8 employees. We believe we have
good employee relations. None of our employees are members of any labor union, and we are not a party to any collective bargaining
agreement.</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"><B>CORPORATE INFORMATION </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's corporate headquarters are located at 500 Alders
Drive, Milpitas, CA.</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>DESCRIPTION OF PROPERTY</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: justify">Our principal executive office address
is 500 Alder Drive, Milpitas, California 95035.&nbsp;&nbsp;We lease approximately 7,313 square feet of office and warehouse space
at a monthly rental of $4,425 under the terms of a 63 month lease that expires on May 31, 2016.&nbsp;&nbsp;The rent increases three
percent annually.</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 investment policies
as they pertain to real estate, real estate interests or real estate mortgages.</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>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">The Company had an ongoing litigation over
accounts receivable and payable with Ambeon Corporation, a related party by virtue of common ownership. The dispute started in
2004 and was settled in favor of the Company under the Shih Lin District Court of Taiwan on August 20, 2008. The Company agreed
to pay a sum of $560,000 and the remaining disputed payable balances were decreased in favor of the Company, and settlement income
of $843,572 was realized in year 2008. As of April 30, 2012, the Company has paid $490,000 towards the settlement. The remaining
minimum payments due under the settlement are as follows:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Year Ending July 31:</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: 87%; text-align: left">2012</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">15,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">2013</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">55,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">70,000</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">&nbsp;The Company is not a party and its property is not subject
to any other material pending legal proceedings nor is the Company aware of any threatened or contemplated proceeding by any governmental
authority against the Company.</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>MARKET FOR COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS.</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"><B>Market for Common Equity and Related Shareholder Matters</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: justify">Our common stock is quoted on the Over-the-Counter
Bulletin Market under the symbol &ldquo;ABHI.OB&rdquo;. We received our listing for quotation on June __, 2012.&nbsp;&nbsp;The
table below sets forth the high and low prices for the Company&rsquo;s Common Stock for the quarters included within 2011. Quotations
reflect inter-dealer prices, without retail mark-up, mark-down commission, and may not represent actual transactions. Since the
Company's common stock trades sporadically, there is not an established active public market for its common stock. No assurance
can be given that an active market will exist for the Company's common stock and the Company does not expect to declare dividends
in the foreseeable future since the Company intends to utilize its earnings, if any, to finance its future growth, including possible
acquisitions.</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 CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 80%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 25%; font-weight: bold; text-align: center">Year</TD>
    <TD STYLE="width: 25%; font-weight: bold">Quarter</TD>
    <TD STYLE="width: 25%; font-weight: bold">High</TD>
    <TD STYLE="width: 25%; font-weight: bold">Low</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">2010</TD>
    <TD>First</TD>
    <TD>0.00</TD>
    <TD>0.00</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">2010</TD>
    <TD>Second</TD>
    <TD>0.00</TD>
    <TD>0.00</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">2010</TD>
    <TD>Third</TD>
    <TD>0.65</TD>
    <TD>0.24</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">2010</TD>
    <TD>Fourth</TD>
    <TD>0.48</TD>
    <TD>0.13</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">2011</TD>
    <TD>First</TD>
    <TD>0.19</TD>
    <TD>0.11</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">2011</TD>
    <TD>Second</TD>
    <TD>0.18</TD>
    <TD>0.07</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">2011</TD>
    <TD>Third</TD>
    <TD>0.10</TD>
    <TD>0.05</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">2011</TD>
    <TD>Fourth</TD>
    <TD>0.08</TD>
    <TD>0.04</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"><B>Holders</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">As of July 5, 2012, there were approximately 9,790,760 shares
of common stock issued and outstanding and there were 80 holders of record of our 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"><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 declared or paid cash dividends
on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion
of our business and do not anticipate paying any cash dividends in the foreseeable future.</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>Anti-Takeover Effects of Provisions
of Nevada State 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">We may be or in the future we may become
subject to Nevada's control share law. A corporation is subject to Nevada's control share law if it has more than 200 shareholders,
at least 100 of whom are shareholders of record and residents of Nevada, and if the corporation does business in Nevada or through
an affiliated corporation.</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 law focuses on the acquisition of a
&ldquo;controlling interest&rdquo; which means the ownership of outstanding voting shares is sufficient, but for the control share
law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election
of directors: (1) one-fifth or more but less than one-third, (2) one-third or more but less than a majority, or (3) a majority
or more. The ability to exercise such voting power may be direct or indirect, as well as individual or in association with others.</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 effect of the control share law is
that the acquiring person, and those acting in association with that person, obtain only such voting rights in the control shares
as are conferred by a resolution of the shareholders of the corporation, approved at a special or annual meeting of shareholders.
The control share law contemplates that voting rights will be considered only once by the other shareholders. Thus, there is no
authority to take away voting rights from the control shares of an acquiring person once those rights have been approved. If the
shareholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent
non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire
a controlling interest, their shares do not become governed by the control share law.</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 control shares are accorded full voting
rights and the acquiring person has acquired control shares with a majority or more of the voting power, any shareholder of record,
other than an acquiring person, who has not voted in favor of approval of voting rights, is entitled to demand fair value for such
shareholder's shares.</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">Nevada's control share law may have the
effect of discouraging corporate takeovers.</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">In addition to the control share law, Nevada
has a business combination law, which prohibits certain business combinations between Nevada corporations and &quot;interested
shareholders&quot; for three years after the &quot;interested shareholder&quot; first becomes an &quot;interested shareholder&quot;
unless the corporation's board of directors approves the combination in advance. For purposes of Nevada law, an &quot;interested
shareholder&quot; is any person who is (1) the beneficial owner, directly or indirectly, of ten percent or more of the voting power
of the outstanding voting shares of the corporation, or (2) an affiliate or associate of the corporation and at any time within
the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then
outstanding shares of the corporation. The definition of the term &quot;business combination&quot; is sufficiently broad to cover
virtually any kind of transaction that would allow a potential acquirer to use the corporation's assets to finance the acquisition
or otherwise to benefit its own interests rather than the interests of the corporation and its other shareholders.</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">The effect of Nevada's business combination law is to potentially
discourage parties interested in taking control of the Company from doing so if it cannot obtain the approval of our Board of Directors.</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"><B>Provisions Having A Possible Anti-Takeover Effect</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: justify">We are subject to the State of Nevada's
business combination statute. In general, the statute prohibits a publicly held Nevada corporation from engaging in a business
combination with a person who is an interested shareholder for a period of three years after the date of the transaction in which
that person became an interested shareholder, unless the business combination is approved in a prescribed manner. A business combination
includes a merger, asset sale or other transaction resulting in a financial benefit to the interested shareholder. An interested
shareholder is a person who, together with affiliates, owns, or, within three years prior to the proposed business combination,
did own 15% or more of our voting stock. The statute could prohibit or delay mergers or other takeovers or change in control attempts
and accordingly, may discourage attempts to acquire our Company.</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">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION</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: justify"><I>The following discussion and analysis
should be read in conjunction with our financial statements and related notes thereto included elsewhere in this annual report.
Portions of this document that are not statements of historical or current fact are forward-looking statements that involve risk
and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in
this annual report should be read as applying to all related forward-looking statements wherever they appear in this annual report.
You can identify forward-looking statements by the use of words such as the words &ldquo;expect,&rdquo; &ldquo;anticipate,&rdquo;
&ldquo;estimate,&rdquo; &ldquo;may,&rdquo; &ldquo;will,&rdquo; &ldquo;should,&rdquo; &ldquo;intend,&rdquo; &ldquo;believe,&rdquo;
and similar expressions. From time to time, we may publish forward-looking statements relative to such matters as anticipated financial
performance, business prospects, technological developments and similar matters. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. All statements other than statements of historical fact included in
this section or elsewhere in this report are, or may be deemed to be, forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Important factors that could cause actual
results to differ materially from those discussed in such forward-looking statements include, but are not limited to, the following:
changes in the economy or in specific customer industry sectors; changes in customer procurement policies and practices; changes
in product manufacturer sales policies and practices; the availability of product and labor; changes in operating expenses; the
effect of price increases or decreases; the variability and timing of business opportunities including acquisitions, alliances,
customer agreements and supplier authorizations; our ability to realize the anticipated benefits of acquisitions and other business
strategies; the incurrence of debt and contingent liabilities in connection with acquisitions; changes in accounting policies and
practices; the effect of organizational changes within the Company; the emergence of new competitors, including firms with greater
financial resources than ours; adverse state and federal regulation and legislation; and the occurrence of extraordinary events,
including natural events and acts of God, fires, floods and accidents.</I></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 discussion and analysis of our plan of operations
should be read in conjunction with our financial statements and related notes appearing elsewhere in this report. This discussion
and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially
from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those
presented under the heading of &ldquo;Risk Factors&rdquo; and elsewhere in this prospectus.</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"><B>Acquisition and Reorganization</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: justify">On January 15, 2010, the acquisition of
AmbiCom was completed, and the business of AmbiCom was adopted as our business. As such, the following Management Discussion is
focused on the current and historical operations of AmbiCom, and excludes the prior operations of the Registrant.</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>Overview </B></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">AmbiCom
is a designer and developer of wireless products focusing on Wi-Fi and Bluetooth</FONT><FONT STYLE="font-family: Symbol">&acirc;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">
applications for the medical and healthcare industry. AmbiCom purchases standard wireless products and designs and develops features
and packaging to customize these products to their target OEM markets. The Company believes that there are unique opportunities
as a result of the sheer size of the wireless healthcare market and the Company&rsquo;s innovative approach and exemplary customer
service. AmbiCom will also continue to develop and explore solutions for non-healthcare applications although these are not material
at present.</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">On August 30, 2011, Kenneth Cheng resigned
as the Company&rsquo;s President, as a member of the Board of Directors, and all other positions with the Company&rsquo;s subsidiaries.</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 October 19, 2011, the Company effectuated
a one-for-eight reverse split of its shares, effective September 8, 2011. The reverse decreased the total authorized, issued and
outstanding common shares and Series B Preferred Convertible Stock by the same one-for-eight ratio as well as amended the par value
per share from $0.001 to $0.008. The total authorized common shares decreased from 1,000,000,000 to 125,000,000.</P>

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

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<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">On October 31, 2011, the Company entered
into an Investment Agreement and a Registration Rights Agreement with Kodiak Capital Group, LLC (the &quot;Investor&quot;) to purchase
up to $1,000,000 of the company's common stock. Upon Registration, the Company may obtain capital in increments of up to $25,000
as working capital is needed.&nbsp;&nbsp;The facility sets the purchase price at 80% of the volume weighted average over five consecutive
trading days.</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 January 4, 2012, the Company entered
into a Public Relations Agreement with Cape MacKinnon Inc. for investor relations services in exchange for 150,000 shares of the
Company&rsquo;s restricted common stock for each month of service provided.</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 February 2, 2012, Kenneth Cheng exercised
the conversion rights to convert 2,350,000 shares of Preferred A stock into 2,350,000 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 4, 2012, the Company entered into
a Consulting Agreement with Strategic Partners Inc. for consulting services in exchange for 340,000 shares of restricted 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 16, 2012, the Company issued a
6% stock dividend on its Preferred B 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"><B><U>Results of Operations</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">The following table sets forth, for the
periods indicated, certain financial data as a percentage of total revenue:</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 NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three Months Ended April 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine Months Ended April 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%">Sales</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">100.0</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">100.0</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">100.0</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">100.0</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><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="padding-bottom: 1pt">Cost of sales</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">35.3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">50.7</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">39.9</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">46.9</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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">Gross profits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64.7</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49.3</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60.1</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53.1</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Operating Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.24in">Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.3</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.5</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.1</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.24in">Professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.1</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38.2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.6</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.24in">Selling and general expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43.2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">45.7</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">69.6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">38.0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.24in">Total operating expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60.6</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54.9</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">108.3</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43.7</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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">Income (loss) from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.1</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-5.6</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-48.2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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; padding-left: 0in">Other income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.24in">Other income and expense, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-0.3</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.3</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-1.6</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.24in">Interest expense, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-1.0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-0.3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-0.7</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net other income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-1.3</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-2.3</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total income (loss) before income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.1</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-6.9</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-48.2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.1</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Income taxes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.1</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-6.9</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-48.2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.1</TD><TD STYLE="text-align: left">%</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"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Revenue </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">Revenue is derived from sales of our wireless device products
and non-recurring engineering (NRE) project fees. The products consist of routers, Compact flash Adapters/Modules, USB Adapters/Modules,
Mini PCI Modules, PCI Express Mini Modules and mobile wireless products. The Company operates in a market characterized by long
term growth prospects as businesses adopt the convenience of wireless connectivity and switch from traditional wired solutions.
We provide optimized wireless products to the medical industry which has concentrated on using wireless solutions as a way to reduce
healthcare costs as a whole. Total revenue for the three and nine months ended April 30, 2012 and 2011 is summarized in the following
table:</P>

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

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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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 COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Three
    Months Ended April 30,</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="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Nine
    Months Ended April 30,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in Dollars</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in<BR>
Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in Dollars</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in<BR>
Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><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: 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: 9%; text-align: right"><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: 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: 11%; text-align: right"><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: 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: 9%; text-align: right"><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: 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: 9%; text-align: right"><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: 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: 9%; text-align: right"><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: 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: 11%; text-align: right"><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: 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: 9%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</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="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">458,040</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">781,780</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">(323,740</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 8pt">-41</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">1,065,801</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">2,984,941</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">(1,919,140</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 8pt">-64</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">%</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">Our sales declined by 41% in the three
months ended April 30, 2012 compared to the three months ended April 30, 2011. Our sales declined by 64% in the nine months ended
April 30, 2012 compared to the nine months ended April 30, 2011, mainly as a result of a large portion of our products reaching
the end of their product life cycle. We expect revenue from our existing products to continue to decline which will be partially
offset by new products that have been introduced during this quarter and also partially offset by revenue from non-recurring engineering
project fees.</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>Customer Concentration Information</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">One customer accounted for more than 10% of total revenue for
the three months ended April 30, 2012, and two customers accounted for more than 10% for the three months ended April 30, 2011.
Three customers accounted for more than 10% of total revenue for the nine months ended April 30, 2012, and one customer accounted
for more than 10% for the nine months ended April 30, 2011.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Cost of Sales </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: 10pt Times New Roman, Times, Serif">Our cost
of sales consists primarily of the amounts paid to third-party manufacturers for the products we purchase for resale, related packaging
costs, as well as labor and material costs associated with our NRE</FONT> projects. Our cost of sales for the three and nine months
ended April 30, 2012 and 2011 are summarized in the following table:</P>

<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 COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Three
    Months Ended April 30,</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="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Nine
    Months Ended April 30,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in Dollars</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in Dollars</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><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: 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: 9%; text-align: right"><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: 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: 11%; text-align: right"><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: 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: 9%; text-align: right"><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: 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: 9%; text-align: right"><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: 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: 9%; text-align: right"><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: 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: 11%; text-align: right"><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: 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: 9%; text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</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="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">161,586</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">396,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(234,414</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt">-59</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left; vertical-align: bottom"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">425,295</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">1,400,297</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(975,002</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 8pt">-70</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left; vertical-align: bottom"><FONT STYLE="font-size: 8pt">%</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">Our cost of sales decreased by 59% in the
three months ended April 30, 2012 compared to the three months ended April 30, 2011. Our cost of sales decreased by 70% in the
nine months ended April 30, 2012 compared to the nine months ended April 30, 2011. The decrease in cost of sales was at a greater
rate than the decrease in revenue for the period due to shifts in products purchased.</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>Gross Profit &amp; Gross Margin</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 gross profit decreased by 23% from
$385,780 in the three months ended April 30, 2011 to $296,454 in the three months ended April 30, 2012. Gross profit decreased
by 60% from $1,584,644 for the nine months ended April 30, 2011 to $640,506 for the nine months ended April 30, 2012, mainly due
to the reduced sales volume from our older products reaching the ends of their product life cycles which was partly offset by newly
introduced products this quarter. Our gross margin will continue to be affected by a variety of factors, including the product
mix that our customers demand, changes in supply costs, outsourcing costs for ongoing projects, the average sales prices on sales
of our products, the stages of our product life cycle, and the introduction of new products.</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>Operating Expenses</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"></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 COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Three
    Months Ended April 30,</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="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Nine
    Months Ended April 30,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in Dollars</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in<BR>
Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">2011</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in Dollars</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><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">Change
    in<BR>
Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">277,585</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 9%; border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">428,720</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 11%; border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">(151,135</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 8pt">-35</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 9%; border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">1,153,457</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 9%; border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">1,307,330</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 11%; border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">(153,873</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt"><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: 9%; text-align: right"><FONT STYLE="font-size: 8pt">-12</FONT></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">%</FONT></TD></TR>
</TABLE>



<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="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our operating expenses are categorized
to include depreciation, professional fees and selling, general and administrative expenses. Overall operating expenses decreased
by $151,135 for the three months ended April 30, 2012 compared to the same period in 2011, a decrease of 35%. Operating expenses
decreased by $153,873 for the nine months ended April 30, 2012 compared to April 30, 2011, a decrease of 12%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Depreciation expense was $1,496 for the
three months ended April 30, 2012 and $1,709 for the three months ended April 30, 2011. Depreciation expense was $4,891 for the
nine months ended April 30, 2012 and $3,913 for the nine months ended April 30, 2011. Our depreciation rate policy remained unchanged.
The increase was due to additional fixed assets purchased during the year.</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 professional fees increased to $78,170
in the three months ended April 30, 2012 from $70,095 in the three months ended April 30, 2011. Professional fees increased to
$406,743 for the nine months ended April 30, 2012 from $167,787 for the nine months ended April 30, 2011. Professional fees are
a significant part of our operating expenses as a direct result of our reporting and filing requirements as a public company since
the merger in 2010. The main increase in professional fees for the nine months ended April 30, 2012 was for the fees paid to Kodiak
Capital related to the investment agreement and fees paid to Strategic Consulting for consulting expenses.</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">Selling, general and administrative expenses
consist primarily of salaries and associated costs for employees in finance, human resources, sales, information technology and
administrative activities. In addition, selling, general and administrative expenses may from time to time include charges relating
to insurance or stock-based compensation under Statement of Financial Accounting Standards No. 123(R), &ldquo;Share-Based Payment.&rdquo;
Our selling, general and administrative expenses decreased by $158,997 or 45% to $197,919 in the three months ended April 30, 2012
from $356,916 in the three months ended April 30, 2011. Selling, general and administrative expenses decreased by $393,807 or 35%
to $741,823 for the nine months ended April 30, 2012 from $1,135,630 for the nine months ended April 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The decrease was mainly due to decreases
in salary and headcount, reductions in R&amp;D expenditures and marketing expenses which were partly offset by the increased professional
fees.</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>Income (Loss) from 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">Income (loss) from operations indicates
the amount available from operating activities after we have deducted our operating expenses from our gross profit. Our income
(loss) from operations increased from a loss of $42,940 in the three months ended April 30, 2011 to a net income of $18,870 in
the three months ended April 30, 2012, with decreases in revenue and gross profit offset by greater decreases in selling, general
and administrative expenses. Our income (loss) from operations decreased from an income of $277,314 for the nine months ended April
30, 2011 to a loss of $512,951 for the nine months ended April 30, 2012. This was mainly due to decreases in revenue and increased
professional fees for the nine months ended April 30, 2012<B>.</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>Other Income and Expenses</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 income and expenses arise from non-operating
events and transactions, principally interest charges. We did not have other income and expenses, net, for the three months ended
April 30, 2012 compared to a net expense of $2,154 for the three months ended April 30, 2011. Other income and expenses, net, was
a net income of $2,696 for the nine months ended April 30, 2012 compared to a net expense of $48,578 for the nine months ended
April 30, 2011.</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>Provision for Income Taxes</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 effective tax rate for the years ended
July 31, 2011 and 2010 was 42.8%. We made no provisions for income taxes in either the first nine months of 2012 or 2011 as we
had significant NOL carry-forwards to cover our liability for the these periods.</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">Net Income (Loss)</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">Net
income (loss) for the three and the nine months ended April 30, 2012 and 2011 is summarized in the following table</FONT>:</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 COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three Months Ended April 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine Months Ended April 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Change in<BR>
Dollars</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Change in<BR>
Percent</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Change in<BR>
Dollars</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Change in<BR>
Percent</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</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: 9%; text-align: right">&nbsp;</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: 11%; text-align: right">&nbsp;</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: 9%; text-align: right">&nbsp;</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: 9%; text-align: right">&nbsp;</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: 9%; text-align: right">&nbsp;</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: 11%; text-align: right">&nbsp;</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: 9%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">18,870</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(52,917</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">71,787</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">136</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(513,338</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">208,394</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(721,732</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</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">-346</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</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">For the three months ended April 30, 2012,
net income was $18,870, an increase of 136% compared to the three months ended April 30, 2011 net loss of $52,917. For the nine
months ended April 30, 2012, net loss was $513,338, a decrease of 346% compared to the nine months ended April 30, 2011 net income
of $208,394. The decrease in net income for nine months ended April 30, 2012 compared to the nine months ended April 30, 2011 was
mainly due to the decrease in revenues resulting from our products reaching the end of their product life cycles as well as increased
professional fees. The increase in net income for the three months ended April 30, 2012 was due to reduced selling and general
expenses from decrease in salary and headcount.</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><U>Capital Resources and Liquidity</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">Cash and cash equivalents were $131,593
at April 30, 2012 and $524,512 at July 31, 2011. The net decrease in cash over the period was mainly due to the decreased sales
volume for the period and the payoff of the line of credit. Our total current assets decreased 49% to $406,273 at April 30, 2012
from $804,198 at July 31, 2011 while our current liabilities decreased by 28% to $330,202 at April 30, 2012 from $456,840 at July
31, 2011. Total working capital decreased to $76,071 at April 30, 2012 compared to $347,358 at July 31, 2011, a decrease of $271,287.</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 negotiated a $1.3 million secured
line of bank credit as of May 9, 2011, and at July 31, 2011, the balance outstanding under this facility was $290,000. The covenants
relating to the line of bank credit include monthly unaudited, compliance certifications requiring a minimum current asset to current
liability ratio of 1:2, a maximum debt to tangible net worth ratio of 2.5:1, and a minimum quarterly EBITDA of at least $30,000
on a rolling four quarter 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">At April 30, 2012, the company was in violation
of the restrictive covenant pertaining to a minimum quarterly EBITDA of not less than $30,000. The lender issued a forbearance
for the violation of the restrictive covenant.</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><U>Off-Balance Sheet Arrangements</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">We do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.</P>

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

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<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>Critical Accounting Policies</I></B></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; text-align: justify">The process of preparing financial statements
requires the use of estimates on the part of our management. The estimates used by management are based on our historical experiences
combined with management&rsquo;s understanding of current facts and circumstances. Certain of our accounting policies are considered
critical as they are both important to the portrayal of our financial condition and results and require significant or complex
judgment on the part of management. For a description of what we believe to be our most critical accounting policies and estimates,
please refer to &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations,&rdquo; of our
Annual Report on Form 10-K, for the year ended July&nbsp;31, 2011, which was filed with the Securities and Exchange Commission
on November 9, 2011.</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">Critical accounting policies affecting
us, the critical estimates made when applying them, and the judgments and uncertainties affecting their application have not changed
materially since July 31, 2011.</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>Recent Accounting Pronouncements</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">See Note 3 &ldquo;Summary of Significant
Accounting Policies&rdquo; in the Notes to the Unaudited Condensed Consolidated Financial Statements for a full description of
relevant recent accounting pronouncements including the respective expected dates of adoption.</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>GOING CONCERN</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: justify">Our operating losses since inception raise
substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of assets or the amounts or classification of liabilities
that might be necessary should we be unable to continue as a going concern. For the foreseeable future, we will have to fund all
our operations and capital expenditures from the net proceeds of equity or debt offerings we may have, cash on hand, etc. Although
we plan to pursue additional financing, there can be no assurance that we will be able to secure financing when needed or to obtain
such financing on terms satisfactory to us, if at all. If we are unable to secure additional financing in the future on acceptable
terms, or at all, we may be unable to complete the development of our new products. In addition, we could be forced to reduce or
discontinue product development, reduce or forego sales and marketing efforts and forego attractive business opportunities in order
to improve our liquidity to enable us to continue 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">The following discussion should be read
in conjunction with the information contained in the consolidated financial statements of the Company and the notes thereto appearing
elsewhere herein and in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations
set forth in (1) the Company's Annual Report on Form 10-K for the year ended July 31, 2011. Readers should carefully review the
risk factors disclosed therein and other documents filed by the Company with the SEC.</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>QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK</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 is not exposed to market risk related to interest
rates on foreign currencies.</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>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">The required Financial Statements and the notes thereto are
contained in a separate section of this report beginning with the page following the signature page.</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: center"><B>CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE</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">None.</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>DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS</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: justify">The following table sets forth information
regarding the members of the Company&rsquo;s board of directors and its executive officers. All directors hold office until the
first annual meeting of the shareholders of the Company and until the election and qualification of their successors or their earlier
removal or retirement.</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">Officers are elected annually by the board of directors and
serve at the discretion of the board.</P>

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

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 60%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 44%; font-style: italic; font-weight: bold">Name</TD>
    <TD STYLE="width: 10%; font-style: italic; font-weight: bold; text-align: center">Age</TD>
    <TD STYLE="width: 46%; font-style: italic; font-weight: bold">Title</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John Hwang</TD>
    <TD STYLE="text-align: center">49</TD>
    <TD>Chief Executive Officer, Director</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Robert Radoff</TD>
    <TD STYLE="text-align: center">43</TD>
    <TD>Director</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"><B>John Hwang, 49 Chief Executive Director,</B>
From 2002 through 2007, Mr. Hwang was a member of the office of the Chairman of Techno Concepts, Inc., a developer and manufacturer
of wireless communications devices.&nbsp;&nbsp;Mr. Hwang also has over twenty years&rsquo; corporate and entrepreneurial leadership
experience in semiconductor technology and consumer electronics.&nbsp;&nbsp;Mr. Hwang was President of Osicom, a fiber optic and
network technologies manufacturer from 1996 through 1998, Executive Vice-President of Relialogic, from 1992 to 1996, and a Vice-President
and Corporate Manger of Samsung America, Inc. from 1985 to 1991, where he helped launch its new computer and monitor division.&nbsp;&nbsp;Mr.
Hwang has a Bachelor of Science Degree in Economics from Rutgers University.</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>Robert Radoff, 43 Director</B>.&nbsp;&nbsp;Mr.
Radoff has created and managed a national broker network, monitoring sales, distribution, packaging and setting up logistics of
new and existing products, setting objectives and goals for the sales force and creating presentations to major accounts. He has
also helped develop and sell national brand and private label and other brands to major accounts in the U.S. and international
markets.&nbsp;&nbsp;Mr. Radoff served on active duty in the United States Army from 1986-1990 and competed his reserve obligations
through 1995.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Elaine Mayumi Kato, Director.&nbsp;&nbsp;&nbsp;Mr.
Kato resigned from her role as the Registrant&rsquo;s sole principal officer and director on January 15, 2010.</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">Kenneth Cheng, President, Director. Mr.
Cheng resigned from his role as the Registrant&rsquo;s President and Director on August 26, 2011.</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>Compensation 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">At this time, directors receive no remuneration
for their services as directors of the Company, nor does the Company reimburse directors for expenses incurred in their service
to the Board of Directors.&nbsp;&nbsp;The Company does not expect to pay any fees to its directors for the 2012 fiscal year.</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"><B>Code of Ethics</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: justify">We do not currently have a code of ethics.&nbsp;&nbsp;Because
we currently have only limited business operations and two officers and directors, we believe a code of ethics would have limited
utility. We intend to adopt a code of ethics as our business operations expand and we have additional directors, officers and employees.</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>Audit Committee.&nbsp;&nbsp;</B>The
Company intends to establish an audit committee, which will consist of independent directors. The audit committee's duties would
be to recommend to the Company's board of directors the engagement of independent auditors to audit the Company's financial statements
and to review its accounting and auditing principles. The audit committee would review the scope, timing and fees for the annual
audit and the results of audit examinations performed by the internal auditors and independent public accountants, including their
recommendations to improve the system of accounting and internal controls. The audit committee would at all times be composed exclusively
of directors who are, in the opinion of the Company's board of&nbsp;&nbsp;directors, free from any relationship which would interfere
with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally
accepted accounting principles.</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>Compensation Committee.&nbsp;&nbsp;&nbsp;</B>Our
board of directors does not have a standing compensation committee responsible for determining executive and director compensation.&nbsp;&nbsp;Instead,
the entire board of directors fulfills this function, and each member of the Board participates in the determination.&nbsp;&nbsp;Given
the small size of the Company and its Board and the Company's limited resources, locating, obtaining and retaining additional independent
directors is extremely difficult.&nbsp;&nbsp;In the absence of independent directors, the Board does not believe that creating
a separate compensation committee would result in any improvement in the compensation determination process.&nbsp;&nbsp;Accordingly,
the board of directors has concluded that the Company and its shareholders would be best served by having the entire board of directors&rsquo;
act in place of a compensation committee.&nbsp;&nbsp;When acting in this capacity, the Board does not have a charter.</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">In considering and determining executive
and director compensation, our board of directors review compensation that is paid by other similar public companies to its officers
and takes that into consideration in determining the compensation to be paid to the Company&rsquo;s officers.&nbsp;&nbsp;The board
of directors also determines and approves any non-cash compensation to any employee.&nbsp;&nbsp;The Company does not engage any
compensation consultants to assist in determining or recommending the compensation to the Company&rsquo;s officers or employees.</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>EXECUTIVE COMPENSATION</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"><B><I>Summary Compensation Table</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">The following table sets forth all of the compensation awarded
to, earned by or paid to (i) each individual serving as our principal executive officer during our last completed fiscal year;
and (ii) each other individual that served as an executive officer at the conclusion of the fiscal years ended July 31, 2011 and
who received in excess of $100,000 in the form of salary and bonus during such fiscal year (collectively, the Named Executives).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&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 NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name &amp;<BR>
 Principal <BR>
Position</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Year</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Salary<BR>
 (a)</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Bonus</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restricted <BR>Stock <BR>
Awards</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Option<BR>
 Awards <BR>(b)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Non-Equity <BR>Incentive Plan<BR>&nbsp;Compensation</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">All Other <BR>Compensation</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Total</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 17%; text-align: left">John Hwang</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: center">2011</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right">$240,000</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; 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">7,050,000</TD><TD STYLE="width: 1%; text-align: left">(1)</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">$</TD>
    <TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 0%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD>
    <TD STYLE="text-align: right; width: 8%">240,000</TD>
    <TD STYLE="text-align: right; width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">2010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">$120,000</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</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">5,000,000</TD><TD STYLE="text-align: left">(1)</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">$</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD>
    <TD STYLE="text-align: right">120,000</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD>
    <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>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Kenneth Cheng</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">2011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">$240,000</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</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">2,350,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">23,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD>
    <TD STYLE="text-align: right">263,500</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">2010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">$260,250</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</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">5,500,000</TD><TD STYLE="text-align: left">(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD>
    <TD STYLE="text-align: right">267,250</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
</TABLE>

<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">(1) Granted in connection with the reverse merger under the
terms of the Exchange Agreement</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><I>Compensation Policy</I></B>: Our
Company&rsquo;s executive compensation plan is based on attracting and retaining qualified professionals who possess the skills
and leadership necessary to enable our Company to achieve earnings and profitability growth to satisfy our stockholders.&nbsp;&nbsp;Therefore,
we must create incentives for these executives to achieve both Company and individual performance objectives through the use of
performance-based compensation programs.&nbsp;&nbsp;No one component is considered by itself, but all forms of the compensation
package are considered in total.&nbsp;&nbsp;Wherever possible, objective measurements will be utilized to quantify performance,
but many subjective factors still come into play when determining performance.</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>Compensation Components</I></B>:
As an early-stage development company, the main elements of our compensation package consist of base salary, stock options and
bonuses.</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><I>Base Salary</I></B>: As we continue
to grow and financial conditions improve, these base salaries, stock options, and bonuses will be reviewed for possible adjustments.&nbsp;&nbsp;Base
salary adjustments will be based on both individual and Company performance and will include both objective and subjective criteria
specific to each executive&rsquo;s role and responsibility with the Company.</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"><B>COMPENSATION OF DIRECTORS</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">At this time, directors receive no remuneration for their services
as directors of the Company, nor does the Company reimburse directors for expenses incurred in their service to the Board of Directors.&nbsp;&nbsp;The
Company does not expect to pay any fees to its directors for the 2012 fiscal year.</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">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE
IN CONTROL ARRANGEMENTS</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: justify">On January 15, 2010, the Company entered
into employment agreements with its two executive officers, John Hwang and Kenneth Cheng.</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">Each employment agreement provides for a three year term with
minimum annual base salary of $240,000.&nbsp;&nbsp;Under the agreement, they will be subject to customary non-competition and employee
non-solicitation restrictions while they are employed by the Company and for a period of 2 year(s) thereafter.</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">On August 30, 2011, Kenneth Cheng resigned as the Company&rsquo;s
President, a member of the Board of Directors, and all other positions with the Company&rsquo;s subsidiaries.</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>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND 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; text-align: justify">The following table summarizes certain
information regarding the beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of outstanding Common Stock as of June 20, 2012 (after giving effect to the Exchange) by (i) each person known by us to be the
beneficial owner of more than 5% of the outstanding Common Stock, (ii) each of our directors, (iii) each of our named executive
officers (as defined in Item 403(a) of Regulation S-K under the Securities Act), and (iv) all executive officers and directors
as a group. Except as indicated in the footnotes below, the security and stockholders listed below possess sole voting and investment
power with respect to their shares.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 95%; 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">Name of Beneficial Owner</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">Amount of Beneficial Owner(1)</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">Percent <BR>of Class(2)</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: 74%; text-align: left">John Hwang (3)(4)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">7,675,000</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: 10%; text-align: right">43.93</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Robert Radoff</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,500</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">All Directors and Executive Officers as a Group (2 persons)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,687,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44.02</TD><TD STYLE="text-align: left">%</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">* Less than 1%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(1) &quot;Beneficial Owner&quot; means
having or sharing, directly or indirectly (i) voting power, which includes the power to vote or to direct the voting, or (ii) investment
power, which includes the power to dispose or to direct the disposition, of shares of the common stock of an issuer. The definition
of beneficial ownership includes shares, underlying options or warrants to purchase common stock, or other securities convertible
into common stock, that currently are exercisable or convertible or that will become exercisable or convertible within 60 days.
Unless otherwise indicated, the beneficial owner has sole voting and investment power.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(2) For each shareholder, the calculation
of percentage of beneficial ownership is based upon 9,790,760 shares of Common Stock outstanding as of June 11, 2012, and shares
of Common Stock subject to options, warrants and/or conversion rights held by the shareholder that are currently exercisable or
exercisable within 60 days, which are deemed to be outstanding and to be beneficially owned by the shareholder holding such options,
warrants, or conversion rights. The percentage ownership of any shareholder is determined by assuming that the shareholder has
exercised all options, warrants and conversion rights to obtain additional securities and that no other shareholder has exercised
such rights.</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"></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">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(3) Does not include 141,388 shares of
Common stock held beneficially by family members.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(4) Assumes conversion of 7,050,000 shares Series A
Convertible Preferred Stock beneficially owned by Mr. Hwang.</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>CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS</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: justify">Except as otherwise disclosed herein, there
have been no related party transactions, or any other transactions or relationships, including matters related to director independence,
required to be disclosed pursuant to Items 404 or 407(a) of Regulation S-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">Currently, we have one independent director
on our Board of Directors, and have no formal procedures in effect for reviewing and pre-approving any transactions between us,
our directors, officers and other affiliates. We will use our best efforts to insure that all transactions are on terms at least
as favorable to the Company as we would negotiate with unrelated third parties.</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: center"><B>PART II - INFORMATION NOT REQUIRED IN
PROSPECTUS</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>OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION</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 the expenses in connection with
the issuance and distribution of the securities being registered hereby.&nbsp;&nbsp;All such expenses will be borne by the Company;
none shall be borne by any selling shareholders.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left; text-indent: 0">SEC Registration Fee</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">275.04</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Legal Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">20,000.00</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">Accounting Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,000.00</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Miscellaneous</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,000.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>TOTAL</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">40,275.04</TD><TD STYLE="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: center"><B>INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS</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"><B>Indemnification of Directors and Officers</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">Nevada Revised Statutes (&ldquo;NRS&rdquo;) Sections 78.7502
and 78.751 provide the Company with the power to indemnify any of our directors and officers. The director or officer must have
conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to our best interests.
In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was
unlawful.</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">Under NRS Section 78.751, advances for expenses may be made
by agreement if the director or officer affirms in writing that he/she believes he/she has met the standards and will personally
repay the expenses if it is determined such officer or director did not meet the standards.</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 Company&rsquo;s Articles of Incorporation and
bylaws, we may indemnify an officer or director who is made a party to any proceeding, because of his position as such, to the
fullest extent authorized by Nevada Revised Statutes, as the same exists or may hereafter be amended. In certain cases, we may
advance expenses incurred in defending any such proceeding.</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 the extent that indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions,
we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable. If a claim for indemnification against such liabilities (other than the payment by us of expenses
incurred or paid by a director, officer or controlling person of our company in the successful defense of any action, suit or proceeding)
is asserted by any of our directors, officers or controlling persons in connection with the securities being registered, we will,
unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of that issue.</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>RECENT ISSUANCES OF UNREGISTERED SECURITIES
BY THE REGISTRANT</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">Since inception of the Company on July 1, 2008 we have sold
unregistered securities to the following shareholders:</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 22, 2007 we issued 6,000,000 shares
of Common&nbsp;&nbsp;Stock to Ms. Kato, who at the time was the Registrant&rsquo;s sole officer and director in exchange for&nbsp;&nbsp;the
payment of $6,000, or $0.001 per share.</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 January 15, 2010, the Registrant authorized
the issuance of 20,000,000 shares of Common Stock, 2,600,000 shares of Series B Preferred Stock, options to purchase 5,500,000
shares of Common Stock and 2,350,000 shares of Series A Preferred Stock at the purchase price of $0.01 per share,&nbsp;&nbsp;and
warrants to purchase 500,000 shares of Common Stock at the exercise price of $0.50 per share, in connection with the execution
of an Agreement and Plan of Share Exchange with the shareholders of AmbiCom Acquisition Corp. (the &ldquo;Exchange&rdquo;).</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">On January 15, 2010, the Registrant sold
1,250,000 shares of Common Stock at the price of $0.40 per share for an aggregate offering of $500,000.</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 January 4, 2012, the Company issued
150,000 shares of restricted common stock for services provided.</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">Except as noted above, the sales of the
securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities
and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant
to Section 4(2) thereof and rules promulgated thereunder. Each of the above-referenced investors in our stock represented to us
in connection with their investment that they were &ldquo;accredited investors&rdquo; (as defined by Rule 501 under the Securities
Act) and were acquiring the shares for investment and not distribution, that they could bear the risks of the investment and could
hold the securities for an indefinite period of time. The investors received written disclosures that the securities had not been
registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from
such registration. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.</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>WHERE YOU CAN FIND MORE INFORMATION</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: justify">We have filed a registration statement
on Form S-1 under the Securities Act with the SEC for the securities offered hereby. This prospectus, which constitutes a part
of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits
and schedules which are part of the registration statement. For additional information about us and our securities, we refer you
to the registration statement and the accompanying exhibits and schedules. Statements contained in this prospectus regarding the
contents of any contract or any other documents to which we refer are not necessarily complete. In each instance, reference is
made to the copy of the contract or document filed as an exhibit to the registration statement, and each statement is qualified
in all respects by that reference. Copies of the registration statement and the accompanying exhibits and schedules may be inspected
without charge (and copies may be obtained at prescribed rates) at the public reference facility of the SEC at Room 1024, 100 F
Street, N.E. Washington, D.C. 20549.</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">You can request copies of these documents
upon payment of a duplicating fee by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the
operation of its public reference rooms. Our filings, including the registration statement, will also be available to you on the
Internet web site maintained by the SEC at<U>&nbsp;&nbsp;http://www.sec.gov</U> .</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"><B>ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES</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 exhibits are filed as part of this registration
statement:</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: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 8%; font-weight: bold; text-align: left; vertical-align: bottom; border-bottom: Black 1pt solid">Exhibit<BR>
No.</TD>
    <TD STYLE="width: 2%; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 90%; font-weight: bold; text-align: left; vertical-align: bottom; border-bottom: Black 1pt solid">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>Amended and Restated Articles of Incorporation of the Registrant (1)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>By-laws (1)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>Certificate of Designation of Rights and Preferences of Series A Preferred Stock</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.4</TD>
    <TD>&nbsp;</TD>
    <TD>Certificate of Designation of Rights and Preferences of 6% Series B Convertible, Redeemable Preferred Stock</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Subscription Agreement of Med Control, Inc. (1)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">5.1</TD>
    <TD>&nbsp;</TD>
    <TD>Opinion of Tarter Krinsky &amp; Drogin LLP (2)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.1</TD>
    <TD>&nbsp;</TD>
    <TD>Investment Agreement between the Registrant and Kodiak Capital Group LLC dated October 31, 2011(3)</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">&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">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 8%; text-align: center">10.2</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 90%">Registration Rights Agreement between the Registrant and Kodiak Capital Group LLC dated October 31, 2011(3)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.3</TD>
    <TD>&nbsp;</TD>
    <TD>Employment Agreement between Med Control, Inc. and John Hwang dated January 15, 2010.(1)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.4</TD>
    <TD>&nbsp;</TD>
    <TD>Employment Agreement between Med Control, Inc. and Kenneth Cheng dated January 15 2010. (1)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.5</TD>
    <TD>&nbsp;</TD>
    <TD>2010 Equity Incentive Plan (1)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">23.1</TD>
    <TD>&nbsp;</TD>
    <TD>Consent of Kim &amp; Lee Corporation (2)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">24.1</TD>
    <TD>&nbsp;</TD>
    <TD>Power of Attorney (4)</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">(1) Incorporated by reference to our&nbsp;Current Report&nbsp;on
Form 8-K filed with the SEC on January 22, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(2) Filed herewith.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(3) Incorporated by reference to our Current Report on Form
8-K filed with the SEC on November 7, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(4) Included on signature page of this Registration Statement.</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>UNDERTAKINGS</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-indent: 0.5in">The undersigned Registrant hereby undertakes:</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; text-indent: 0.5in">1. To file, during
any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:</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; text-indent: 0.5in">(a) To include any
Prospectus required by Section 10(a)(3) of the Securities Act;</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; text-indent: 0.5in">(b) To reflect in the
Prospectus any facts or events arising after the effective date of this Registration Statement, or most recent post-effective amendment,
which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement;
and notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospects filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the &ldquo;Calculation
of Registration Fee&rdquo; table in the effective registration statement; and</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; text-indent: 0.5in">(c) To include any
material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material
change to such information in the registration statement.</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; text-indent: 0.5in">2. That, for the purpose
of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.</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; text-indent: 0.5in">3. To remove from registration
by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the termination of
the offering.</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; text-indent: 0.5in">4. For determining
liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities,
the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this Registration
Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:</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; text-indent: 0.5in">(a) Any preliminary
Prospectus or Prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (Sec.
230.424);</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; text-indent: 0.5in">(b) Any free writing
Prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the registrant;</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; text-indent: 0.5in">(c) The portion of
any other free writing Prospectus relating to the offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and</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-indent: 0.5in">(d) Any other communication that is an offer
in the offering made by the undersigned registrant to the purchaser.</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; text-indent: 0.5in">Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to
the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons
in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons
in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification is against public
policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.</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>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; text-align: justify">In accordance with the requirements of
the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing this Form S-1 and has authorized this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Milpitas, State of California, on July 5, 2012.</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: 100%">
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">AMBICOM HOLDINGS, INC.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 45%">&nbsp;</TD>
    <TD STYLE="width: 5%">By:</TD>
    <TD STYLE="width: 50%; border-bottom: Black 1pt solid">/s/&nbsp;&nbsp;<I>John Hwang</I></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Name: John Hwang</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Title: Chief Executive Officer&nbsp;&nbsp;and Chief Financial
        Officer</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Principal Executive Officer and Principal Financial Officer)</P></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; text-align: center"><B>POWER OF ATTORNEY</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">Know all persons by these presents that each individual whose
signature appears below constitutes and appoints John Hwang, our Chief Executive Officer as a true and lawful attorney-in-fact
and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this registration statement, and to sign any registration
statement for the same offering covered by this registration statement that is to be effective upon filing under Rule 462 promulgated
under the Securities Act of 1933, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be
done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any one of them, or his or their substitutes, may lawfully do or cause to be done
by virtue hereof.</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 Act of 1933,
this registration statement has been signed by the following persons in the capacities and on the dates indicated.</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: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 25%">Signature</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 56%">Title</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 15%">Date</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR>
    <TD STYLE="border-bottom: Black 1pt solid">/s/ John Hwang</TD>
    <TD>&nbsp;</TD>
    <TD>Chief Executive Officer, Chief Financial Officer, Director</TD>
    <TD>&nbsp;</TD>
    <TD>July 5, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John Hwang</TD>
    <TD>&nbsp;</TD>
    <TD>(Principal Executive Officer and Principal Financial Officer)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-decoration: none; border-bottom: Black 1pt solid">/s/ Robert Radoff</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD>&nbsp;</TD>
    <TD>July 5, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Robert Radoff</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&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: center"><B>AMBICOM HOLDINGS, INC.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>WITH REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>For the Years Ended July 31, 2011 and
2010</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>FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TABLE OF CONTENTS</B></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: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 95%">&nbsp;</TD>
    <TD STYLE="width: 5%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Page</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Report of Independent Registered Public Accounting Firm</TD>
    <TD STYLE="text-align: center">F-2</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated Balance Sheets as of July 31, 2011 and 2010</TD>
    <TD STYLE="text-align: center">F-3</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated Statements of Cash Flows for the years ended July 31, 2011 and 2010</TD>
    <TD STYLE="text-align: center">F-5</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Consolidated Statement of Stockholders&rsquo; Equity as of July 31, 2011</TD>
    <TD STYLE="text-align: center">F-6</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Notes to Consolidated Financial Statements</TD>
    <TD STYLE="text-align: center">F-7</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"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></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>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</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">To the Board of Directors and Stockholders of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Ambicom Holdings, Inc.</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">We have audited the accompanying consolidated balance sheets
of Ambicom Holdings, Inc. and subsidiaries (collectively, the &ldquo;Company&rdquo;) as of July 31, 2011 and 2010, and the related
consolidated statements of operations, stockholders&rsquo; equity and cash flows for the years then ended.&nbsp;&nbsp;These consolidated
financial statements are the responsibility of the Company&rsquo;s management.&nbsp;&nbsp;Our responsibility is to express an opinion
on these consolidated financial statements based on our audit.</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">We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States of America).&nbsp;&nbsp;Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.&nbsp;&nbsp;The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.&nbsp;&nbsp;Our
audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company&rsquo;s internal control
over financial reporting.&nbsp;&nbsp;Accordingly, we express no such opinion.&nbsp;&nbsp;An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation.&nbsp;&nbsp;We
believe that our audit provide a reasonable basis for our opinion.</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">In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of the Company as of July 31, 2011 and 2010, and the
results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted
in the United States of America.</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">Kim and Lee Corporation, CPAs</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">Los Angeles, California</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">October 28, 2011</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"></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AS OF JULY 31,</B></P>

<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; margin-left: 0">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&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">2011</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">2010</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="font-weight: bold; text-align: center">ASSETS</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Current assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in; width: 74%">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">524,512</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">165,848</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Accounts receivable, net of
    allowance for doubtful accounts of $9,329 and $20,761 as of July 31, 2011 and 2010, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,853</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">639,910</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; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Inventory, net of reserve balances of $37,814 and $42,381 as of July 31, 2011 and 2010, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">113,770</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">161,863</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Other receivables, current</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">11,251</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; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Prepaid expenses and other current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">26,063</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,296</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 27pt">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">804,198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">980,168</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Property and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,641</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,293</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; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Deposit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,695</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,138</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">850,534</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,000,599</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: center">LIABILITIES AND STOCKHOLDERS&rsquo; EQUITY</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>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Current liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">47,094</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">89,047</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Accounts payable - other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,582</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,677</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; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Deferred revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,164</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,800</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Due to related party</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">100,000</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; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Line of credit payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Notes payable - current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">60,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">115,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Total current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">456,840</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">450,524</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">&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; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Notes payable, net of current</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">120,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Total liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">511,840</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">570,524</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Commitment and contingency (Note 4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&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; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Stockholders&rsquo; equity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Common stock, $0.001 par value; 1,000,000,000 shares authorized; 52,577,449 and 51,750,000 shares issued and outstanding at July 31, 2011 and July 31, 2010, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,577</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,750</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; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Preferred stock, Series A, $0.001 per share; 9,400,000 shares authorized; 9,400,000 and 0 shares issued and outstanding at July 31, 2011 and July 31, 2010, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,400</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="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Preferred stock, Series B, $0.001 per share 2,600,000 shares authorized; 2,600,000 and 2,600,000 shares issued and outstanding at July 31, 2011 and July 31, 2010, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,600</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,600</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; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Additional paid in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,170,697</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,084,749</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Accumulated deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(10,896,580</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(10,709,024</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-top: 0; padding-left: 0.15in; text-indent: -0.15in">Total stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">338,694</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">430,075</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&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">850,534</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,000,599</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: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></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"></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FOR THE YEARS ENDED JULY 31,</B></P>

<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>&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">2011</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">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%">Sales</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,263,786</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,540,104</TD><TD STYLE="width: 1%; 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">Cost of sales</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,553,858</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,763,974</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Gross profits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,709,928</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,776,130</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Operating Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,756</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,876</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">Professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">217,356</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">287,550</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Selling and general expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,612,446</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,427,013</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Total operating expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,835,558</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,717,439</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Income (loss) from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(125,630</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,691</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Other income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other income and expense, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(34,998</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,940</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">Interest expense, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(25,172</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(17,700</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net other expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(60,170</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,760</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total income (loss) before income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(185,800</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,931</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">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Income taxes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,600</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,050</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net income (loss)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(187,400</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">48,881</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net income (loss) per share&nbsp;&nbsp;- basic</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.004</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.002</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net income (loss) per share&nbsp;&nbsp;- diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.003</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.002</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Weighted average shares outstanding &mdash; basic</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,577,449</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,471,154</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Weighted average shares outstanding &mdash; diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,744,116</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,071,154</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="text-align: left"></P>

<P STYLE="text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FOR THE YEARS ENDED JULY 31,</B></P>

<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>&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">2011</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">2010</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="font-weight: bold; text-align: left">Cash flows from operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left">Net income (loss)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(187,400</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">48,881</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net income items not affecting cash:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,756</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,876</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">Non cash bonus</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">55,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Stock-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">96,019</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,861</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">Inventory valuation adjustment</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">35,078</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Reduction in bad debt reserve</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(11,432</TD><TD STYLE="text-align: left">)</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">Reduction in reserve for inventory loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,567</TD><TD STYLE="text-align: left">)</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>&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">Decrease / (Increase) in operating assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">511,489</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(371,316</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.85in">Inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,661</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(122,544</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 45pt">Other receivables</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,251</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(753</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 45pt">Prepaid expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(22,330</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">79,307</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; text-indent: -9pt; padding-left: 45pt">Deposit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(16,558</TD><TD STYLE="text-align: left">)</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>&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; text-indent: 0">Increase / (Decrease) in operating liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 45pt">Accounts payable - trade</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,417</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(29,836</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 45pt">Accrued payable - other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(39,770</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,514</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 45pt">Unearned revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,364</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,665</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.75in">Net cash provided by (used) in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">407,900</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(252,267</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Cash flows from investing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Payment of notes to related parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(100,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(65,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Capital expenditures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(19,236</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,545</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.75in">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(119,236</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(72,545</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Cash flows from financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Proceeds from sale of common stock</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">500,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Proceeds from sale of preferred stock</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">2,600</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">Proceeds from line of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">190,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Payments on notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(120,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(150,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Cash used in reverse merger, net of cash received</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">(98,153</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.75in">Net cash provided by financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">70,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">354,447</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Net increase in cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">358,664</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,635</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cash and cash equivalents, beginning of year</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">165,848</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">136,213</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Cash and cash equivalents, end of year</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">524,512</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">165,848</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Supplemental information:</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; padding-left: 27pt">Income taxes paid</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,600</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,740</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 14pt">Interest paid</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">25,172</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">17,700</TD><TD STYLE="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: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></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="margin: 0"></P>


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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Statement of Changes in
Stockholders' Equity</B></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>Consolidated Statements of Changes in
Stockholders' Equity</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&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><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Preferred
    <BR>Stock <BR>Series B #</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Preferred
    <BR>Stock <BR>Series B <BR>Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Preferred
    <BR>Stock <BR>Series A #</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Preferred
    <BR>Stock <BR>Series A <BR>Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Common
    <BR>Stock #</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Common
    <BR>Stock <BR>Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Additional
    <BR>Paid-in <BR>Capital</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Accumulated<BR>

Deficit</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 7pt">Total</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 10%"><FONT STYLE="font-size: 7pt">Balance at August 1, 2009</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">20,000,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">20,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">10,582,714</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">(10,757,905</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 7pt">(155,191</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">New shares issued as part of reverse merger</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">2,600,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">2,600</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">25,000,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">25,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(23,076</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">4,524</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Proceeds from raise of capital</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,250,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">1,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">498,750</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">500,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Expenses related to capital raise</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(65,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(65,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Stock option expense</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">41,861</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">41,861</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Common stock option exercised</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">5,500,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">5,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">49,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">55,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">Net income for the year ended July 31, 2010</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">48,881</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">48,881</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">Balance at July 31, 2010</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">2,600,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">2,600</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">51,750,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">51,750</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">11,084,749</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">(10,709,024</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">430,075</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Employee stock option expense</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">15,469</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">15,469</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Investor relations expense</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">350,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">350</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">27,150</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">27,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Advisory board expense</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">321,430</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">321</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">22,179</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">22,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Annual 6% common stock dividend for Preferred B holders per Preferred
    B agreement</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">156,015</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">156</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(156</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Bonus to Kenneth Cheng for stock option exercise of Preferred A
    shares</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">23,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">23,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Exercise of Preferred A shares by Kenneth Cheng</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">2,350,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">2,350</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">(2,350</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">Preferred A grant to John Hwang per merger agreement</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">7,050,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">7,050</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 7pt">7,050</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">Net loss for the year ended July 31, 2011</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">(187,400</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 7pt">(187,400</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">Balance at July 31, 2011</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">2,600,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">2,600</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">9,400,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">9,400</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">52,577,445</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">52,577</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">11,170,697</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">(10,896,580</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 7pt">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 7pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 7pt">338,694</FONT></TD><TD STYLE="padding-bottom: 2.5pt; 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; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

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

<!-- Field: Page; Sequence: 48; Value: 2 -->
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    <!-- Field: /Page -->

<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>AMBICOM HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>JULY 31, 2011 AND 2010</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"><B>NOTE 1 &ndash; Organization and Principal Activities</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">AmbiCom Holdings, Inc. (&ldquo;AmbiCom Holdings&rdquo; or the
&lsquo;Company&rdquo;) was incorporated as Med Control, Inc. (&ldquo;Med Control&rdquo;) under the laws of the State of Nevada
on July 1, 2008.&nbsp;&nbsp;Med Control was a development stage enterprise until January 15, 2010.&nbsp;&nbsp;All of Med Control&rsquo;s
activities prior to January 15, 2010 related to its organization, initial funding and share issuances.&nbsp;&nbsp;On January 15,
2010, Med Control Inc. changed its name to AmbiCom Holdings, Inc.</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">On January 15, 2010, Med Control, Inc. (the &ldquo;Registrant&rdquo;)
authorized its Articles of Incorporation (the &ldquo;Amendment&rdquo;) to change its name to AmbiCom Holdings, Inc., to increase
the number of its authorized shares of capital stock from 75,000,000 to 1,050,000,000 shares of which 1,000,000,000 were designated
common stock and 50,000,000 were designated preferred stock, par value $0.001 per share (the &ldquo;Preferred Stock&rdquo;) and
to effect a forward-split such that 131.2335958 shares of Common Stock were issued for every 1 share of Common Stock issued and
outstanding immediately prior to filing of the amendment (the &ldquo;Forward Split&rdquo;).</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">On January 15, 2010, the Company acquired AmbiCom Acquisition
Corp. a privately owned Nevada corporation (&ldquo;AmbiCom&rdquo;), pursuant to an Agreement and Plan of Share Exchange (the &ldquo;Exchange&rdquo;).&nbsp;&nbsp;AmbiCom
was organized under the laws of the State of Nevada on July 29, 2008.&nbsp;&nbsp;AmbiCom is a holding company whose operating company,
AmbiCom, Inc., is a designer and developer of wireless products focusing on the wireless medical industry.&nbsp;&nbsp;AmbiCom&rsquo;s
wireless modules and devices are based on its innovative application software and Wi-Fi or Bluetooth technologies.</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 terms of the Exchange, the Company acquired
AmbiCom from the AmbiCom equity holders in exchange for an aggregate of 20,000,000 newly issued shares of Common Stock,&nbsp;&nbsp;2,600,000
shares of Series B Preferred Stock, an option to purchase 5,500,000 shares of Common Stock and 2,350,000 shares of Series A Preferred
Stock at the purchase price of $.01 per share,&nbsp;&nbsp;and warrants to purchase 500,000 shares of Common Stock at the exercise
price of $0.50 per share (collectively, the &ldquo;Exchange Shares&rdquo;).&nbsp;&nbsp;As a result of the Exchange, the AmbiCom
equity holders surrendered all of their issued and outstanding capital stock of AmbiCom in consideration for the Exchange Shares
and AmbiCom became a wholly-owned subsidiary of the Company.</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">Simultaneously upon the Closing, the Company closed an offering
(the &ldquo;Offering&rdquo;) of its Common Stock at a price of $0.40 per share for an aggregate of 1,250,000 shares of Common Stock
for aggregate offering price of $500,000.</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">In addition, contemporaneously with the Closing, the Company
and our former principal stockholder, Ms. Kato, split-off its wholly owned subsidiary, MCI Acquisition Corp., a newly-formed Nevada
corporation (&ldquo;MCAC&rdquo;), whereby the Company assigned all of its previous operating assets to MCAC in consideration for
the assumption of all of the Company&rsquo;s liabilities to Ms. Kato, who is currently the principal shareholder of MCI and the
retirement and cancellation of Ms. Kato&rsquo;s 6,000,000 shares of Common Stock pursuant to the terms and conditions of a split-off
agreement by and among the Company, Ms. Kato, and MCAC (the &ldquo;Split-Off Agreement&rdquo;).</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 issuance of the Exchange Shares and the retirement
of Ms. Kato&rsquo;s shares pursuant to the Split-Off Agreement, the former stockholders of AmbiCom and/or their designees now beneficially
own approximately fifty-five percent (55%) of the total outstanding shares of Common Stock, and after giving effect to the conversion
of the Series B in accordance with their respective terms (and the satisfaction of certain conditions to the conversion of such
shares) seventy-six percent (76%) of the total outstanding shares of Common Stock on a fully-diluted basis.</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">Details of the Company&rsquo;s subsidiaries as of July 31, 2011
are as follows:</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: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 23%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">Name</TD>
    <TD STYLE="width: 2%; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 23%; border-bottom: windowtext 1pt solid; text-align: left; vertical-align: bottom">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Place and Date of</B> </P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Establishment/</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Incorporation</B></P></TD>
    <TD STYLE="width: 2%; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 25%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">Relationships</TD>
    <TD STYLE="width: 2%; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 23%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">Principal Activities</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>E-Care USA, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Nevada</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">March 15, 2011</P></TD>
    <TD>&nbsp;</TD>
    <TD>Wholly-owned subsidiary of AmbiCom Holdings, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>Designer and developer of wireless home medical devices</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>AmbiCom Technology, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Nevada</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">May 17, 2010</P></TD>
    <TD>&nbsp;</TD>
    <TD>Wholly-owned subsidiary of AmbiCom Holdings, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Planned acquisition company&nbsp;</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">Inter-company accounts and transactions have been eliminated
in consolidation.</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"><B>NOTE 2 &ndash; Basis of Presentation</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 accompanying consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange Commission (&ldquo;SEC&rdquo;) and accounting principles
generally accepted in the United States for financial information.&nbsp;&nbsp;The preparation of financial statements in accordance
with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect
the amounts reported in the financial statements. Actual results could differ from those estimates. Significant estimates made
in preparing the financial statements include revenue recognition and costs of revenue, inventory valuations, long-lived and intangible
asset valuations and loss contingencies. In the opinion of management, the financial statements include all adjustments (which
are of a normal and recurring nature) necessary for the fair presentation of the results of the periods presented.</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">For financial accounting purposes, the acquisition was a reverse
acquisition of the Company by AmbiCom, under the purchase method of accounting, and was treated as a recapitalization with AmbiCom
as the acquirer.&nbsp;&nbsp;Upon consummation of the Exchange, the Company adopted the business plan of AmbiCom.&nbsp;&nbsp;Accordingly,
the consolidated statements of operations include the results of operations of AmbiCom and its subsidiaries from August 1, 2010
and 2009, and the results of operations of Med Control from the acquisition date through July 31, 2011.</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"><B>NOTE 3 &ndash; Summary of Significant Accounting Policies</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 summary of significant accounting policies is presented
to assist in understanding the Company&rsquo;s financial statements.&nbsp;&nbsp;These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the preparation of the financial statements.</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"><B><I>a) Description of Business - </I></B>The Company is a
leading designer and developer of wireless technologies which emphasize wireless medical and other wireless products.</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"><B><I>b) Segment Information </I>- </B>The Company follows ASC
Topic 280, &ldquo;Disclosures about Segments of an Enterprise and Related Information.&rdquo; Topic 280 requires that a company
report financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise
for which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance. The Company&rsquo;s chief operating decision maker currently evaluates
the Company&rsquo;s operations from a number of different operational perspectives including but not limited to a client by client
basis. The Company derives all significant revenues from a single reportable operating segment of business. Accordingly, the Company
does not report more than one segment; nevertheless, management evaluates, at least annually, whether the Company continues to
have one single reportable segment.</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"><B><I>c) Use of Estimates - </I></B>The preparation of financial
statements in conformity with accounting principles generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
may differ from those estimates, and the differences may be material to the financial statements. Estimates are used primarily
in determining the depreciable lives of fixed assets, and inventory valuation. In addition, estimates form the basis for the reserves
for sales allowances, accounts receivable and inventory.&nbsp;&nbsp;Various assumptions go into the determination of these estimates.
The process of determining significant estimates requires consideration of factors such as historical experience and current and
expected economic conditions.</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><I>d) Cash and Cash Equivalents - </I></B>The Company considers
all highly liquid investments and time deposits with original maturities of three months or less when purchased to be cash equivalents.
All cash and cash equivalents are maintained with nationally recognized financial institutions.</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"><B><I>e) Allowance for Doubtful Accounts - </I></B>An allowance
for doubtful accounts is computed based on the Company&rsquo;s historical experience and management&rsquo;s analysis of possible
bad debts.&nbsp;&nbsp;Accounts receivable are shown net of an allowance for doubtful accounts of $9,329 and $20,761 as of July
31, 2011 and 2010, respectively.</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"><B><I>f) Inventories - </I></B>Inventories are stated at the
lower of cost or market on an average basis. Inventory reserves are recorded for damaged, obsolete, excess and slow-moving inventory.
Market value of inventory is estimated based on the impact of market trends, an evaluation of economic conditions and the value
of current orders relating to the future sales of this type of inventory.&nbsp;&nbsp;As of July 31, 2011 and July 31, 2010, the
value of the inventory reserve was $37,814 and $42,381 respectively.</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"><B><I>g)&nbsp;&nbsp;Income Taxes - </I></B>The Company accounts
for income taxes pursuant to the FASB ASC Topic 740, &quot;Accounting for Uncertainty in Income Taxes&quot;, (&ldquo;Topic 740&rdquo;).
Topic 740 clarifies the accounting for uncertainty in income taxes recognized in the Company&rsquo;s financial statements in accordance
with generally accepted accounting principles.&nbsp;&nbsp;The calculation of the Company's tax provision involves the application
of complex tax rules and regulations within multiple jurisdictions. The Company's tax liabilities include estimates for all income-related
taxes that the Company believes are probable and that can be reasonably estimated. To the extent that the Company&rsquo;s estimates
are understated, additional charges to the provision for income taxes would be recorded in the period in which the Company determines
such understatement. If the Company's income tax estimates are overstated, income tax benefits will be recognized when realized.&nbsp;&nbsp;Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment. Topic 740 prescribes a recognition threshold and measurement attributes
for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.</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"><B><I>h) Revenue Recognition - </I></B>The majority of the Company's
product revenues are recognized upon shipment or delivery and acceptance of products by customers, when pervasive evidence of a
sales arrangement exists, the price is fixed or determinable, the title has transferred and collection of resulting receivables
is reasonably assured.&nbsp;&nbsp;For merchandise products, the Company recognizes revenue upon shipment of products, when title
is passed and the amount collectible can reasonably be determined.&nbsp;&nbsp;All amounts billed to a customer related to shipping
and handling are classified as revenue, while all costs incurred by the Company for shipping and handling are classified as selling
expenses.&nbsp;&nbsp;For NRE projects, revenue is recognized for the deliverable portions that meet the revenue recognition criteria
that persuasive evidence that an agreement exists, delivery has occurred or services have been rendered, the price is fixed and
determinable, and collectability is reasonably assured.</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"><B><I>i) Research and Development Costs - </I></B>Research and
development costs are expensed as incurred.</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">j<B><I>) Stock-Based Compensation - </I></B>The Company adopted
ASC Topic 718 &ldquo;Share-Based Payment&rdquo;. As permitted, the Company elected to adopt disclosure-only provisions of ASC 718
in accordance with generally accepted accounting principles. Under the provisions of Topic ASC 718, compensation expense is recognized
based on the fair value of options on the grant date.</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"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>k) Fair Value of Financial Instruments </I></B>- ASC Topic
820, &ldquo;Fair Value Measurements&rdquo;, requires disclosure of the level within the fair value hierarchy in which fair value
measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets
or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). The Company's
financial instruments consist of cash and cash equivalents, short-term trade receivables and payables at July 31.</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"><B><I><U>Fair Value of Financial Instruments</U></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table presents the carrying amounts and estimated
fair values of the Company&rsquo;s financial instruments at:</P>

<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>&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">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&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">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Carrying<BR>
amount</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">Fair value</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">Carrying<BR>
amount</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">Fair value</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Financial assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 52%; text-align: left; text-indent: -0.5in; padding-left: 0.75in">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">524,512</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: 9%; text-align: right">524,512</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: 9%; text-align: right">165,848</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: 9%; text-align: right">165,848</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.5in; padding-left: 0.75in">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,853</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,853</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">639,910</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">639,910</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Financial liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.5in; padding-left: 0.75in">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94,676</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94,676</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133,724</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133,724</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; text-indent: -0.5in; padding-left: 0.75in">Due to related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.5in; padding-left: 0.75in">Line of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</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; text-indent: -0.5in; padding-left: 0.75in">Notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">115,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,598</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">235,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">229,296</TD><TD STYLE="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">The fair values of the financial instruments shown in the above
table represent the amounts that would be received when those assets are sold or that would be paid when those liabilities are
transferred in an orderly transaction between market participants at the measurement date.&nbsp;&nbsp;Those fair value measurements
maximize the use of observable inputs.</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">However, in situations where there is little, if any, market
activity for the asset or liability at the measurement date, the fair value measurement reflects the Company&rsquo;s own judgments
about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the
Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted
discount rates, available observable and unobservable inputs.</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 uses the following methods and assumptions in estimating
the fair value disclosures for financial instruments:</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"><U>Cash equivalents</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The carrying amount reported in the balance sheets of cash equivalents
approximate fair value because of the relatively short time to maturity.</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"><U>Accounts receivable</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The carrying amount reported in the balance sheets of accounts
receivable approximate fair value because of the relatively short time to maturity.</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"><U>Accounts payable and accrued liabilities</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The carrying amount reported in the balance sheets of accrued
payable and accrued liabilities approximate fair value because of the relatively short time to maturity.</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"><U>Due to related party</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The carrying amount reported in the balance sheets of due to
related party approximate fair value because of the relatively short time to maturity.</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"><U>Line of credit</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The carrying amount reported in the balance sheets of due to
related party approximate fair value because of the relatively short time to maturity.</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"><U>Notes payable</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The fair value of the Company&rsquo;s notes payable are measured
using quoted offer-side prices when quoted market prices are available.&nbsp;&nbsp;If quoted market prices are not available, the
fair value is determined by discounting the future cash flows of each instrument at rates that reflect rates currently observed
in publicly traded debt markets for debt of similar terms to companies with comparable credit risk. For long-term debt measurements,
where there are no rates currently observable in publicly traded debt markets of similar terms with comparable credit, the Company
uses market interest rates and adjusts that rate for all necessary risks, including its own credit risk.</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"><B><I><U>Fair Value Hierarchy</U></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">The following table presents the placement in the fair value
hierarchy of assets and liabilities that are measured at fair value on a recurring basis at :</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: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="border-bottom: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Fair value measurements at</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>reporting date using</B></P></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; 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; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid">
        <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">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>2011</B></P></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Quoted prices in<BR>
 active markets<BR>

        for identical<BR>
assets</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Level 1)</B></P></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Significant other<BR>
observable<BR>
inputs</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Level 2)</B></P></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Significant<BR>
unobservable<BR>
inputs</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Level 3)</B></P></TD>
    <TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 24%">Notes payable</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right; width: 15%">115,000</TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right; width: 15%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right; width: 15%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right; width: 19%">112,598</TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD></TR>
</TABLE>
<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: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="border-bottom: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Fair value measurements at</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>reporting date using</B></P></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; 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; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid">
        <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">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>2010</B></P></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Quoted prices in<BR>
active markets<BR>
for identical<BR>
assets</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Level 1)</B></P></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Significant other<BR>
observable<BR>
inputs</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Level 2)</B></P></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Significant<BR>
unobservable<BR>
inputs</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Level 3)</B></P></TD>
    <TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 24%">Notes payable</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right; width: 15%">235,000</TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right; width: 15%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right; width: 15%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right; width: 19%">229,296</TD>
    <TD NOWRAP STYLE="width: 1%">&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"><B><I>l) Translation of Foreign Currency - </I></B>The Company
accounts for its foreign operations in accordance with ASC Topic 830, &ldquo;Foreign Currency Translation&rdquo;. For the branch,
non-monetary balance sheet items and related income statements items are translated at historical exchange rates, while monetary
balance sheet items are translated at current exchange rates. Income statement items, other than monetary, are translated at the
weighted average exchange rate during the year. Deferred taxes are not provided on translation gains and losses where the Company
expects earnings of a foreign branch to be permanently reinvested.</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"><B><I>m) Concentration - </I></B>Financial instruments which
potentially subject the Company to concentrations of credit risk are primarily accounts receivable. The Company performs ongoing
credit evaluations of its customers&rsquo; financial condition. If the collection of the receivable becomes doubtful, the Company
establishes a reserve in an amount determined appropriate for the perceived risk.&nbsp;&nbsp;The Company maintains its cash accounts
at commercial banks. From time to time, cash balances maintained in such banks may exceed the insured amount by the Federal Deposit
Insurance Corporation (FDIC). As of July 31, 2011 and July 31, 2010, management does not believe they are exposed to any significant
risk on their cash balances.&nbsp;&nbsp;The Company&rsquo;s products are primarily sold to global medical device companies. These
customers can be significantly affected by changes in economic, competitive or other factors. The Company makes substantial sales
to a relatively few, large customers, where company is seeking to capture more business from other targeted medical device companies.</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">Four customers accounted for $57,800 (39%), $40,579 (27%), $35,430
(24%) and $23,559 (16%) of receivables at July 31, 2011 while two customers accounted for $370,011 (56%) and $139,400 (21%) of
accounts receivable as of July 31, 2010.</P>

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

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    <!-- Field: /Page -->

<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">One customer accounted for $1,791,400 (55%) and $2,246,511 (63%)
of the revenues for the years ended July 31, 2011 and 2010 respectively.</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">Two vendors accounted for $25,000 (61%) and $10,018 (25%) of
accounts payable as of July 31, 2011 and, $35,000 (39%) and $18,000 (20%) at July 31, 2010, respectively.</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">One vendor accounted for $1,253,753 (86%) and $1,657,500 (88%)
of the purchases for the years ended July 31, 2011 and 2010 respectively.</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"><B>RECENT 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">In October 2009, the FASB issued guidance on multiple-deliverable
arrangements to address how to separate deliverables and how to measure and allocate arrangement consideration.&nbsp;&nbsp;This
guidance requires vendors to develop the best estimate of selling price for each deliverable and allocate the arrangement consideration
using this selling price. This guidance also expands the disclosure requirements to include both quantitative and qualitative information.
This guidance is effective for fiscal years beginning after June 15, 2010.&nbsp;&nbsp;The Company does not expect the adoption
to have a material impact on its consolidated financial position, results of operations or cash flows.</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">In January 2010, the FASB issued guidance that expands the interim
and annual disclosure requirements of fair value measurements, including the information about movement of assets between level
1 and 2 of the three-tier fair value hierarchy established under its fair value measurement guidance. This guidance also requires
separate disclosure for each of purchases, sales, issuance, and settlements in the reconciliation for fair value measurements using
significant unobservable inputs, level 3. Except for the detailed disclosure in the level 3 reconciliation, which is effective
for the fiscal years beginning after December 15, 2010, all the other disclosures under this guidance are effective for the fiscal
years beginning after December 15, 2009.&nbsp;&nbsp;The Company does not expect the adoption to have a material impact on its consolidated
financial position, results of operations or cash flows.</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">In February 2010, the FASB issued ASU No. 2010-09, &ldquo;Amendments
to Certain Recognition and Disclosure Requirements,&rdquo; which addresses both the interaction of the requirements of Topic 855,
Subsequent Events, with the SEC&rsquo;s reporting requirements and the intended breadth of the reissuance disclosures provision
related to subsequent events.&nbsp;&nbsp;Specifically, the amendments state that SEC filers are no longer required to disclose
the date through which subsequent events have been evaluated in originally issued and revised financial statements.&nbsp;&nbsp;The
standard was effective immediately upon issuance.&nbsp;&nbsp;The Company does not expect the adoption to have a material impact
on its consolidated financial position, results of operations or cash flows.</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">In April 2010, the FASB issued ASU 2010-13 &ldquo;Compensation-Stock
Compensation (Topic 718) Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market
in Which the Underlying Equity Security Trades&rdquo; (ASU 2010-13). Topic 718 is amended to clarify that a share-based payment
award with an exercise price denominated in the currency of a market in which a substantial portion of the entity&rsquo;s equity
securities trades shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not
to be classified as a liability if it otherwise qualifies as equity classification. The amendments in this standard are effective
for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The guidance should be
applied by recording a cumulative-effect adjustment to the opening balance of retained earnings for all outstanding awards as of
the beginning of the fiscal year in which the amendments are initially applied.&nbsp;&nbsp;The Company does not expect the adoption
to have a material impact on its consolidated financial position, results of operations or cash flows.</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">In December 2010, the FASB issued ASU 2010-29, &ldquo;Business
Combinations (ASC Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations &ndash; a consensus of
the FASB Emerging Issues Task Force&rdquo;.&nbsp;&nbsp;This ASU clarifies existing disclosure requirements for public entities
with business combinations that occur in the current reporting period.&nbsp;&nbsp;The ASU stipulates that if an entity is presenting
comparative financial statements, revenue and earnings of the combined entity should be disclosed as though the business combinations
that occurred during the current year had occurred as of the beginning of the comparative prior annual reporting period.&nbsp;&nbsp;The
ASU also expands the supplemental pro forma disclosures required by ASC Topic 805 to include a description of the nature and amount
of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro
forma revenue and earnings.&nbsp;&nbsp;This guidance is effective prospectively for business combinations with acquisition dates
on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.&nbsp;&nbsp;Early adoption
is permitted.&nbsp;&nbsp;The Company does not expect the adoption to have a material impact on its consolidated financial position,
results of operations or cash flows.</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">Management does not believe that any other recently issued,
but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.</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"><B>NOTE 4 &ndash;Commitments and Contingencies</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 leases its office and warehouse. The maturity date
for the lease is May 2016. The minimum rental commitment under the lease for the years ended July 31 are:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Year Ending July 31:</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: 82%; text-align: left">2012</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">53,696</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,133</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">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,570</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,007</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; padding-bottom: 1pt">2016</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">49,537</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">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">272,943</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">The rent expense for the years ended July 31, 2011 and 2010
was $65,221, and $67,000, respectively.</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"><B>NOTE 5 &ndash; Liquidity and Shareholders&rsquo; Equity</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">Cash and cash equivalents were $524,512 and $165,848 at July
31, 2011 and 2010, respectively.&nbsp;&nbsp;Our working capital was $347,358 and $529,643 at July 31, 2011 and 2010, respectively.</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"><B>Preferred Stock</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's Amended Articles of Incorporation authorizes the
issuance of 50,000,000 shares of Preferred Stock, par value $0.001 per share, subject to any limitations prescribed by law, without
further vote or action by the stockholders, to issue from time to time shares of preferred stock in one or more series. Each such
series of Preferred Stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special
or relative rights or privileges as shall be determined by the Company's board of directors, which may include, among others, dividend
rights, voting rights, liquidation preferences, conversion rights and preemptive rights.</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"><B><U>Series A Convertible Preferred Stock</U></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 authorized a total of 9,400,000 shares of Series
A Convertible Preferred Stock (the &ldquo;Series A&rdquo;).&nbsp;&nbsp;The Series A is convertible at any time into shares of the
Company&rsquo;s common stock at the conversion rate of one share of Common Stock per each share of Series A converted.&nbsp;&nbsp;The
Series A is treated on an &ldquo;as converted&rdquo; basis for both voting and liquidation rights. There are currently 9,400,000
shares of Series A issued and outstanding.&nbsp;&nbsp;In June 2011, an amendment was filed with the Secretary of State of Nevada
whereby the conversion price of Series A would remain unchanged in event of stock split, stock dividend on the common stock, a
reclassification of the common stock or distribution to holders of common stock.&nbsp;&nbsp;If the Company reports net income in
two of the following four years following the Exchange, the Series A shall be convertible into Common Stock at the conversion rate
of two shares of Common Stock per each share of Series A converted.</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><U>Series B Convertible Preferred Stock</U></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 authorized a total of 2,600,000 shares of 6%
Series B Convertible, Redeemable Preferred Stock (the &ldquo;Series B&rdquo;).&nbsp;&nbsp;The Series B accrues annual dividends
at the rate of 6% per year in shares of Common Stock at the dividend conversion rate of $1.00.&nbsp;&nbsp;The Series B, together
with any unpaid dividends, is convertible at any time into shares of the Company&rsquo;s common stock at the conversion rate of
one share of Common Stock per each share of Series B converted.&nbsp;&nbsp;Following the second anniversary of the Exchange, the
Series B, together with any unpaid dividends, shall be convertible into Common Stock at the conversion price of forty cents ($0.40)
or seventy percent (70%) of the daily volume weighted average price of the Common Stock for the twenty trading days immediately
prior to the conversion.&nbsp;&nbsp;The Series B is redeemable by the Company, at any time prior to December 31, 2015, in cash
at the redemption rate of $1.00 per share of Series B plus any accrued and unpaid dividends.&nbsp;&nbsp;On December 31, 2015, all
outstanding shares of Series B shall be redeemed by the Company at a per share redemption price equal to $1.00 per share of Series
B plus an amount of Common Stock equal to the amount of the accrued and unpaid dividend thereon.&nbsp;&nbsp;The Series B has a
liquidation preference of $2,600,000 and ranks prior to the Series A and the Common Stock.&nbsp;&nbsp;The Series B votes on an
&ldquo;as converted&rdquo; basis.&nbsp;&nbsp;There are currently 325,000 shares of Series B 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"><B>Warrants</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">As of July 31, 2010, there were warrants outstanding to purchase
500,000 shares of Common Stock at the exercise price of $0.50.</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">As of July 31, 2011, there were warrants outstanding to purchase
500,000 shares of Common Stock at the exercise price of $1.60.</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"><B>Options</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">As of the Exchange date, there were fully vested options outstanding
to purchase 5,500,000 shares of Common Stock and 2,350,000 shares of Series A Preferred Stock, both at a purchase price of $0.01
per share as well as 7,050,000 shares of Series A Preferred Stock as part of the Exchange.&nbsp;&nbsp;On April 27, 2010 the Board
granted a non cash bonus to Mr. Kenneth Cheng of $55,000 upon receipt of which, all 5,500,000 options for Common Stock were exercised.&nbsp;&nbsp;On
July 20, 2011, Mr. Kenneth Cheng exercised all 2,350,000 options for Series A Preferred Stock.&nbsp;&nbsp;On June 1, 2011, all
7,050,000 shares for Series A Preferred Stock were issued to Mr. John Hwang as part of the Exchange agreement.</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">As of July 31, 2010, there were options outstanding for the
purchase of 2,350,000 of Series A Preferred Stock.</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">As of July 31, 2011, there were no options issued or 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"><B>2010 Equity Incentive Plan</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">On January 15, 2010, our Board and Stockholders approved and
adopted the 2010 Equity Incentive Plan (the &ldquo;2010 Plan&rdquo;). A copy of the 2010 Plan was attached as Exhibit 10.4 to Form
8-K filed with the Securities and Exchange Commission on January 22, 2010.</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 2010 Plan is intended to promote the interests of the Company
by attracting and retaining exceptional employees, consultants, directors, officers and independent contractors (collectively referred
to as the &ldquo;Participants&rdquo;), and enabling such Participants to participate in the long-term growth and financial success
of the Company. Under the 2010 Plan, the Company may grant stock options, which are intended to qualify as &ldquo;incentive stock
options&rdquo; under Section 422 of the Internal Revenue Code of 1986, as amended (the &ldquo;Incentive Stock Options&rdquo;),
non-qualified stock options (the &ldquo;Nonqualified Stock Options&rdquo;), stock appreciation rights (&ldquo;SARs&rdquo;) and
restricted stock awards (the &ldquo;Restricted Stock Awards&rdquo;), which are restricted shares of Common Stock (the Incentive
Stock Options, the Nonqualified Stock Options, the SARs and the Restricted Stock Awards are collectively referred to as &ldquo;Incentive
Awards&rdquo;). Incentive Awards may be granted pursuant to the 2010 Plan for 10 years from the Effective Date.</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">From time to time, the Company may issue Incentive Awards pursuant
to the 2010 Plan.&nbsp;&nbsp;Each of the awards will be evidenced by and issued under a written agreement. In accordance with the
rules of the plan, the exercise price of options granted shall be not less than 110% of the average of the closing price for the
30 days preceding the grant date.</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Board reserved a total of 2,277,778 shares of our Common
Stock for issuance under the 2010 Plan. If an incentive award granted under the 2010 Plan expires, terminates, is unexercised or
is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to such award and
the surrendered shares will become available for further awards under the Plan.</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 number of shares subject to the 2010 Plan, any number of
shares subject to any numerical limit in the 2010 Plan, and the number of shares and terms of any Incentive Award may be adjusted
in the event of any change in our outstanding Common Stock by reason of any stock dividend, spin-off, stock split, reverse stock
split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares, or similar
transaction.</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">On September 1, 2010, 840,000 options were granted to eight
employees at an exercise price of $0.20 per share.&nbsp;&nbsp;Using the Black-Scholes option pricing model with the following assumptions:
risk-free interest rate of 1.79%; volatility of 40%; expected life of 10 years; and, all option grants without payment of dividends,
the Company recognized a non-cash stock compensation charge of $15,469 for the twelve months ended July 31, 2011 in connection
with the issuance and vesting of these options.&nbsp;&nbsp;At July 31, 2011, 1,437,778 options remain available for future grant
under the Plan.</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">For the year ended July 31, 2010, based on the fair value of
Common Stock and Series A Preferred Stock options granted during the year, the Company recognized stock option expense of $41,861.&nbsp;&nbsp;The
fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following
assumptions: risk-free interest rate of 1.79%; volatility of 70%; expected life of 4 years; and, all option grants without payment
of dividends.</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">As of July 31, 2011, no options were issued or outstanding under
the terms of the 2010 Plan.</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"><B>Common Stock</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">On April 30, 2010, the Company Amended and Restated its Articles
of Incorporation to authorize the issuance of up to 1,000,000,000 shares of common stock, $0.001 par value per share, of which
52,577,449 shares and 51,750,000 were outstanding as of July 31, 2011 and July 31, 2010, respectively.</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"><B>NOTE 6 &ndash; Related Party Transactions and Gain on Settlement</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"><I><U>Shareholder</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company did not have notes payable to related parties as
of July 31, 2011, and had two notes payable to related parties of $70,000 and $30,000 as of July 31, 2010.</P>

<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>&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">July 31, 2011</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">July 31, 2010</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: 64%; text-align: left">Note payable to a shareholder, bearing interest at 10% per annum.&nbsp;&nbsp;The note was repaid to shareholder February 2011.</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">30,000</TD><TD STYLE="width: 1%; 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; padding-bottom: 1pt">Note payable to an employee, bearing interest at 10% per annum.&nbsp;&nbsp;The note was repaid to employee June 2011.</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">70,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100,000</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"><I><U>Litigation settlement</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company had an ongoing litigation over accounts receivable
and payable with Ambeon Corporation, a related party by virtue of common ownership. The dispute started in 2004 and was settled
in favor of the Company under the Shih Lin District Court of Taiwan on August 20, 2008. The Company agreed to pay a sum of $560,000
and the remaining disputed payable balances were decreased in favor of the Company, and settlement income of $843,572 was realized
in year 2008. As of July 31, 2011, the company has paid $445,000 towards the settlement.&nbsp;&nbsp;The remaining minimum payments
due under the settlement are as follows:</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: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Year Ending July 31:</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: 77%; text-align: left">2012</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 20%; text-align: right">60,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">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">115,000</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"><B>NOTE 7 &ndash; Property and Equipment</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">Property and equipment are stated at cost. Depreciation is calculated
using the straight-line method over the following estimated useful lives of the assets: furniture and fixtures &ndash;seven years;
machinery and equipment &ndash;five years; software &ndash; five years; leasehold improvements &ndash;the life of the current facility
lease. Major additions and betterments are capitalized and repairs and maintenance are charged to operations in the period incurred.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; 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="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">July 31, <BR>
2011</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">July 31, <BR>
2010</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: 64%; text-align: left">Furniture and fixture</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">27,635</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">14,901</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Machinery and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,157</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,641</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Software</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">359,417</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">359,416</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Leasehold Improvements</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,985</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">417,194</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">397,958</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accumulated depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(391,553</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(381,665</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Property and equipment, net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">25,641</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">16,293</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"><B>Note 8 &ndash; Revolving Line of Credit</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">On May 9, 2011, the Company completed negotiations to renew
and expand its secured line of bank credit for up to one million three hundred thousand dollars and extend the line by one year
to July 2012. Advances under the credit line will be secured with substantially all of the Company&rsquo;s assets, be subject to
interest at 1% above the Wall Street Journal prime rate index, and be subject to the following restrictive covenants: (i) the current
ratio shall not be less than 1.2 times; (ii) the debt to tangible net worth ratio shall not exceed 2.5 times; and (iii) the quarterly
EBITDA shall not be less than $30,000 on a rolling four quarter basis.&nbsp;&nbsp;At July 31, 2011, the company was in violation
of the restrictive covenant pertaining to a minimum quarterly EBITDA of not less than $30,000.&nbsp;&nbsp;The lender issued forbearance
for the violation of the restrictive covenant.&nbsp;&nbsp;The credit line will expire on July 14, 2012.&nbsp;&nbsp;At July 31,
2011, the Company had drawn $290,000 under this credit line.</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 incurred interest expense of $25,172 and $17,700
during the years ended July 31, 2011, and 2010, respectively.</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"><B>Note 9 - Notes Payable</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">Notes payable, which are unsecured, consist of the following
as of July 31, 2011 and July 31, 2010:</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"><B>Notes Payable Consist of the Following at:&nbsp;</B></P>

<P STYLE="margin: 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>&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">July 31, 2011</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">July 31, 2010</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: 64%; text-align: left">Note payable to Ambeon Corporation, a related party by virtue of common ownership, bearing interest at 5% per annum.</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">115,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">235,000</TD><TD STYLE="width: 1%; 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">Note payable to a shareholder, bearing interest at 10% per annum.&nbsp;&nbsp;The note was repaid to shareholder February 2011.</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">30,000</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">Note payable to an employee, bearing interest at 10% per annum.&nbsp;&nbsp;The note was repaid to employee June 2011.</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">70,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total notes payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">115,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">335,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Less current portion</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Due to related party</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">100,000</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; padding-bottom: 1pt; text-indent: -0.5in; padding-left: 0.5in">Due to third party</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">60,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">115,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">60,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">215,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.5in; padding-left: 0.5in">Long-term notes payable</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">55,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">120,000</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>

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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>Note 10 &ndash; Income Taxes</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: justify">The consolidated income tax expense for
the years ended July 31, 2011 and 2010 was determined based upon estimates of the Company&rsquo;s consolidated effective income
tax rates for the years ending July 31, 2011 and 2010, respectively. The difference between the consolidated effective income tax
rate and the U.S. federal statutory rate is primarily attributable to state income taxes, and the effect of certain permanent differences.</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">FASB Topic 740, Accounting for Uncertainty
in Income Taxes, prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. Generally accepted accounting principles require that the Company
recognizes in the financial statements a liability for tax uncertainty if it is more likely than not that the position will be
sustained on an audit, based on the technical merits of the position. They also provide guidance on de-recognition, classification,
interest and penalties, accounting in interim periods and disclosure. The Company has not recorded any liability for unrecognized
tax benefits as of July 31, 2011. There have been no material changes in unrecognized tax benefits at July 31, 2011.</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 tax returns are subject
to examination by federal, state and foreign taxing authorities. As of July 31, 2011, the statute of limitations for examining
the Company&rsquo;s federal income tax returns has not expired for the years ended July 31, 2006 through 2010. As of July 31, 2011,
the statutes of limitation for tax examinations in the state of California have not expired for tax returns filed for the years
ended July 31, 2006 through 2010.&nbsp;&nbsp;As of July 31, 2011, the statute of limitation for tax examinations in Taiwan have
not expired for tax returns filed for the years ended July 31, 2006 through 2010.</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 provided $1,600 and $5,050 for income taxes in the
years ended July 31, 2011 and 2010 respectively.&nbsp;&nbsp;The effective tax rates takes into consideration federal and state
minimum tax rates and foreign taxes.</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 accumulated NOLs of $1.45 million, which, if
unutilized, will begin to expire in 2018. Future tax benefits, which may arise as a result of these losses, have not been recognized
in these financial statements, and have been offset by a valuation allowance since there is no assurance that we will be able to
utilize these NOLs. Details of future income tax assets are as follows:</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"><B>Future income tax assets</B>&nbsp;</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"></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="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">July 31, 2011</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">July 31, 2010</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: 64%; text-align: left; text-indent: -0.5in; padding-left: 0.5in">NOL available for carry forward</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">1,452,077</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">1,307,775</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.5in; padding-left: 0.5in">R&amp;D credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">220,220</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">140,553</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; padding-bottom: 1pt; text-indent: -0.5in; padding-left: 0.5in">Other temporary timing differences</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">123,269</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">66,643</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,795,566</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,514,971</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; text-indent: -0.5in; padding-left: 0.5in; padding-bottom: 1pt">Statutory tax rate (combined federal and state)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">42.28</TD><TD STYLE="text-align: left; padding-bottom: 1pt">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">42.84</TD><TD STYLE="text-align: left; padding-bottom: 1pt">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.5in; padding-left: 0.5in">Net deferred tax asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">759,165</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">649,014</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; text-indent: -0.5in; padding-left: 0.5in; padding-bottom: 1pt">Valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(759,165</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(649,014</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</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>

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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>Note 11 &ndash; Subsequent Events</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: justify">On August 30, 2011, Kenneth Cheng resigned
as the Company&rsquo;s President, as a member of the Board of Directors, and all other positions with the Company&rsquo;s subsidiaries.</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 October 19, the Company effectuated
a one-for-eight reverse split of its shares, effective September 8, 2011. The reverse decreased the total authorized, issued and
outstanding common shares and Series B Preferred Convertible Stock by the same one-for-eight ratio as well as amended the par value
per share from $0.001 to $0.008.&nbsp;&nbsp;The total authorized common shares decreased from 1,000,000,000 to 125,000,000.</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 October 31, 2011 the Company entered
into an Investment Agreement and a Registration Rights Agreement with Kodiak Capital Group, LLC (the &quot;Investor&quot;) to purchase
up to $1,000,000 of the company's common stock.&nbsp;&nbsp;Upon Registration, the Company may&nbsp;&nbsp;obtain capital in increments
of up to $25,000 as working capital is needed.&nbsp;&nbsp;The facility sets the purchase price at 80% of the volume weighted average
over five consecutive trading days.</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">Management performed an evaluation of the
Company&rsquo;s activity through the date these financials were issued to determine if they must be reported.&nbsp;&nbsp;The Management
of the Company determined that there were no other reportable subsequent events to be disclosed.</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>ITEM 1. Financial Statements</B></P>

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

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 88%">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 10%; padding-bottom: 1.5pt; text-align: center; border-bottom: Black 1pt solid">Page</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">Condensed Consolidated Balance Sheets as of January 31, 2012 (Unaudited) and July 31, 2011 (Audited)</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">2</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">Condensed Consolidated Statements of Operations for the Three and Six Months Ended January 31, 2012 and 2011 (Unaudited)</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">3</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">Condensed Consolidated Statements of Cash Flows for the Six Months Ended January 31, 2012 and 2011 (Unaudited)</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">4</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">Notes to Condensed Consolidated Financial Statements for the Three and Six Months Ended January 31, 2012 and 2011 (Unaudited)</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">5</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&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: center"><B>AMBICOM HOLDINGS, INC.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&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">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">January&nbsp;31,</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">July&nbsp;31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">2012</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">2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">(Unaudited)</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">(Audited)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: center">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&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">Current assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 64%; text-align: left; padding-left: 9pt">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">225,546</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">524,512</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts receivable, net of allowance for doubtful accounts of $5,837 and $9,329 as of January 31, 2012, and July 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">182,587</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,853</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Inventory, net of reserve balances of $31,657 and $37,814 as of January 31, 2012, and July 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,287</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">113,770</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; padding-bottom: 1pt; padding-left: 9pt">Prepaid expenses and other current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,159</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">26,063</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">428,579</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">804,198</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Property and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,247</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,641</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Deposit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,695</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,695</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">471,521</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">850,534</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: center">LIABILITIES AND STOCKHOLDERS&rsquo; EQUITY</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>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Current liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">77,084</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">47,094</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts payable - other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">85,913</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,582</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; padding-left: 9pt">Deferred revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">167,120</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,164</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Line of credit payable</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">290,000</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; padding-bottom: 1pt; padding-left: 9pt">Notes payable - current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">60,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">60,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Total current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">390,117</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">456,840</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Notes payable, net of current</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">55,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">415,117</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">511,840</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Commitment and contingency (Note 10)</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>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stockholders&rsquo; equity:</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; padding-left: 9pt">Common stock, $0.008 par value; 125,000,000 shares authorized; 9,790,760 and 6,572,181 shares issued and outstanding at January 31, 2012 and July 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,677</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,577</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Preferred stock, Series A, $0.001 per share; 9,400,000 shares authorized; 9,400,000 and 9,400,000 shares issued and outstanding at January 31, 2012 and July 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,400</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; padding-left: 9pt">Preferred stock, Series B, $0.008 per share 325,000 shares authorized; 262,500 and 325,000 shares issued and outstanding at January 31, 2012 and July 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,600</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Additional paid in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,407,011</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,160,697</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; padding-bottom: 1pt; padding-left: 9pt">Accumulated deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(11,418,784</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(10,886,580</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">56,404</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">338,694</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">&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">471,521</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">850,534</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 0pt 3.9pt; text-align: center"><I>The accompanying notes are
an integral part of these consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 3.9pt; text-align: center"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 3.9pt; text-align: center">&nbsp;</P>

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

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

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

<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>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Three&nbsp;Months&nbsp;Ended&nbsp;January&nbsp;31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Six&nbsp;Months&nbsp;Ended&nbsp;January&nbsp;31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&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">2012</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">2011</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">2012</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">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&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><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="width: 40%">Sales</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">458,813</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,268,148</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">607,759</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">2,203,161</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Cost of sales</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">189,763</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">503,107</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">263,709</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">997,399</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Gross profits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">269,050</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">765,041</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">344,050</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,205,762</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Operating Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,602</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,102</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,394</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,205</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; padding-left: 9pt">Professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">59,410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,758</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">328,573</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">97,692</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Selling and general expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">247,424</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">417,216</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">543,904</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">785,613</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total operating expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">308,436</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">477,076</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">875,871</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">885,510</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Income (loss) from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(39,386</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">287,965</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(531,821</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">320,252</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Other income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Other income and expense, net</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">(34,073</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,696</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(46,425</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Interest expense, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6,908</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,084</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(12,519</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net other income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(40,981</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(388</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(58,944</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total income (loss) before income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(39,377</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">246,984</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(532,209</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">261,308</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Income taxes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net income (loss)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(39,377</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">246,984</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(532,209</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">261,308</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net income (loss) per share - basic</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.006</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.038</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.078</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.040</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net income (loss) per share - diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.002</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.036</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.032</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.038</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Weighted average shares outstanding &mdash; basic</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,010,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,475,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,799,202</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,475,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Weighted average shares outstanding &mdash; diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,672,488</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,800,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,461,690</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,800,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></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: center"><B>AMBICOM HOLDINGS, INC.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIX MONTHS ENDED JANUARY 31,</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&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="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</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">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">(Unaudited)</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flows from operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left; padding-left: 9pt">Net income (loss)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(532,209</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">261,308</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net income items not affecting cash:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,394</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,205</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">Stock-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,413</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,671</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Issuance of stock to investment firm</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">245,001</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; padding-left: 0.25in">Reduction in bad debt reserve</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,492</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(11,448</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Increase (reduction) in reserve for inventory loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,203</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,780</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in">Decrease / (Increase) in operating assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 27pt">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(39,242</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(534,370</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 27pt">Inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,686</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,038</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; padding-left: 27pt">Other receivables</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">13,689</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Prepaid expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,909</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(30,200</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in">Increase / (Decrease) in operating liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 27pt">Accounts payable - trade</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,502</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,103</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Accrued payable - other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,819</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(31,352</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 27pt">Unearned revenue</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">154,956</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.5in">Net cash provided by (used in) operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21,534</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(296,782</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flows from investing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Capital expenditures</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(518</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.5in">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(518</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Cash flows from financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net proceeds from (Net payments on) line of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(290,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">250,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Payments on notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(30,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(60,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Conversion of preferred stock</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.5in">Net cash provided by (used in) financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(320,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">190,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net decrease in cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(298,966</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(107,300</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Cash and cash equivalents, beginning of year</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">524,512</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">165,848</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Cash and cash equivalents, end of quarter</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">225,546</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">58,548</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&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; padding-left: 9pt">Supplemental information:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Income taxes paid</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</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; padding-left: 0.25in">Interest paid</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,084</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">12,519</TD><TD STYLE="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: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></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: center"><B>AMBICOM HOLDINGS, INC.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FOR THE THREE AND SIX MONTHS ENDED JANUARY
31, 2012 AND 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(UNAUDITED)</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"><B>NOTE 1 &ndash; Organization and Principal Activities</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: justify">AmbiCom Holdings, Inc. (&ldquo;AmbiCom
Holdings&rdquo; or the &lsquo;Company&rdquo;) was incorporated as Med Control, Inc. (&ldquo;Med Control&rdquo;) under the laws
of the State of Nevada on July 1, 2008. Med Control was a development stage enterprise until January 15, 2010. All of Med Control&rsquo;s
activities prior to January 15, 2010 related to its organization, initial funding and share issuances. On January 15, 2010, Med
Control Inc. changed its name to AmbiCom Holdings, Inc.</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 January 15, 2010, Med Control, Inc.
(the &ldquo;Registrant&rdquo;) authorized its Articles of Incorporation (the &ldquo;Amendment&rdquo;) to change its name to AmbiCom
Holdings, Inc., to increase the number of its authorized shares of capital stock from 75,000,000 to 1,050,000,000 shares of which
1,000,000,000 were designated common stock and 50,000,000 were designated preferred stock, par value $0.001 per share (the &ldquo;Preferred
Stock&rdquo;) and to effect a forward-split such that 131.2335958 shares of Common Stock were issued for every 1 share of Common
Stock issued and outstanding immediately prior to filing of the amendment (the &ldquo;Forward Split&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">On January 15, 2010, the Company acquired
AmbiCom Acquisition Corp. a privately owned Nevada corporation (&ldquo;AmbiCom&rdquo;), pursuant to an Agreement and Plan of Share
Exchange (the &ldquo;Exchange&rdquo;). AmbiCom was organized under the laws of the State of Nevada on July 29, 2008. AmbiCom is
a holding company whose operating company, AmbiCom, Inc., is a designer and developer of wireless products focusing on the wireless
medical industry. AmbiCom&rsquo;s wireless modules and devices are based on its innovative application software and Wi-Fi or Bluetooth
technologies.</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 Exchange,
the Company acquired AmbiCom from the AmbiCom equity holders in exchange for an aggregate of 20,000,000 newly issued shares of
Common Stock, 2,600,000 shares of Series B Preferred Stock, an option to purchase 5,500,000 shares of Common Stock and 2,350,000
shares of Series A Preferred Stock at the purchase price of $.01 per share, and warrants to purchase 500,000 shares of Common Stock
at the exercise price of $0.50 per share (collectively, the &ldquo;Exchange Shares&rdquo;). As a result of the Exchange, the AmbiCom
equity holders surrendered all of their issued and outstanding capital stock of AmbiCom in consideration for the Exchange Shares
and AmbiCom became a wholly-owned subsidiary 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">Simultaneously upon the Closing, the Company
closed an offering (the &ldquo;Offering&rdquo;) of its Common Stock at a price of $0.40 per share for an aggregate of 1,250,000
shares of Common Stock for aggregate offering price of $500,000.</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, contemporaneously with the
Closing, the Company and our former principal stockholder, Ms. Kato, split-off its wholly owned subsidiary, MCI Acquisition Corp.,
a newly-formed Nevada corporation (&ldquo;MCAC&rdquo;), whereby the Company assigned all of its previous operating assets to MCAC
in consideration for the assumption of all of the Company&rsquo;s liabilities to Ms. Kato, who is currently the principal shareholder
of MCI and the retirement and cancellation of Ms. Kato&rsquo;s 6,000,000 shares of Common Stock pursuant to the terms and conditions
of a split-off agreement by and among the Company, Ms. Kato, and MCAC (the &ldquo;Split-Off 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">Following the issuance of the Exchange
Shares and the retirement of Ms. Kato&rsquo;s shares pursuant to the Split-Off Agreement, the former stockholders of AmbiCom and/or
their designees now beneficially own approximately fifty-five percent (55%) of the total outstanding shares of Common Stock, and
after giving effect to the conversion of the Series B in accordance with their respective terms (and the satisfaction of certain
conditions to the conversion of such shares) seventy-six percent (76%) of the total outstanding shares of Common Stock on a fully-diluted
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"></P>

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<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"></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"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Details of the Company&rsquo;s subsidiaries
as of January 31, 2012 are as follows:</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="width: 22%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">Name</TD>
    <TD STYLE="width: 2%; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 19%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">Place&nbsp;and&nbsp;Date of<BR> Establishment/<BR> Incorporation</TD>
    <TD STYLE="width: 2%; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 25%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">Relationships</TD>
    <TD STYLE="width: 2%; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 28%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left; vertical-align: bottom">Principal&nbsp;Activities</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">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>E-Care USA, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>Nevada<BR> March 15, 2011</TD>
    <TD>&nbsp;</TD>
    <TD>Wholly-owned subsidiary of AmbiCom Holdings, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>Designer and developer of wireless home medical devices</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>AmbiCom Technology, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>Nevada<BR> May 17, 2010</TD>
    <TD>&nbsp;</TD>
    <TD>Wholly-owned subsidiary of AmbiCom Holdings, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>Planned acquisition company</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">Inter-company accounts and transactions
have been eliminated in consolidation.</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"><B>NOTE 2 &ndash; Basis of Presentation</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: justify">The accompanying consolidated financial
statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (&ldquo;SEC&rdquo;)
and accounting principles generally accepted in the United States for financial information. The preparation of financial statements
in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Significant estimates
made in preparing the financial statements include revenue recognition and costs of revenue, inventory valuations, long-lived and
intangible asset valuations and loss contingencies. In the opinion of management, the financial statements include all adjustments
(which are of a normal and recurring nature) necessary for the fair presentation of the results of the periods presented.</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">For financial accounting purposes, the
acquisition was a reverse acquisition of the Company by AmbiCom, under the purchase method of accounting, and was treated as a
recapitalization with AmbiCom as the acquirer.&nbsp;&nbsp;Upon consummation of the Exchange, the Company adopted the business plan
of AmbiCom. Accordingly, the consolidated statements of operations include the results of operations of AmbiCom and its subsidiaries
from August 1, 2011 and 2010, and the results of operations of Med Control from the acquisition date through January 31, 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"><B>NOTE 3 &ndash; Summary of Significant Accounting Policies</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: justify">The summary of significant accounting policies
is presented to assist in understanding the Company&rsquo;s financial statements. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the preparation of the financial statements.</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>a) Description of Business - </I></B>The
Company is a leading designer and developer of wireless technologies which emphasize wireless medical and other wireless 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"><B><I>b) Segment Information </I>- </B>The
Company follows ASC Topic 280, &ldquo;Disclosures about Segments of an Enterprise and Related Information.&rdquo; Topic 280 requires
that a company report financial and descriptive information about its reportable operating segments. Operating segments are components
of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in assessing performance. The Company&rsquo;s chief operating decision maker currently
evaluates the Company&rsquo;s operations from a number of different operational perspectives including but not limited to a client
by client basis. The Company derives all significant revenues from a single reportable operating segment of business. Accordingly,
the Company does not report more than one segment; nevertheless, management evaluates, at least annually, whether the Company continues
to have one single reportable segment.</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>c) Use of Estimates - </I></B>The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results may differ from those estimates, and the differences may be material to the financial statements. Estimates
are used primarily in determining the depreciable lives of fixed assets, and inventory valuation. In addition, estimates form the
basis for the reserves for sales allowances, accounts receivable and inventory. Various assumptions go into the determination of
these estimates. The process of determining significant estimates requires consideration of factors such as historical experience
and current and expected economic conditions.</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"></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>d) Cash and Cash Equivalents - </I></B>The
Company considers all highly liquid investments and time deposits with original maturities of three months or less when purchased
to be cash equivalents. All cash and cash equivalents are maintained with nationally recognized financial institutions.</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>e) Allowance for Doubtful Accounts
- </I></B>An allowance for doubtful accounts is computed based on the Company&rsquo;s historical experience and management&rsquo;s
analysis of possible bad debts. Accounts receivable are shown net of an allowance for doubtful accounts of $5,837 as of January
31, 2012 and $9,329 as of July 31, 2011, respectively.</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>f) Inventories - </I></B>Inventories
are stated at the lower of cost or market on an average basis. Inventory reserves are recorded for damaged, obsolete, excess and
slow-moving inventory. Market value of inventory is estimated based on the impact of market trends, an evaluation of economic conditions
and the value of current orders relating to the future sales of this type of inventory. As of January 31, 2012 and July 31, 2011,
the value of the inventory reserve was $31,657 and $37,814, respectively.</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>g) Income Taxes - </I></B>The Company
accounts for income taxes pursuant to the FASB ASC Topic 740, &quot;Accounting for Uncertainty in Income Taxes&quot;, (&ldquo;Topic
740&rdquo;). Topic 740 clarifies the accounting for uncertainty in income taxes recognized in the Company&rsquo;s financial statements
in accordance with generally accepted accounting principles. The calculation of the Company's tax provision involves the application
of complex tax rules and regulations within multiple jurisdictions. The Company's tax liabilities include estimates for all income-related
taxes that the Company believes are probable and that can be reasonably estimated. To the extent that the Company&rsquo;s estimates
are understated, additional charges to the provision for income taxes would be recorded in the period in which the Company determines
such understatement. If the Company's income tax estimates are overstated, income tax benefits will be recognized when realized.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment. Topic 740 prescribes a recognition threshold and measurement
attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.</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>h) Revenue Recognition - </I></B>The
majority of the Company's product revenues are recognized upon shipment or delivery and acceptance of products by customers, when
pervasive evidence of a sales arrangement exists, the price is fixed or determinable, the title has transferred and collection
of resulting receivables is reasonably assured. For merchandise products, the Company recognizes revenue upon shipment of products,
when title is passed and the amount collectible can reasonably be determined. All amounts billed to a customer related to shipping
and handling are classified as revenue, while all costs incurred by the Company for shipping and handling are classified as selling
expenses.</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>i) Research and Development Costs
- </I></B>Research and development costs are expensed as incurred.</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">j<B><I>) Stock-Based Compensation - </I></B>The
Company adopted ASC Topic 718 &ldquo;Share-Based Payment&rdquo;. As permitted, the Company elected to adopt disclosure-only provisions
of ASC 718 in accordance with generally accepted accounting principles. Under the provisions of Topic ASC 718, compensation expense
is recognized based on the fair value of options on the grant date.</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>k) Fair Value of Financial Instruments
</I></B>- ASC Topic 820, &ldquo;Fair Value Measurements&rdquo;, requires disclosure of the level within the fair value hierarchy
in which fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets
for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs
(Level 3). The Company's financial instruments consist of cash and cash equivalents, short-term trade receivables and payables
at January 31.</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"><B><I><U>Fair Value of Financial Instruments</U></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table presents the carrying
amounts and estimated fair values of the Company&rsquo;s financial instruments at:</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 STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January&nbsp;31,&nbsp;2012</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">July&nbsp;31,&nbsp;2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Carrying<BR> amount</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Fair&nbsp;value</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Carrying<BR> amount</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Fair&nbsp;value</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Financial assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 52%; text-align: left; padding-left: 9pt">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">225,546</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: 9%; text-align: right">225,546</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: 9%; text-align: right">524,512</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: 9%; text-align: right">524,512</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">182,587</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">182,587</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,853</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,853</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Financial liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">162,997</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">162,997</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94,676</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94,676</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Line of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">85,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">82,943</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">115,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,500</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">The fair values of the financial instruments
shown in the above table represent the amounts that would be received when those assets are sold or that would be paid when those
liabilities are transferred in an orderly transaction between market participants at the measurement date. Those fair value measurements
maximize the use of observable inputs.</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, in situations where there is little,
if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company&rsquo;s
own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed
by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted
discount rates, available observable and unobservable inputs.</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 uses the following methods
and assumptions in estimating the fair value disclosures for financial instruments:</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"><U>Cash equivalents</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The carrying amount reported in the balance
sheets of cash equivalents approximate fair value because of the relatively short time to maturity.</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"><U>Accounts receivable</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The carrying amount reported in the balance
sheets of accounts receivable approximate fair value because of the relatively short time to maturity.</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"><U>Accounts payable and accrued liabilities</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The carrying amount reported in the balance
sheets of accrued payable and accrued liabilities approximate fair value because of the relatively short time to maturity.</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"><U>Line of credit</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The carrying amount reported in the balance
sheets of due to related party approximate fair value because of the relatively short time to maturity.</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"><U>Notes payable</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of the Company&rsquo;s notes
payable are measured using quoted offer-side prices when quoted market prices are available. If quoted market prices are not available,
the fair value is determined by discounting the future cash flows of each instrument at rates that reflect rates currently observed
in publicly traded debt markets for debt of similar terms to companies with comparable credit risk. For long-term debt measurements,
where there are no rates currently observable in publicly traded debt markets of similar terms with comparable credit, the Company
uses market interest rates and adjusts that rate for all necessary risks, including its own credit risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></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><I><U>Fair Value Hierarchy</U></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">The following table presents the placement
in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at :</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 STYLE="text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair&nbsp;value&nbsp;measurements&nbsp;at&nbsp;<BR> reporting&nbsp;date&nbsp;using</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January&nbsp;31,<BR> 2012</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; border-bottom: Black 1pt solid">Quoted&nbsp;prices<BR> in&nbsp;active<BR> markets&nbsp;for<BR> identical<BR> assets<BR> (Level&nbsp;1)</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; border-bottom: Black 1pt solid">Significant<BR> other<BR> observable<BR> inputs<BR> (Level&nbsp;2)</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; border-bottom: Black 1pt solid">Significant<BR> unobservable<BR> inputs<BR> (Level&nbsp;3)</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 52%; text-align: justify; text-indent: -0.5in">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; 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: 9%; 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: 9%; 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: 9%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left"></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Notes payable</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">85,000</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"></TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">82,943</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<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>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair&nbsp;value&nbsp;measurements&nbsp;at&nbsp;<BR> reporting&nbsp;date&nbsp;using</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<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; border-bottom: Black 1pt solid">July&nbsp;31,&nbsp;2011</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; border-bottom: Black 1pt solid">Quoted&nbsp;prices<BR> in&nbsp;active&nbsp;<BR> markets&nbsp;for<BR> identical<BR> assets<BR> (Level&nbsp;1)</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; border-bottom: Black 1pt solid">Significant&nbsp;<BR> other&nbsp;<BR> observable&nbsp;<BR> inputs&nbsp;<BR> (Level&nbsp;2)</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; border-bottom: Black 1pt solid">Significant<BR> unobservable<BR> inputs&nbsp;<BR> (Level&nbsp;3)</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 52%; text-indent: -0.5in">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; 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: 9%; 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: 9%; 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: 9%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Notes payable</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">115,000</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">112,500</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&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"><B><I>l) Translation of Foreign Currency
- </I></B>The Company accounts for its foreign operations in accordance with ASC Topic 830, &ldquo;Foreign Currency Translation&rdquo;.
For the branch, non-monetary balance sheet items and related income statements items are translated at historical exchange rates,
while monetary balance sheet items are translated at current exchange rates. Income statement items, other than monetary, are translated
at the weighted average exchange rate during the year. Deferred taxes are not provided on translation gains and losses where the
Company expects earnings of a foreign branch to be permanently reinvested.</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>m) Concentration - </I></B>Financial
instruments which potentially subject the Company to concentrations of credit risk are primarily accounts receivable. The Company
performs ongoing credit evaluations of its customers&rsquo; financial condition. If the collection of the receivable becomes doubtful,
the Company establishes a reserve in an amount determined appropriate for the perceived risk. The Company maintains its cash accounts
at commercial banks. From time to time, cash balances maintained in such banks may exceed the insured amount by the Federal Deposit
Insurance Corporation (FDIC). As of January 31, 2012 and July 31, 2011, management does not believe they are exposed to any significant
risk on their cash balances. The Company&rsquo;s products are primarily sold to global medical device companies. These customers
can be significantly affected by changes in economic, competitive or other factors. The Company makes substantial sales to a relatively
few, large customers, where company is seeking to capture more business from other targeted medical device companies.</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">Two customers accounted for $152,000 (81%)
and $28,000 (15%) of receivables at January 31, 2012 while four customers accounted for $57,800 (39%), $40,579 (27%), $35,430 (24%)
and $23,559 (16%) as of July 31, 2011, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Two customers accounted for $216,600 (47%)
and $195,780 (43%) of revenue for the three months ended January 31, 2012 and one customer accounted for $1,015,800 (80%) of revenue
for the three months ended January 31 2011. Three customers accounted for $216,600 (36%), $202,530 (33%), and $91,921 (15%) of
the revenues for the six months ended January 31, 2012 and one customer accounted for $1,589,800 (72%) of the revenues for the
six months ended January 31, 2011 respectively.</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">Four vendors accounted for $20,000 (26%),
$19,584 (25%), $10,000 (13%), and $9,386 (12%) of accounts payable as of January 31, 2012 and two vendors accounted for $25,000
(53%) and $10,018 (21%) as of July 31, 2011, respectively.</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">One vendor accounted for $94,338 (78%)
of the purchases for the three months ended January 31, 2012, and one vendor accounted for $447,300 (98%) of the purchases for
the three months ended January 31, 2011. Three vendors accounted for $94,338 (56%), $39,000 (23%), and $20,000 (12%) of the purchases
for the six months ended January 31, 2012, and one vendor accounted for $837,203 (87%) of the purchases for the six months ended
January 31, 2011, respectively.</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>RECENT ACCOUNTING PRONOUNCEMENTS</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 October 2009, the FASB issued guidance
on multiple-deliverable arrangements to address how to separate deliverables and how to measure and allocate arrangement consideration.
This guidance requires vendors to develop the best estimate of selling price for each deliverable and allocate the arrangement
consideration using this selling price. This guidance also expands the disclosure requirements to include both quantitative and
qualitative information. This guidance is effective for fiscal years beginning after June 15, 2010. The Company does not expect
the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2010, the FASB issued guidance
that expands the interim and annual disclosure requirements of fair value measurements, including the information about movement
of assets between level 1 and 2 of the three-tier fair value hierarchy established under its fair value measurement guidance. This
guidance also requires separate disclosure for each of purchases, sales, issuance, and settlements in the reconciliation for fair
value measurements using significant unobservable inputs, level 3. Except for the detailed disclosure in the level 3 reconciliation,
which is effective for the fiscal years beginning after December 15, 2010, all the other disclosures under this guidance are effective
for the fiscal years beginning after December 15, 2009. The Company does not expect the adoption to have a material impact on its
consolidated financial position, results of operations or cash flows.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2010, the FASB issued ASU No.
2010-09, &ldquo;Amendments to Certain Recognition and Disclosure Requirements,&rdquo; which addresses both the interaction of the
requirements of Topic 855, Subsequent Events, with the SEC&rsquo;s reporting requirements and the intended breadth of the reissuance
disclosures provision related to subsequent events. Specifically, the amendments state that SEC filers are no longer required to
disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The
standard was effective immediately upon issuance. The Company does not expect the adoption to have a material impact on its consolidated
financial position, results of operations 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; text-align: justify"><FONT STYLE="color: black">In April 2010,
the FASB issued ASU 2010-13 &ldquo;Compensation-Stock Compensation (Topic 718) Effect of Denominating the Exercise Price of a Share-Based
Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades&rdquo; (ASU 2010-13). Topic 718 is amended
to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial
portion of the entity&rsquo;s equity securities trades shall not be considered to contain a market, performance, or service condition.
Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments
in this standard are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December
15, 2010. The guidance should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings
for all outstanding awards as of the beginning of the fiscal year in which the amendments are initially applied. </FONT>The Company
does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.<FONT STYLE="color: black">
</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">In December
2010, the FASB issued ASU 2010-29, &ldquo;Business Combinations (ASC Topic 805): Disclosure of Supplementary Pro Forma Information
for Business Combinations &ndash; a consensus of the FASB Emerging Issues Task Force&rdquo;. This ASU clarifies existing disclosure
requirements for public entities with business combinations that occur in the current reporting period. The ASU stipulates that
if an entity is presenting comparative financial statements, revenue and earnings of the combined entity should be disclosed as
though the business combinations that occurred during the current year had occurred as of the beginning of the comparative prior
annual reporting period. The ASU also expands the supplemental pro forma disclosures required by ASC Topic 805 to include a description
of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included
in the reported pro forma revenue and earnings. This guidance is effective prospectively for business combinations with acquisition
dates on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is
permitted. </FONT>The Company does not expect the adoption to have a material impact on its consolidated financial position, results
of operations or cash flows.</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">Management does not believe that any other
recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying
financial statements.</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: justify"><B>NOTE 4 &ndash; Liquidity and Shareholders&rsquo;
Equity</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">Cash and cash equivalents were $225,546
and $524,512 at January 31, 2012 and July 31, 2011, respectively. Our working capital was $38,462 and $347,358 at January 31, 2012
and July 31, 2011, respectively.</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>Preferred Stock&nbsp;</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's Amended Articles of Incorporation
authorize the issuance of 50,000,000 shares of Preferred Stock, par value $0.001 per share, subject to any limitations prescribed
by law, without further vote or action by the stockholders, and to issue, from time to time, shares, of preferred stock in one
or more series. Each such series of Preferred Stock shall have such number of shares, designations, preferences, voting powers,
qualifications, and special or relative rights or privileges as shall be determined by the Company's board of directors, which
may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.</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><U>Series A Convertible Preferred Stock</U></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 has authorized a total of 9,400,000
shares of Series A Convertible Preferred Stock (the &ldquo;Series A&rdquo;).&nbsp;&nbsp;The Series A is convertible at any time
into shares of the Company&rsquo;s common stock at the conversion rate of one share of Common Stock per each share of Series A
converted.&nbsp;&nbsp;The Series A is treated on an &ldquo;as converted&rdquo; basis for both voting and liquidation rights. There
are currently 9,400,000 shares of Series A issued and outstanding. In June 2011, an amendment was filed with the Secretary of State
of Nevada whereby the conversion price of Series A would remain unchanged in event of stock split, stock dividend on the common
stock, a reclassification of the common stock or distribution to holders of common stock. If the Company reports net income in
two of the following four years following the Exchange, the Series A shall be convertible into Common Stock at the conversion rate
of two shares of Common Stock per each share of Series A converted.&nbsp;&nbsp;</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><U>Series B Convertible Preferred Stock</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">The Company has authorized a total of 2,600,000
shares of 6% Series B Convertible, Redeemable Preferred Stock (the &ldquo;Series B&rdquo;). The Series B accrues annual dividends
at the rate of 6% per year in shares of Common Stock at the dividend conversion rate of $1.00.&nbsp;&nbsp;The Series B, together
with any unpaid dividends, is convertible at any time into shares of the Company&rsquo;s common stock at the conversion rate of
one share of Common Stock per each share of Series B converted.&nbsp;&nbsp;Following the second anniversary of the Exchange, the
Series B, together with any unpaid dividends, shall be convertible into Common Stock at the conversion price of forty cents ($0.40)
or seventy percent (70%) of the daily volume weighted average price of the Common Stock for the twenty trading days immediately
prior to the conversion.&nbsp;&nbsp;The Series B is redeemable by the Company, at any time prior to December 31, 2015, in cash
at the redemption rate of $1.00 per share of Series B plus any accrued and unpaid dividends.&nbsp;&nbsp;On December 31, 2015, all
outstanding shares of Series B shall be redeemed by the Company at a per share redemption price equal to $1.00 per share of Series
B plus an amount of Common Stock equal to the amount of the accrued and unpaid dividend thereon.&nbsp;&nbsp;The Series B has a
liquidation preference of $2,600,000 and ranks prior to the Series A and the Common Stock.&nbsp;&nbsp;The Series B votes on an
&ldquo;as converted&rdquo; basis. On October 19, 2011, the Company effectuated a reverse 1 for 8 stock split to reduce the authorized
shares to 325,000 shares of Preferred Stock B, $0.008 par value 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">There are presently 9.4 million shares
of Series A Preferred Stock and 262,500 shares of Series B Preferred Stock outstanding.</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>Warrants</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">As of January 31, 2012, there were warrants
outstanding to purchase 62,500 shares of Common Stock at the exercise price of $1.60.</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>Options</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 the Exchange date, there were fully
vested options outstanding to purchase 5,500,000 shares of Common Stock and 2,350,000 shares of Series A Preferred Stock, both
at a purchase price of $0.01 per share as well as 7,050,000 shares of Series A Preferred Stock as part of the Exchange.&nbsp;&nbsp;On
April 27, 2010 the Board granted a non cash bonus to Mr. Kenneth Cheng of $55,000 upon receipt of which, all 5,500,000 options
for Common Stock were exercised. On July 20, 2011, Mr. Kenneth Cheng exercised all 2,350,000 options for Series A Preferred Stock.
On June 1, 2011, all 7,050,000 shares for Series A Preferred Stock were issued to Mr. John Hwang as part of the Exchange agreement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of January 31, 2012 and July 31, 2011,
there were no options issued or outstanding.</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>2010 Equity Incentive Plan</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 January 15, 2010, our Board and Stockholders
approved and adopted the 2010 Equity Incentive Plan (the &ldquo;2010 Plan&rdquo;). A copy of the 2010 Plan was attached as Exhibit
10.4 to Form 8-K filed with the Securities and Exchange Commission on January 22, 2010.</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 2010 Plan is intended to promote the
interests of the Company by attracting and retaining exceptional employees, consultants, directors, officers and independent contractors
(collectively referred to as the &ldquo;Participants&rdquo;), and enabling such Participants to participate in the long-term growth
and financial success of the Company. Under the 2010 Plan, the Company may grant stock options, which are intended to qualify as
&ldquo;incentive stock options&rdquo; under Section 422 of the Internal Revenue Code of 1986, as amended (the &ldquo;Incentive
Stock Options&rdquo;), non-qualified stock options (the &ldquo;Nonqualified Stock Options&rdquo;), stock appreciation rights (&ldquo;SARs&rdquo;)
and restricted stock awards (the &ldquo;Restricted Stock Awards&rdquo;), which are restricted shares of Common Stock (the Incentive
Stock Options, the Nonqualified Stock Options, the SARs and the Restricted Stock Awards are collectively referred to as &ldquo;Incentive
Awards&rdquo;). Incentive Awards may be granted pursuant to the 2010 Plan for 10 years from the Effective 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">From time to time, the Company may issue
Incentive Awards pursuant to the 2010 Plan.&nbsp;&nbsp;Each of the awards will be evidenced by and issued under a written agreement.
In accordance with the rules of the plan, the exercise price of options granted shall be not less than 110% of the average of the
closing price for the 30 days preceding the grant date.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board reserved a total of 284,722 shares
of our Common Stock for issuance under the 2010 Plan. If an incentive award granted under the 2010 Plan expires, terminates, is
unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to
such award and the surrendered shares will become available for further awards under the Plan.</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 number of shares subject to the 2010
Plan, any number of shares subject to any numerical limit in the 2010 Plan, and the number of shares and terms of any Incentive
Award may be adjusted in the event of any change in our outstanding Common Stock by reason of any stock dividend, spin-off, stock
split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange
of shares, or similar 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">On September 1, 2010, 105,000 options were
granted to eight employees at an exercise price of $0.20 per share. Using the Black-Scholes option pricing model with the following
assumptions: risk-free interest rate of 1.79%; volatility of 40%; expected life of 10 years; and, all option grants without payment
of dividends, the Company recognized a non-cash stock compensation charge of $2,555 for the three months ended January 31, 2012
and $5,414 for the six months ended January 31, 2012. At January 31, 2012, 179,722 options remain available for future grant under
the Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&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: justify">For the year ended July 31, 2010, based
on the fair value of Common Stock and Series A Preferred Stock options granted during the year, the Company recognized stock option
expense of $41,861. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions: risk-free interest rate of 1.79%; volatility of 70%; expected life of 4 years; and, all option
grants without payment of 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">As of January 31, 2012, no options were issued or outstanding
under the terms of the 2010 Plan.<B> </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"><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">On April 30, 2010, the Company Amended
and Restated its Articles of Incorporation to authorize the issuance of up to 1,000,000,000 shares of common stock, $0.001 par
value 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">On September 8, 2011, FINRA approved a
one-for-eight reverse split of the Company&rsquo;s common shares.</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 October 19, 2011, the Company effectuated
a one-for-eight reverse split of its shares, effective September 8, 2011. The reverse decreased the total authorized, issued and
outstanding common shares and Series B Preferred Convertible Stock by the same one-for-eight ratio as well as amended the par value
per share from $0.001 to $0.008. The total authorized common shares decreased from 1,000,000,000 to 125,000,000.</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">After the reverse split, there were 9,790,760
and 6,572,181 shares outstanding as of January 31, 2012 and July 31, 2011, respectively.</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>NOTE 5 &ndash; Related Party Transactions and Gain on Settlement</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: justify"><I><U>Shareholder</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company did not have notes payable
to related parties as of January 31, 2012 and July 31, 2011, respectively.</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><U>Litigation settlement</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had an ongoing litigation over
accounts receivable and payable with Ambeon Corporation, a related party by virtue of common ownership. The dispute started in
2004 and was settled in favor of the Company under the Shih Lin District Court of Taiwan on August 20, 2008. The Company agreed
to pay a sum of $560,000 and the remaining disputed payable balances were decreased in favor of the Company, and settlement income
of $843,572 was realized in year 2008. As of January 31, 2012, the Company has paid $475,000 towards the settlement. The remaining
minimum payments due under the settlement are as follows:</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: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Year Ending July 31:</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 82%; text-align: left">2012</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">30,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">2013</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">55,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">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">85,000</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"><B>NOTE 6 &ndash; Property and Equipment</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: justify">Property and equipment are stated at cost.
Depreciation is calculated using the straight-line method over the following estimated useful lives of the assets: furniture and
fixtures &ndash;seven years; machinery and equipment &ndash;five years; software &ndash; five years; leasehold improvements &ndash;
the life of the current facility lease. Major additions and betterments are capitalized and repairs and maintenance are charged
to operations in the period incurred. Depreciation expense for the three months ended January 31, 2012 and 2011 was $1,602 and
$1,102, respectively. Depreciation expense for the six months ended January 31, 2012 and 2011 was $3,394 and $2,205, respectively.</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: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January&nbsp;31,&nbsp;2012</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">July&nbsp;31,&nbsp;2011</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: 72%; text-align: left">Furniture and fixture</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">27,634</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">27,634</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Machinery and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,157</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,157</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Software</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">359,417</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">359,417</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Leasehold Improvements</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,985</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,985</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">417,193</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">417,193</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Accumulated depreciation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(394,946</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(391,552</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Property and equipment, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,247</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25,641</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<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"><B>NOTE 7 &ndash; Revolving Line of Credit</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: justify">On May 9, 2011, the Company completed negotiations
to renew and expand its secured line of bank credit for up to one million three hundred thousand dollars and extend the line by
one year to July 2012. Advances under the credit line will be secured with substantially all of the Company&rsquo;s assets, be
subject to interest at 1% above the Wall Street Journal prime rate index, and be subject to the following restrictive covenants:
(i) the current ratio shall not be less than 1.2 times; (ii) the debt to tangible net worth ratio shall not exceed 2.5 times; and
(iii) the quarterly EBITDA shall not be less than $30,000 on a rolling four quarter basis. At July 31, 2011, the company was in
violation of the restrictive covenant pertaining to a minimum quarterly EBITDA of not less than $30,000. The lender issued forbearance
for the violation of the restrictive covenant. The credit line will expire on July 14, 2012. At July 31, 2011, the Company had
an outstanding balance of $290,000. At January 31, 2012, the Company did not have any balance outstanding under this credit line.</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 incurred interest expense of
$0 and $6,908 during the three months ended January 31, 2012, and 2011, respectively. The Company incurred interest expense of
$3,084 and $12,519 during the six months ended January 31, 2012, and 2011, respectively.</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>NOTE 8 - Notes Payable</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: justify">Notes payable, which are unsecured, consist
of the following as of January 31, 2012 and July 31, 2011:</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="font-weight: bold">Notes&nbsp;Payable&nbsp;Consist&nbsp;of&nbsp;the&nbsp;Following&nbsp;at:</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin: 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 STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">January&nbsp;31,&nbsp;2012</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; border-bottom: Black 1pt solid">July&nbsp;31,&nbsp;2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 76%; text-align: left; padding-bottom: 1pt">Note payable to Ambeon Corporation, a related party by virtue of common ownership, bearing interest at 5% per annum</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="width: 9%; text-align: right; border-bottom: Black 1pt solid">85,000</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="width: 9%; text-align: right; border-bottom: Black 1pt solid">115,000</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total notes payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">85,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">115,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Less current portion</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Due to third party</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">60,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">60,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">60,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">60,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Long-term notes payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">25,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">55,000</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&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"><B>NOTE 9 &ndash; Income Taxes</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: justify">The consolidated income tax expense for
the years ended July 31, 2011 and 2010 was determined based upon estimates of the Company&rsquo;s consolidated effective income
tax rates for the years ending July 31, 2011 and 2010, respectively. The difference between the consolidated effective income tax
rate and the U.S. federal statutory rate is primarily attributable to state income taxes, and the effect of certain permanent differences.</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">FASB Topic 740, Accounting for Uncertainty
in Income Taxes, prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. Generally accepted accounting principles require that the Company
recognizes in the financial statements a liability for tax uncertainty if it is more likely than not that the position will be
sustained on an audit, based on the technical merits of the position. They also provide guidance on de-recognition, classification,
interest and penalties, accounting in interim periods and disclosure. The Company has not recorded any liability for unrecognized
tax benefits as of July 31, 2011. There have been no material changes in unrecognized tax benefits at January 31, 2012.</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 tax returns are subject
to examination by federal, state and foreign taxing authorities. As of July 31, 2011, the statute of limitations for examining
the Company&rsquo;s federal income tax returns has not expired for the years ended July 31, 2006 through 2010. As of July 31, 2011,
the statutes of limitation for tax examinations in the state of California have not expired for tax returns filed for the years
ended July 31, 2006 through 2010. &nbsp;As of July 31, 2011, the statute of limitation for tax examinations in Taiwan have not
expired for tax returns filed for the years ended July 31, 2006 through 2010.</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 did not make any provision for income
taxes in the three months ended January 31, 2012. Our effective tax rate takes into consideration federal and state minimum tax
rates, foreign taxes and net operating loss (&ldquo;NOL&rdquo;) carry-forwards.&nbsp;&nbsp;&nbsp;</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 accumulated NOLs of $1.45
million, which, if unutilized, will begin to expire in 2018. Future tax benefits, which may arise as a result of these losses,
have not been recognized in these financial statements, and have been offset by a valuation allowance since there is no assurance
that we will be able to utilize these NOLs.</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>NOTE 10 &ndash; Commitments and Contingencies</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 leases its office and warehouse.
The Company signed a new lease for its office and warehouse effective March 1, 2011 at a new location. The maturity date for the
lease is May 2016. The minimum rental commitments under the lease are as follows:</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: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold">Year Ending July 31:</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 82%; text-align: left">2012</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">53,696</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,133</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">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,570</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,007</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; padding-bottom: 1pt">2016</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">49,537</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">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">272,943</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; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The rent expense for the three months ended
January 31, 2012 and 2011 was $14,010 and $19,233, respectively. The rent expense for the six months ended January 31, 2012 and
2011 was $29,204 and $34,833, respectively.</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>NOTE 11 &ndash; Subsequent Events</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">Management has evaluated all events that occurred after the
balance sheet date through the date these financial statements were issued to determine if they must be reported. Management has
determined that there were no reportable subsequent events to be disclosed.</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;&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FINANCIAL INFORMATION</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"><B>ITEM 1. Financial Statements</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"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 94%">&nbsp;</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 5%; border-bottom: black 1pt solid; text-align: center; vertical-align: bottom">Page</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD>Condensed Consolidated Balance Sheets as of April 30, 2012 (Unaudited) and July 31, 2011 (Audited)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">2</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD>Condensed Consolidated Statements of Operations for the Three and Nine Months Ended April 30, 2012 and 2011 (Unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">3</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD>Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2012 and 2011 (Unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">4</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCFFCC">
    <TD>Notes to Condensed Consolidated Financial Statements for the Three and Nine Months Ended April 30, 2012 and 2011 (Unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; vertical-align: top">5</TD></TR>
</TABLE>


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

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

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

<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 STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">April 30,</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">July 31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">2012</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">2011</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">(Unaudited)</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">(Audited)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">&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: center"><B>ASSETS</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Current assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left; padding-left: 9pt">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">131,593</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">524,512</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts receivable, net of allowance for doubtful accounts of $1,237 and $9,329 as of April 30, 2012, and July 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">160,490</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,853</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Inventory, net of reserve balances of $75,213 and $37,814 as of April 30, 2012, and July 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,138</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">113,770</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Prepaid expenses and other current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">78,052</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">26,063</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">406,273</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">804,198</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&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">Property and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,751</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,641</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Deposit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,695</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,695</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">447,719</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">850,534</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: center">&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: center; padding-left: 0">LIABILITIES AND STOCKHOLDERS&rsquo; EQUITY</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">Current liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">83,142</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">47,094</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; padding-left: 9pt">Accounts payable - other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,078</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,582</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Deferred revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">84,982</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,164</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; padding-left: 9pt">Line of credit payable</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">290,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Notes payable - current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">60,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">60,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Total current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">330,202</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">456,840</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; padding-left: 9pt">Notes payable, net of current</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">340,202</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">511,840</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Commitment and contingency (Note 10)</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">Stockholders&rsquo; equity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Common stock, $0.008 par value; 125,000,000 shares authorized; 9,790,760 and 6,572,181 shares issued and outstanding at April 30, 2012 and July 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78,324</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,577</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; padding-left: 9pt">Preferred stock, Series A, $0.001 per share; 9,400,000 shares authorized; 7,050,000 and 9,400,000 shares issued and outstanding at April 30, 2012 and July 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,050</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,400</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Preferred stock, Series B, $0.008 per share 325,000 shares authorized; 262,500 and 325,000 shares issued and outstanding at April 30, 2012 and July 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,600</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; padding-left: 9pt">Additional paid in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,420,082</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,160,697</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Accumulated deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(11,400,039</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(10,886,580</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">107,517</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">338,694</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right; padding-bottom: 2.5pt">&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">447,719</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">850,534</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-top: 0pt; text-align: center; margin-bottom: 0pt"><I>The accompanying notes are an integral part of these consolidated
financial statements.</I></P>

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

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    <!-- Field: /Page -->

<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>AMBICOM HOLDINGS, INC.</B></P>

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

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

<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 STYLE="text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Three Months Ended April 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Nine Months Ended April 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&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">2012</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">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</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">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%">Sales</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">458,040</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">781,780</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,065,801</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,984,941</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Cost of sales</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">161,586</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">396,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">425,295</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,400,297</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Gross profits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">296,454</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">385,780</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">640,506</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,584,644</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Operating Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,496</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,709</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,891</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,913</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; padding-left: 9pt">Professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78,170</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,095</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">406,743</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">167,787</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Selling and general expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">197,919</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">356,916</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">741,823</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,135,630</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total operating expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">277,585</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">428,720</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,153,457</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,307,330</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Income (loss) from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,869</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(42,940</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(512,951</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">277,314</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Other income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Other income and expense, net</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">(2,154</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,696</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(48,578</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Interest expense, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,823</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,083</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(20,342</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net other income (expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(9,977</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(387</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(68,920</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total income (loss) before income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,870</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(52,917</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(513,338</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">208,394</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Income taxes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net income (loss)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">18,870</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(52,917</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(513,338</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">208,394</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net income (loss) per share&nbsp; - basic</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.002</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.001</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.073</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.004</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net income (loss) per share&nbsp; - diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.001</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.001</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.031</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.004</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Weighted average shares outstanding &mdash; basic</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,425,682</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,956,015</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,050,365</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,834,670</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Weighted average shares outstanding &mdash; diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,088,170</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,556,015</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,712,853</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,434,670</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<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"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NINE MONTHS ENDED APRIL 30,</B></P>

<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 STYLE="text-align: right">&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">2012</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">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="text-align: center">(Unaudited)</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flows from operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; padding-left: 9pt">Net income (loss)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(513,338</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">208,394</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net income items not affecting cash:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,891</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,913</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">Stock-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,055</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,570</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Increase (reduction) in bad debt reserve</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">471</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(19,995</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Increase (decrease) in reserve for inventory loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">45,974</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(13,136</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&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; padding-left: 0.25in">Decrease / (Increase) in operating assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(21,108</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">166,185</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 27pt">Inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,658</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">86,278</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Other receivables</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">11,251</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; padding-left: 27pt">Prepaid expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(51,984</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(175,807</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 27pt">Deposit</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">(16,558</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 0.25in">Increase / (Decrease) in operating liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 27pt">Accounts payable - trade</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,561</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(14,199</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Accrued payable - other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,984</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(33,046</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 27pt">Unearned revenue</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">72,818</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">71,970</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&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; padding-bottom: 1pt; padding-left: 0.5in">Net cash provided by (used in) operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(333,018</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">295,820</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&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">Cash flows from investing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Payment of notes to related parties</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">(30,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Capital expenditures</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(18,962</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&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; padding-bottom: 1pt; padding-left: 0.5in">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(48,962</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&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">Cash flows from financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Net proceeds from (Net payments on) line of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(290,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,000</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; padding-left: 9pt">Payments on notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(45,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(75,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Issuance of stock to outside firms for services</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">275,100</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.5in">Net cash provided by (used in) financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(59,900</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">225,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&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">Net increase (decrease) in cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(392,919</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">471,858</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Cash and cash equivalents, beginning of year</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">524,512</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">165,848</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Cash and cash equivalents, end of quarter</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">131,593</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">637,706</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Supplemental information:</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; padding-bottom: 1pt; padding-left: 0.25in">Income taxes paid</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.25in">Interest paid</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">3,083</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">20,342</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; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B><I>The accompanying notes are an integral part of these consolidated
financial statements.</I></P>

<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>AMBICOM HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FOR THE THREE AND NINE MONTHS ENDED APRIL
30, 2012 AND 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(UNAUDITED)</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"><B>NOTE 1 &ndash; Organization and Principal Activities</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: justify">AmbiCom Holdings, Inc. (&ldquo;AmbiCom
Holdings&rdquo; or the &lsquo;Company&rdquo;) was incorporated as Med Control, Inc. (&ldquo;Med Control&rdquo;) under the laws
of the State of Nevada on July 1, 2008. Med Control was a development stage enterprise until January 15, 2010. All of Med Control&rsquo;s
activities prior to January 15, 2010 related to its organization, initial funding and share issuances. On January 15, 2010, Med
Control Inc. changed its name to AmbiCom Holdings, Inc.</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 January 15, 2010, Med Control, Inc.
(the &ldquo;Registrant&rdquo;) authorized its Articles of Incorporation (the &ldquo;Amendment&rdquo;) to change its name to AmbiCom
Holdings, Inc., to increase the number of its authorized shares of capital stock from 75,000,000 to 1,050,000,000 shares of which
1,000,000,000 were designated common stock and 50,000,000 were designated preferred stock, par value $0.001 per share (the &ldquo;Preferred
Stock&rdquo;) and to effect a forward-split such that 131.2335958 shares of Common Stock were issued for every 1 share of Common
Stock issued and outstanding immediately prior to filing of the amendment (the &ldquo;Forward Split&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">On January 15, 2010, the Company acquired
AmbiCom Acquisition Corp. a privately owned Nevada corporation (&ldquo;AmbiCom&rdquo;), pursuant to an Agreement and Plan of Share
Exchange (the &ldquo;Exchange&rdquo;). AmbiCom was organized under the laws of the State of Nevada on July 29, 2008. AmbiCom is
a holding company whose operating company, AmbiCom, Inc., is a designer and developer of wireless products focusing on the wireless
medical industry. AmbiCom&rsquo;s wireless modules and devices are based on its innovative application software and Wi-Fi or Bluetooth
technologies.</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 Exchange,
the Company acquired AmbiCom from the AmbiCom equity holders in exchange for an aggregate of 20,000,000 newly issued shares of
Common Stock, 2,600,000 shares of Series B Preferred Stock, an option to purchase 5,500,000 shares of Common Stock and 2,350,000
shares of Series A Preferred Stock at the purchase price of $.01 per share, and warrants to purchase 500,000 shares of Common Stock
at the exercise price of $0.50 per share (collectively, the &ldquo;Exchange Shares&rdquo;). As a result of the Exchange, the AmbiCom
equity holders surrendered all of their issued and outstanding capital stock of AmbiCom in consideration for the Exchange Shares
and AmbiCom became a wholly-owned subsidiary 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">Simultaneously upon the Closing, the Company
closed an offering (the &ldquo;Offering&rdquo;) of its Common Stock at a price of $0.40 per share for an aggregate of 1,250,000
shares of Common Stock for aggregate offering price of $500,000.</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, contemporaneously with the
Closing, the Company and our former principal stockholder, Ms. Kato, split-off its wholly owned subsidiary, MCI Acquisition Corp.,
a newly-formed Nevada corporation (&ldquo;MCAC&rdquo;), whereby the Company assigned all of its previous operating assets to MCAC
in consideration for the assumption of all of the Company&rsquo;s liabilities to Ms. Kato, who is currently the principal shareholder
of MCI and the retirement and cancellation of Ms. Kato&rsquo;s 6,000,000 shares of Common Stock pursuant to the terms and conditions
of a split-off agreement by and among the Company, Ms. Kato, and MCAC (the &ldquo;Split-Off 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">Following the issuance of the Exchange
Shares and the retirement of Ms. Kato&rsquo;s shares pursuant to the Split-Off Agreement, the former stockholders of AmbiCom and/or
their designees now beneficially own approximately fifty-five percent (55%) of the total outstanding shares of Common Stock, and
after giving effect to the conversion of the Series B in accordance with their respective terms (and the satisfaction of certain
conditions to the conversion of such shares) seventy-six percent (76%) of the total outstanding shares of Common Stock on a fully-diluted
basis.&nbsp;&nbsp;</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">Details of the Company&rsquo;s subsidiaries
as of April 30, 2012 are as follows:</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: bottom">
    <TD STYLE="width: 22%; border-bottom: windowtext 1pt solid; font-weight: bold">Name</TD>
    <TD STYLE="width: 2%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 22%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left">Place&nbsp;and&nbsp;Date of<BR> Establishment/<BR> Incorporation</TD>
    <TD STYLE="width: 2%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 22%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left">Relationships</TD>
    <TD STYLE="width: 2%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 28%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: left">Principal&nbsp;Activities</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>E-Care USA, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>Nevada<BR> March 15, 2011</TD>
    <TD>&nbsp;</TD>
    <TD>Wholly-owned subsidiary of AmbiCom Holdings, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>Designer and developer of wireless home medical devices</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>AmbiCom Technology, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Nevada</FONT>*<FONT STYLE="font-size: 10pt"><BR>
May 17, 2010<SUP>*</SUP></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>Wholly-owned subsidiary of AmbiCom Holdings, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD>Planned acquisition company</TD></TR>
</TABLE>
<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="font-size: 10pt">&nbsp;AmbiCom
Technology, Inc. was dissolved on June 1, 2012.</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">Inter-company accounts and transactions
have been eliminated in consolidation.</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"><B>NOTE 2 &ndash; Basis of Presentation</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: justify">The accompanying consolidated financial
statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (&ldquo;SEC&rdquo;)
and accounting principles generally accepted in the United States for financial information. The preparation of financial statements
in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Significant estimates
made in preparing the financial statements include revenue recognition and costs of revenue, inventory valuations, long-lived and
intangible asset valuations and loss contingencies. In the opinion of management, the financial statements include all adjustments
(which are of a normal and recurring nature) necessary for the fair presentation of the results of the periods presented.</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">For financial accounting purposes, the
acquisition was a reverse acquisition of the Company by AmbiCom, under the purchase method of accounting, and was treated as a
recapitalization with AmbiCom as the acquirer.&nbsp;&nbsp;Upon consummation of the Exchange, the Company adopted the business plan
of AmbiCom. Accordingly, the consolidated statements of operations include the results of operations of AmbiCom and its subsidiaries
from August 1, 2011 and 2010, and the results of operations of Med Control from the acquisition date through April 30, 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"><B>NOTE 3 &ndash; Summary of Significant Accounting Policies</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: justify">The summary of significant accounting policies
is presented to assist in understanding the Company&rsquo;s financial statements. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the preparation of the financial statements.</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>a) Description of Business - </I></B>The
Company is a leading designer and developer of wireless technologies which emphasize wireless medical and other wireless 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"><B><I>b) Segment Information </I>- </B>The
Company follows ASC Topic 280, &ldquo;Disclosures about Segments of an Enterprise and Related Information.&rdquo; Topic 280 requires
that a company report financial and descriptive information about its reportable operating segments. Operating segments are components
of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in assessing performance. The Company&rsquo;s chief operating decision maker currently
evaluates the Company&rsquo;s operations from a number of different operational perspectives including but not limited to a client
by client basis. The Company derives all significant revenues from a single reportable operating segment of business. Accordingly,
the Company does not report more than one segment; nevertheless, management evaluates, at least annually, whether the Company continues
to have one single reportable segment.</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><I>c) Use of Estimates - </I></B>The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results may differ from those estimates, and the differences may be material to the financial statements. Estimates
are used primarily in determining the depreciable lives of fixed assets, and inventory valuation. In addition, estimates form the
basis for the reserves for sales allowances, accounts receivable and inventory. Various assumptions go into the determination of
these estimates. The process of determining significant estimates requires consideration of factors such as historical experience
and current and expected economic 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"><B><I>d) Cash and Cash Equivalents - </I></B>The
Company considers all highly liquid investments and time deposits with original maturities of three months or less when purchased
to be cash equivalents. All cash and cash equivalents are maintained with nationally recognized financial institutions.</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>e) Allowance for Doubtful Accounts
- </I></B>An allowance for doubtful accounts is computed based on the Company&rsquo;s historical experience and management&rsquo;s
analysis of possible bad debts. Accounts receivable are shown net of an allowance for doubtful accounts of $1,237 as of April 30,
2012 and $9,329 as of July 31, 2011, respectively.</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>f) Inventories - </I></B>Inventories
are stated at the lower of cost or market on an average basis. Inventory reserves are recorded for damaged, obsolete, excess and
slow-moving inventory. Market value of inventory is estimated based on the impact of market trends, an evaluation of economic conditions
and the value of current orders relating to the future sales of this type of inventory. As of April 30, 2012 and July 31, 2011,
the value of the inventory reserve was $75,213 and $37,814, respectively.</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>g) Income Taxes - </I></B>The Company
accounts for income taxes pursuant to the FASB ASC Topic 740, &quot;Accounting for Uncertainty in Income Taxes&quot;, (&ldquo;Topic
740&rdquo;). Topic 740 clarifies the accounting for uncertainty in income taxes recognized in the Company&rsquo;s financial statements
in accordance with generally accepted accounting principles. The calculation of the Company's tax provision involves the application
of complex tax rules and regulations within multiple jurisdictions. The Company's tax liabilities include estimates for all income-related
taxes that the Company believes are probable and that can be reasonably estimated. To the extent that the Company&rsquo;s estimates
are understated, additional charges to the provision for income taxes would be recorded in the period in which the Company determines
such understatement. If the Company's income tax estimates are overstated, income tax benefits will be recognized when realized.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment. Topic 740 prescribes a recognition threshold and measurement
attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.</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>h) Revenue Recognition - </I></B>The
majority of the Company's product revenues are recognized upon shipment or delivery and acceptance of products by customers, when
pervasive evidence of a sales arrangement exists, the price is fixed or determinable, the title has transferred and collection
of resulting receivables is reasonably assured. For merchandise products, the Company recognizes revenue upon shipment of products,
when title is passed and the amount collectible can reasonably be determined. All amounts billed to a customer related to shipping
and handling are classified as revenue, while all costs incurred by the Company for shipping and handling are classified as selling
expenses.</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>i) Research and Development Costs
- </I></B>Research and development costs are expensed as incurred.</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">j<B><I>) Stock-Based Compensation - </I></B>The
Company adopted ASC Topic 718 &ldquo;Share-Based Payment&rdquo;. As permitted, the Company elected to adopt disclosure-only provisions
of ASC 718 in accordance with generally accepted accounting principles. Under the provisions of Topic ASC 718, compensation expense
is recognized based on the fair value of options on the grant date.</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>k) Fair Value of Financial Instruments
</I></B>- ASC Topic 820, &ldquo;Fair Value Measurements&rdquo;, requires disclosure of the level within the fair value hierarchy
in which fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets
for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs
(Level 3). The Company's financial instruments consist of cash and cash equivalents, short-term trade receivables and payables
at April 30.</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"><B><I><U>Fair Value of Financial Instruments</U></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table presents the carrying
amounts and estimated fair values of the Company&rsquo;s financial instruments at:</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"></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; text-align: justify">&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">April 30, 2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&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">July 31, 2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Carrying<BR> amount</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">Fair value</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">Carrying<BR> amount</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">Fair value</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Financial assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: justify; text-indent: -28.75pt; padding-left: 0.5in">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">131,593</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: 10%; text-align: right">131,593</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: 10%; text-align: right">524,512</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: 10%; text-align: right">524,512</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; text-indent: -28.75pt; padding-left: 0.5in">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">160,490</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">160,490</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,853</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">139,853</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; text-indent: -0.5in; padding-left: 0.5in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; text-indent: -0.5in; padding-left: 0.5in">Financial liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; text-indent: -28.75pt; padding-left: 0.5in">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">185,220</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">185,220</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94,676</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94,676</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify; text-indent: -28.75pt; padding-left: 0.5in">Line of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; text-indent: -28.75pt; padding-left: 0.5in">Notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68,562</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">115,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">113,041</TD><TD STYLE="text-align: left">&nbsp;</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; text-align: justify">The fair values of the financial instruments
shown in the above table represent the amounts that would be received when those assets are sold or that would be paid when those
liabilities are transferred in an orderly transaction between market participants at the measurement date. Those fair value measurements
maximize the use of observable inputs.</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, in situations where there is
little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company&rsquo;s
own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are
developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately
risk-adjusted discount rates, available observable and unobservable inputs.</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 uses the following methods
and assumptions in estimating the fair value disclosures for financial instruments:</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"><U>Cash equivalents</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The carrying amount reported in the balance
sheets of cash equivalents approximate fair value because of the relatively short time to maturity.</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"><U>Accounts receivable</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The carrying amount reported in the balance
sheets of accounts receivable approximate fair value because of the relatively short time to maturity.</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"><U>Accounts payable and accrued liabilities</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The carrying amount reported in the balance
sheets of accrued payable and accrued liabilities approximate fair value because of the relatively short time to maturity.</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"><U>Line of credit</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The carrying amount reported in the balance
sheets of due to related party approximate fair value because of the relatively short time to maturity.</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"><U>Notes payable</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value of the Company&rsquo;s notes
payable are measured using quoted offer-side prices when quoted market prices are available. If quoted market prices are not available,
the fair value is determined by discounting the future cash flows of each instrument at rates that reflect rates currently observed
in publicly traded debt markets for debt of similar terms to companies with comparable credit risk. For long-term debt measurements,
where there are no rates currently observable in publicly traded debt markets of similar terms with comparable credit, the Company
uses market interest rates and adjusts that rate for all necessary risks, including its own credit risk.</P>

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

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<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><U>Fair Value Hierarchy</U></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">The following table presents the placement
in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at:</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"></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="text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair value measurements at <BR> reporting date using</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">April 30, 2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Quoted prices<BR> in active<BR> markets for<BR> identical<BR> assets<BR> (Level 1)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Significant <BR> other <BR> observable <BR> inputs <BR> (Level 2)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Significant<BR> unobservable<BR> inputs<BR> (Level 3)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</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">&nbsp;</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">&nbsp;</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">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; text-align: justify; padding-bottom: 2.5pt; text-indent: 0; padding-left: 0in">Notes payable</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">70,000</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right"></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right"></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">68,562</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><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="text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair value measurements at <BR>reporting date using</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">July 31, 2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Quoted prices<BR> in active<BR> markets for<BR> identical<BR> assets<BR> (Level 1)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Significant <BR> other <BR> observable <BR> inputs <BR> (Level 2)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Significant<BR> unobservable<BR> inputs<BR> (Level 3)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</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;</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;</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;</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: 48%; text-align: justify; padding-bottom: 2.5pt; padding-left: 0in">Notes payable</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">115,000</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right"></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right"></TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">113,041</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; 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"><B><I>l) Translation of Foreign Currency
- </I></B>The Company accounts for its foreign operations in accordance with ASC Topic 830, &ldquo;Foreign Currency Translation&rdquo;.
For the branch, non-monetary balance sheet items and related income statements items are translated at historical exchange rates,
while monetary balance sheet items are translated at current exchange rates. Income statement items, other than monetary, are translated
at the weighted average exchange rate during the year. Deferred taxes are not provided on translation gains and losses where the
Company expects earnings of a foreign branch to be permanently reinvested.</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>m) Concentration - </I></B>Financial
instruments which potentially subject the Company to concentrations of credit risk are primarily accounts receivable. The Company
performs ongoing credit evaluations of its customers&rsquo; financial condition. If the collection of the receivable becomes doubtful,
the Company establishes a reserve in an amount determined appropriate for the perceived risk. The Company maintains its cash accounts
at commercial banks. From time to time, cash balances maintained in such banks may exceed the insured amount by the Federal Deposit
Insurance Corporation (FDIC). As of April 30, 2012 and July 31, 2011, management does not believe they are exposed to any significant
risk on their cash balances. The Company&rsquo;s products are primarily sold to global medical device companies. These customers
can be significantly affected by changes in economic, competitive or other factors. The Company makes substantial sales to a relatively
few, large customers, where company is seeking to capture more business from other targeted medical device companies.</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">One customer accounted for $155,628 (96%)
of receivables at April 30, 2012 while four customers accounted for $57,800 (39%), $40,579 (27%), $35,430 (24%) and $23,559 (16%)
as of July 31, 2011, respectively.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">One customer accounted for $368,128 (80%)
of revenue for the three months ended April 30, 2012 and two customers accounted for $275,000 (35%) and $201,600 (26%) of revenue
for the three months ended April 30, 2011. Three customers accounted for $460,049 (43%), $247,000 (23%), and $202,530 (19%) of
the revenues for the nine months ended April 30, 2012 and one customer accounted for $1,791,400 (60%) of the revenues for the nine
months ended April 30, 2011, respectively.</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="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Two vendors accounted for $52,480 (63%)
and $16,685 (20%) of accounts payable as of April 30, 2012 and two vendors accounted for $25,000 (53%) and $10,018 (21%) as of
July 31, 2011, respectively.</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">Four vendors accounted for $78,600 (34%),
$76,772 (33%), $49,735 (21%), and $27,180 (12%) of the purchases for the three months ended April 30, 2012, and one vendor accounted
for $283,950 (95%) of the purchases for the three months ended April 30, 2011. Four vendors accounted for $121,518 (30%), $78,600
(20%), $76,772 (19%) and $69,735 (17%) of the purchases for the nine months ended April 30, 2012, and one vendor accounted for
$1,121,153 (89%) of the purchases for the nine months ended April 30, 2011, respectively.</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;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">RECENT ACCOUNTING PRONOUNCEMENTS</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 October 2009, the FASB issued guidance
on multiple-deliverable arrangements to address how to separate deliverables and how to measure and allocate arrangement consideration.
This guidance requires vendors to develop the best estimate of selling price for each deliverable and allocate the arrangement
consideration using this selling price. This guidance also expands the disclosure requirements to include both quantitative and
qualitative information. This guidance is effective for fiscal years beginning after June 15, 2010. The Company does not expect
the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2010, the FASB issued guidance
that expands the interim and annual disclosure requirements of fair value measurements, including the information about movement
of assets between level 1 and 2 of the three-tier fair value hierarchy established under its fair value measurement guidance. This
guidance also requires separate disclosure for each of purchases, sales, issuance, and settlements in the reconciliation for fair
value measurements using significant unobservable inputs, level 3. Except for the detailed disclosure in the level 3 reconciliation,
which is effective for the fiscal years beginning after December 15, 2010, all the other disclosures under this guidance are effective
for the fiscal years beginning after December 15, 2009. The Company does not expect the adoption to have a material impact on its
consolidated financial position, results of operations or cash flows.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2010, the FASB issued ASU No.
2010-09, &ldquo;Amendments to Certain Recognition and Disclosure Requirements,&rdquo; which addresses both the interaction of the
requirements of Topic 855, Subsequent Events, with the SEC&rsquo;s reporting requirements and the intended breadth of the reissuance
disclosures provision related to subsequent events. Specifically, the amendments state that SEC filers are no longer required to
disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The
standard was effective immediately upon issuance. The Company does not expect the adoption to have a material impact on its consolidated
financial position, results of operations 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; text-align: justify"><FONT STYLE="color: black">In April 2010,
the FASB issued ASU 2010-13 &ldquo;Compensation-Stock Compensation (Topic 718) Effect of Denominating the Exercise Price of a Share-Based
Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades&rdquo; (ASU 2010-13). Topic 718 is amended
to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial
portion of the entity&rsquo;s equity securities trades shall not be considered to contain a market, performance, or service condition.
Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments
in this standard are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December
15, 2010. The guidance should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings
for all outstanding awards as of the beginning of the fiscal year in which the amendments are initially applied. </FONT>The Company
does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.<FONT STYLE="color: black">
</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">In December
2010, the FASB issued ASU 2010-29, &ldquo;Business Combinations (ASC Topic 805): Disclosure of Supplementary Pro Forma Information
for Business Combinations &ndash; a consensus of the FASB Emerging Issues Task Force&rdquo;. This ASU clarifies existing disclosure
requirements for public entities with business combinations that occur in the current reporting period. The ASU stipulates that
if an entity is presenting comparative financial statements, revenue and earnings of the combined entity should be disclosed as
though the business combinations that occurred during the current year had occurred as of the beginning of the comparative prior
annual reporting period. The ASU also expands the supplemental pro forma disclosures required by ASC Topic 805 to include a description
of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included
in the reported pro forma revenue and earnings. This guidance is effective prospectively for business combinations with acquisition
dates on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is
permitted. </FONT>The Company does not expect the adoption to have a material impact on its consolidated financial position, results
of operations 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; text-align: justify">Management does not believe that any other
recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying
financial statements.</P>

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

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[{"type": "S-1", "sequence": "1", "filename": "v316593_s1.htm", "description": "FORM S-1", "secsgml_size_bytes": 921261}]
{"company-data": {"conformed-name": "AMBICOM HOLDINGS, INC", "cik": "0001444310", "assigned-sic": "3829", "irs-number": "262964607", "state-of-incorporation": "NV", "fiscal-year-end": "0731"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-182555", "film-number": "12948985"}, "business-address": {"street1": "500 ALDER DRIVE", "city": "MILPITAS", "state": "CA", "zip": "95035", "phone": "408-321-0822"}, "mail-address": {"street1": "500 ALDER DRIVE", "city": "MILPITAS", "state": "CA", "zip": "95035"}, "former-company": {"former-conformed-name": "MED CONTROL", "date-changed": "20080902"}}
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
AMBICOM HOLDINGS, INC.
(Exact name of Registrant as specified in
its charter)
Nevada
3829
26-2964607
(State or other jurisdiction of
(Primary Standard Industrial
(I.R.S. Employer Identification No.)
incorporation or organization)
Classification Code)
500  Alder Drive, Milpitas,  CA  95035           
Telephone: (408) 321-0822
(Address and telephone number of Registrant's
principal executive offices)
State Agent and Transfer Syndicate, Inc.
112 North Curry Street
Carson City, Nevada  89703
(775) 882-1013
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Copies of notices and other communications
should be sent to:
Approximate date of commencement of
proposed sale to the public:
From time to time after this Registration Statement is declared effective.
If
any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, please check the following box:
x
If
this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering.
¨
If
this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If
this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box:
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the
definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company"
in Rule 12b-2 of the Exchange Act.  (Check one):
Large Accelerated Filer
¨
Accelerated Filer
¨
Non-accelerated Filer
¨
(Do not check if smaller reporting company)
Smaller reporting company
x
CALCULATION OF REGISTRATION FEE
Title of Each Class of
Securities to be Registered
Amount to
be
Registered
Proposed
Maximum
Offering
Price Per
Share (1)
Proposed
Maximum
Aggregate
Offering
Price (1)
Amount of
Registration
Fee
Common Stock, $0.001 par value per share (1)
20,000,000
$
0.127
$
2,400,000
$
275.04
TOTAL
$
0.12
$
2,400,000
$
275.04
(1) The shares of our Common Stock being
registered hereunder are being registered for (i) resale by Kodiak Capital Group, LLC in accordance with the terms of an investment
agreement between Kodiak Capital Group, LLC and the Company. The number of shares of our Common Stock registered hereunder represents
a good faith estimate by us of the number of shares of our Common Stock issuable upon delivery of a "put" notice.   Should
the number of shares being registered be an insufficient number of shares to fully utilize the credit facility, the Company will
not rely upon Rule 416, but will file a new registration statement to cover the resale of such additional shares should that become
necessary.
(2) Estimated solely for purposes of calculating
the registration fee under Rule 457 under the Securities Act, using the last closing price as reported on the Over-the-Counter
Bulletin Board (the "OTCBB") on July 5, 2012, which was $0.12 per share.
In the event of a stock split, stock dividend,
or similar transaction involving the common stock, the number of shares registered shall automatically be increased to cover the
additional shares of common stock issuable pursuant to Rule 416 under the Securities Act.
The Registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act, or until this registration statement shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS
NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
DATED JULY 5, 2012
AMBICOM HOLDINGS, INC.
20,000,000 Shares of Common Stock, par value
$0.001
This prospectus relates
to the offering from time to time of up to 20,000,000 shares of the common stock of AmbiCom Holdings, Inc., a Nevada corporation
("AmbiCom", "we", "our", "us", or "Company"), to and by Kodiak Capital
Group, LLC, a Delaware limited liability company ("Kodiak" or  "Kodiak Capital")), and pursuant
to a "put right" under an investment agreement, also referred to as an equity line of credit that the Company has entered
into with Kodiak Capital.  The investment agreement permits us to "put" up to $1,000,000 of shares of our
common stock to Kodiak Capital.  Pursuant to registration rights granted to Kodiak Capital, we are obligated to register
the shares acquired by Kodiak Capital.  AmbiCom is not selling any shares of common stock in that resale offering.  We,
therefore, will not receive any proceeds from the sale of the shares by the selling shareholders.  We will, however,
receive proceeds from the sale of securities pursuant to our exercise of the put right.
The selling shareholders
may sell common stock from time to time in the principal market on which the stock will be traded at the prevailing market price
or in negotiated transactions.  The selling shareholders have informed us that they do not have any agreement or understanding,
directly or indirectly, with any person to distribute their common stock. The selling shareholders may, however, be deemed underwriters
of the shares of common stock that they are offering.  AmbiCom will pay the expenses of registering these shares.
Upon the effective
date of this registration statement, Kodiak Capital will commit to purchase up to $1,000,000 worth of our common stock over a 24
month period.  The amount that the Company shall be entitled to put to Kodiak shall be $25,000. The offering price of
these securities will equal 80% of the lowest closing highest posted bid price of the common stock of AmbiCom during the five consecutive
trading days immediately after the put date.  There will be no underwriter discounts or commissions.
Our common stock is
quoted on the Over-the-Counter Markets ("OTC") under the symbol "ABHI.OB". The last reported sale price
of our common stock on the OTCBB on July 5, 2012 was approximately $0.12 per share.
NEITHER THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PLEASE REFER TO "RISK FACTORS"
BEGINNING ON PAGE 3.
The purchase of the securities offered
through this prospectus involves a high degree of risk. You should invest in our common stock only if you can afford to lose your
entire investment. You should carefully read and consider the section of this prospectus titled "Risk Factors" beginning
on page 3 before buying any shares of our common stock.
The information in this prospectus is
not complete and may be changed.  The Selling Shareholder may not sell or offer these securities until the registration
statement of which this prospectus forms a part filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.
The date of this prospectus is July 5,
2012
TABLE OF CONTENTS
Page
Prospectus Summary
1
Risk Factors
2
Risk Specific to Us
2
Risk Relating to the Securities Markets and Investments in Our Common Stock
3
Risks Relating to this Offering
7
Use of Proceeds
8
Determination of Offering Price
8
Dilution
8
Selling Shareholders
9
Investment Agreement
10
Plan of Distribution
11
Description of Securities
13
Interest of Named Experts and Counsel
16
Description of the Business
16
Description of Property
20
Legal Proceedings
20
Market for Common Equity and Related Matters
20
Management's Discussion and Analysis of Financial Condition and Results of Operations
23
Changes in and Disagreements with Accountants
29
Directors, Executive Officers and Control Persons
29
Executive Compensation
30
Security Ownership of Certain Beneficial Owners and Management
31
Certain Relationships and Related Transactions
32
Disclosure on Commission Position on Indemnification for Securities Act Liabilities
ITEM II - Information Not Required in Prospectus
Other Expenses of Issuance and Distribution
33
Indemnification for Securities Act Liabilities
33
Recent Sales of Unregistered Securities
33
Where You Can Find More Information
34
Exhibits
34
Undertakings
35
Signatures
36
Financial Statements
F-1
FORWARD-LOOKING STATEMENTS
This Prospectus contains
        forward-looking statements. Such forward-looking statements include statements regarding, among other things, (a) our projected
        sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans and
        (e) our anticipated needs for working capital. Forward-looking statements, which involve assumptions and describe our future plans,
        strategies, and expectations, are generally identifiable by use of the words "may", "will", "should",
        "expect", "anticipate", "estimate", "believe", "intend" or "project"
        or the negative of these words or other variations on these words or comparable terminology. This information may involve known
        and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially
        different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements
        may be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and
        "Business" as well as in this Prospectus generally. Actual events or results may differ materially from those discussed
        in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk
        Factors" and matters described in this Prospectus generally. In light of these risks and uncertainties, there can be no assurance
        that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required
        to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required
        statements, in light of the circumstances under which they are made, not misleading.
ABOUT THIS PROSPECTUS
You should only rely
on the information contained in this prospectus.  We have not authorized anyone to give any information or make any representation
about this offering that differs from, or adds to, the information in this prospectus or in its documents that are publicly filed
with the SEC.  Therefore, if anyone does give you different or additional information, you should not rely on it.  The
delivery of this prospectus does not mean that there have not been any changes in our condition since the date of this prospectus.  If
you are in a jurisdiction where it is unlawful to offer the securities offered by this prospectus, or if you are a person to whom
it is unlawful to direct such activities, then the offer presented by this prospectus does not extend to you.  This prospectus
speaks only as of its date except where it indicates that another date applies.
Market data and certain
industry forecasts used in this prospectus were obtained from market research, publicly available information and industry publications.
We believe that these sources are generally reliable, but the accuracy and completeness of such information is not guaranteed.
We have not independently verified this information, and we do not make any representation as to the accuracy of such information.
PROSPECTUS SUMMARY
This summary highlights
information contained elsewhere in this prospectus.  This summary does not contain all of the information you should
consider before investing in our common stock. You should read the entire prospectus carefully, especially the "Risk Factors"
section and our financial statements and the related notes appearing at the end of this, before deciding to invest in our common
stock."
The Offering
Common Stock Being Offered By Selling Shareholders
20,000,000 shares of Common Stock issuable to Kodiak Capital Group, LLC pursuant to an Investment Agreement with us dated October 31, 2011 (the "Investment Agreement" or "Equity Line of Credit")
Terms of the Offering
The Selling Shareholders will determine when and how they will sell the Common Stock offered in this prospectus.
Termination of the Offering
The offering will conclude upon the earliest of (i) such time as all of the Common Stock has been sold pursuant to the registration statement, (ii) two years or (iii) such time as all of the Common Stock become eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), or any other rule of similar effect.
Use of Proceeds
We are not selling any shares of Common Stock in this offering and, as a result, will not receive any proceeds from this offering.
Trading Symbol
"ABHI.OB"
Risk Factors
The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See "Risk Factors" beginning on page 3.
1
RISK FACTORS
Our business, financial condition, operating
results and prospects are subject to the following risks. Additional risks and uncertainties not presently foreseeable to us may
also impair our business operations. If any of the following risks actually occurs, our business, financial condition or operating
results could be materially adversely affected. In such case, the trading price of our common stock could decline, and our shareholders
may lose all or part of their investment in the shares of our common stock.
RISK FACTORS
Investing in the Company's common stock
involves a high degree of risk. Prospective investors should carefully consider the risks described below, together with all of
the other information included or referred to in this Registration, before purchasing shares of the Company's common stock. There
are numerous and varied risks, known and unknown, that may prevent the Company from achieving its goals. The risks described below
are not the only ones the Company will face. If any of these risks actually occur, the Company's business, financial condition
or results of operation may be materially adversely affected. In such case, the trading price of the Company's common stock could
decline and investors in the Company's common stock could lose all or part of their investment.
Risks Specific to Us
If our products do not gain expected
market acceptance, prospects for our sales revenue and profit may be affected.
The healthcare industry's
relative unfamiliarity with wireless medical products may slow their market acceptance. Potential customers for our devices
and systems may be reluctant to adopt these as alternatives to traditional technologies because of regulatory and other
factors beyond the Company's control Obstacles to widespread adoption of our devices include inability to achieve
market penetration before they are rendered obsolete.
If we are not able to compete effectively
with other competitors, our prospects for future growth will be jeopardized.
There is significant competition in the
healthcare industry with more established companies. We are not only competing with other wireless device providers but also with
companies offering traditional medical products, which are usually more established and have greater resources to devote to research
and development, manufacturing and marketing.  In addition, we compete with large companies such as Cisco which have
advantages of global marketing capabilities and substantially greater resources to devote to research and development and marketing.
Our competitors may promote devices which
are more readily accepted by customers and we may be required to reduce the prices of our products in order to remain competitive.
Downturns in general economic and
market conditions could materially and adversely affect our business.
A significant amount of medical device
purchases are related to the budgets and purchasing of medical facilities generally and hospitals in particular.  A reduction
in spending and budgets would likely cause a reduction in the demand for our products.  If these facilities have less
funds budgeted as a result of general economic conditions, sales of our wireless medical products for which they have budgeted
would likely be influenced by general economic downturns.
2
If critical components become unavailable
or contract manufacturers delay their production, our business will be negatively impacted.
Stability of component supply is crucial
to determine our manufacturing process. As some critical devices and components are supplied by certain third-party manufacturers,
we may be unable to acquire necessary amounts of key components at competitive prices.
Outsourcing the production of certain parts and components is
one way to reduce manufacturing costs. We have selected these particular manufacturers based on their ability to consistently produce
these products according to our requirements in an effort to obtain the best quality product at the most cost effective price.
However, the loss of all or one of these suppliers or delays in obtaining shipments could have an adverse effect on our operations
until an alternative supplier could be found, if one may be located at all.  This may cause us to breach our contracts
and lose sales.
If our contract manufacturers fail
to meet our requirements for quality, quantity and timeliness, our business growth could be harmed.
We design and outsource our products to
contract manufacturers.  These manufacturers procure most of the raw materials for us and provide all necessary facilities
and labor to manufacture our products. If these companies were to terminate their agreements with us without adequate notice, or
fail to provide the required capacity and quality on a timely basis, we would be delayed in our ability or unable to process and
deliver our products to our customers.
Our products could contain defects
or they may be installed or operated incorrectly, which could reduce sales of those products or result in claims against us.
Although we have quality assurance practices
to ensure good product quality, defects still may be found in the future in our existing or future products.
End-users could lose their confidence in
our products and Company when they unexpectedly use defective products or use our products improperly.  This could result
in loss of revenue, loss of profit margin, or loss of market share.  Moreover, because our products are employed in the
healthcare industry, if one of our products is a cause, or perceived to be the cause, of injury or death to a patient, we would
likely be subject to a claim.  If we were found responsible it could cause us to incur liability which could interrupt
or even cause us to terminate some or all of our operations.
If we are unable to recruit and retain
qualified personnel, our business could be harmed.
Our growth and success highly depend on
qualified personnel. Competition in the industry could cause us difficulty in recruiting or retaining a sufficient number of qualified
technical personnel, which could harm our ability to develop new products. If we are unable to attract and retain necessary key
talents, it would harm our ability to develop competitive product and retain good customers and could adversely affect our business
and operating results.
Risks Related to the Securities Markets
and Investments in Our Common Stock
Because our common stock is quoted
on the "Over the Counter Market," your ability to sell shares in the secondary trading market may be limited.
Our common stock is currently quoted on
the over-the-counter market on the OTC Electronic Bulletin Board. Consequently, the liquidity of our common stock is impaired,
not only in the number of shares that are bought and sold, but also through delays in the timing of transactions, and coverage
by security analysts and the news media, if any, of our company. As a result, prices for shares of our common stock may be lower
than might otherwise prevail if our common stock was quoted and traded on Nasdaq or a national securities exchange.
Because our shares are "penny
stocks," you may have difficulty selling them in the secondary trading market.
Federal regulations under the Securities
Exchange Act of 1934 regulate the trading of so-called "penny stocks," which are generally defined as any security not
listed on a national securities exchange or Nasdaq, priced at less than $5.00 per share and offered by an issuer with limited net
tangible assets and revenues. Since our common stock currently is quoted on the "OTCBB" at less than $5.00 per share,
our shares are "penny stocks" and may not be traded unless a disclosure schedule explaining the penny stock market and
the risks associated therewith is delivered to a potential purchaser prior to any trade.
3
In addition, the Securities and Exchange
Commission has adopted a number of rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3,  15g-4,  15g-5,
15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended.  Because our securities constitute
"penny stocks", within the meaning of the rules, the rules would apply to us and to our securities.  The rules
will further affect the ability of owners of shares to sell their securities in any market that might develop for them because
it imposes additional regulatory burdens on penny stock transactions.
Shareholders should be aware that, according
to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter
or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
(iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced
salespersons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale
dumping of the same securities by promoters and  broker-dealers after prices have been manipulated to a desired level,
leaving investors with 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 the Company's securities.
By virtue of being a public company, the company is subject
to certain regulations and expenses.
The Company is publicly-traded and, accordingly,
subject to the information and reporting requirements of the U.S. securities laws. The U.S. securities laws require, among other
things, review, audit, and public reporting of the Company's financial results, business activities, and other matters.  Recent
SEC regulation, including regulation enacted as a result of the Sarbanes-Oxley Act of 2002, has also substantially increased the
accounting, legal, and other costs related to becoming and remaining an SEC reporting company.  The public company costs
of preparing and filing annual and quarterly reports, and other information with the SEC, and furnishing audited reports to shareholders
will cause the Company's expenses to be higher than if privately-held.  In addition, the Company will incur substantial
expenses in connection with the preparation of the Registration Statement and related documents with respect to the registration
of the shares issued in the Offering. These increased costs may be material and may include the hiring of additional employees
and/or the retention of additional advisors and professionals. Failure by the Company to comply with the federal securities laws
could result in private or governmental legal action against the Company and/or our officers and directors, which could have a
detrimental effect on the Company's business and finances, the value of the Company's stock, and the ability of shareholders
to resell their stock.
We may face a claim from the minority shareholders of
our operating subsidiaries.
On May 21, 2009, AmbiCom Acquisition Corp.
acquired AmbiCom, Inc.  AmbiCom, Inc. was unable to obtain the consent of all of its minority shareholders to the transaction.  Accordingly,
pursuant to the provisions of California corporate law, there is a risk that one or all of these minority shareholders may attempt
to assert dissenter's rights in accordance with the transaction.  While the Company believes it has taken steps
to protect itself against such an action, there is no guarantee that if an action were commenced against the Company that it could
be resolved or resolved on terms favorable to the Company.
Our stock price may be volatile and
your investment in our common stock could suffer a decline in value.
Trading activities in the Company's
common stock has been limited and prices volatile.  There can be no assurance that a stable market will ever develop
in the Company's common stock in the future.  If a stable market does not develop, investors could be unable to
sell their shares of the Company's common stock, possibly resulting in a complete loss of any funds invested.  Should
a stable market develop, the price may fluctuate significantly in response to a number of factors, many of which are beyond our
control. These factors include:
4
·
Acceptance of our products in the industry.
·
Announcements of technological innovations or new products by us or our competitors.
·
Government regulatory action affecting our products or our competitors' products.
·
Developments or disputes concerning patent or proprietary rights.
·
Economic conditions in the United States or abroad.
·
Actual or anticipated fluctuations in our operating results.
·
Broad market fluctuations.
·
Changes in financial estimates by securities analysts.
A registration of a significant amount of our outstanding
restricted stock may have a negative effect on the trading price of our stock.
At July 5, 2012, shareholders of the Company
had approximately 5,278,006 shares of restricted stock, or approximately 54% of the outstanding common stock. If we were to file
a registration statement including all of these shares, and the registration is allowed by the SEC, these shares would be freely
tradable upon the effectiveness of the registration statement. If investors holding a significant number of freely tradable shares
decide to sell them in a short period of time following the effectiveness of a registration statement, such sales could contribute
to significant downward pressure on the price of our stock.
We do not intend to pay any cash
dividends to common shareholders in the foreseeable future and, therefore, any return on your investment in our capital stock must
come from increases in the fair market value and trading price of the capital stock.
We have not paid any cash dividends on
our common stock and do not intend to pay cash dividends on our common stock in the foreseeable future.  We intend to
retain future earnings, if any, for reinvestment in the development and expansion of our business.  Any credit agreements,
which we may enter into with institutional lenders, may restrict our ability to pay dividends.  Whether we pay cash dividends
in the future will be at the discretion of our board of directors and will be dependent upon our financial condition, results of
operations, capital requirements and any other factors that the board of directors decides is relevant.  Therefore, any
return on your investment in our capital stock must come from increases in the fair market value and trading price of the capital
stock.
We may issue additional equity shares
to fund the Company's operational requirements which would dilute your share ownership.
The Company's continued viability may depend
on its ability to raise capital.  Changes in economic, regulatory or competitive conditions may lead to cost increases.  Management
may also determine that it is in the best interest of the Company to develop new services or products. In any such case, additional
financing will likely be required for the Company to meet its operational requirements.  There can be no assurances that
the Company will be able to obtain such financing on terms acceptable to the Company and at times required by the Company, if at
all.  In such event, the Company may be required to materially alter its business plan or curtail all or a part of its
operational plans as detailed further in Management's Discussion and Analysis in this Form S-1. While the Company currently has
no offers to sell its securities to obtain financing, sale or the proposed sale of substantial amounts of our common stock in the
public markets may adversely affect the market price of our common stock and our stock price may decline substantially.  In
the event that the Company is unable to raise or borrow additional funds, the Company may be required to curtail significantly
its operational plans as further detailed in Requirements for Additional Capital in the Management Discussion and Analysis of this
Form S-1.
Also, any new securities issued may have greater rights, preferences
or privileges than our existing common stock which may adversely affect the market price of our common stock and our stock price
may decline substantially.
The Company's Amended Articles
of Incorporation authorize the issuance of up to 1,050,000,000 total shares of capital stock without additional approval by shareholders.
As of July 5, 2012, we had 9,790,760 shares of common stock outstanding.
5
Large amounts of our common stock
will be eligible for resale under Rule 144.
As of July 5, 2012, approximately 5,278,006
of the 9,790,760 issued and outstanding shares of the Company's common stock are restricted securities as defined under Rule 144
of the Securities Act of 1933, as amended (the "Act") and under certain circumstances may be resold without registration
pursuant to Rule 144 or otherwise.
In general, under Rule 144, a person (or
persons whose shares are aggregated) who has satisfied a six month holding period may, under certain circumstances, sell within
any three-month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common
stock or the average weekly trading volume of the class during the four calendar weeks prior to such sale. Rule 144 also permits,
under certain circumstances, the sale of securities, without any limitation, by a person who is not an Affiliate, as such term
is defined in Rule 144(a)(1), of the Company and who has satisfied a one year holding period. Any substantial sale of the Company's
common stock pursuant to Rule 144 may have an adverse effect on the market price of the Company's shares.  Since the
Company has previously indicated in its filings with the Commission that it is a shell company, as that term is defined under the
Securities Act, pursuant to Rule 144, shareholders must wait at least one year from the date of the filing of this Form 10-K to
avail themselves of Rule 144 unless we file a registration statement for the sale of such shares prior thereto.
Our reporting requirements may utilize
a substantial portion of our cash.
We will incur ongoing costs and expenses
for SEC reporting and compliance.
To be eligible for quotation on the OTCBB, issuers must remain current in
their filings with the SEC. Market Makers are not permitted to begin quotation of a security whose issuer does not meet this filing
requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following
a 30 or 60 day grace period if they do not make their required filing during that time.  In order for us to remain in
compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our
available cash resources.
Rule 144 sales in the future may
have a depressive effect on the company's stock price.
All of the outstanding shares of common
stock held by the present officers, directors, and affiliate shareholders are "restricted securities" within the meaning
of Rule 144 under the Securities Act of 1933, as amended. As restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the
Act and as required under applicable state securities laws. Officers, directors and affiliates will be able to sell their shares
if this Registration Statement becomes effective. Rule 144 provides in essence that a person who is an affiliate or officer or
director who has held restricted securities for six months may, under certain conditions, sell every three months, in brokerage
transactions, a number of shares that does not exceed the greater of 1.0% of a company's outstanding common stock. There is no
limit on the amount of restricted securities that may be sold by a non-affiliate after the owner has held the restricted securities
for a period of six months if the company is a current, reporting company under the Exchange Act. A sale under Rule 144 or under
any other exemption from the Act, if available, or pursuant to subsequent registration of shares of common stock of present shareholders,
may have a depressive effect upon the price of the common stock in any market that may develop. In addition, if we are deemed a
shell company pursuant to Section 12(b)-2 of the Act, our "restricted securities", whether held by affiliates or non-affiliates,
may not be re-sold for a period of 12 months following the filing of a Form 10 level disclosure or registration pursuant to the
Act.
Our shareholders may suffer future
dilution due to issuances of shares for various considerations in the future.
There may be substantial dilution to our
shareholders purchasing in future offerings as a result of future decisions of the Board to issue shares without shareholder approval
for cash, services, or acquisitions.
6
Our stock will in all likelihood be thinly traded and,
as a result, investors may be unable to sell at or near ask prices or at all if they need to liquidate shares.
Our shares of common stock may be thinly-traded
on the Over the Counter Market, meaning that the number of persons interested in purchasing our common shares at or near ask 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 it is a small company which is 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 the Company came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company such as ours or purchase
or recommend the purchase of any of our securities until such time as it became more seasoned and viable. As a consequence, there
may be periods of several days or more when trading activity in the our securities 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 the securities price. We cannot give investors any assurance that a broader or more active public trading market
for the Company's common securities will develop or be sustained, or that any trading levels will be sustained. Due to these conditions,
we can give investors no assurance that they will be able to sell their shares at or near ask prices or at all if they need money
or otherwise desire to liquidate their securities of the Company.
Certain Nevada Corporation Law provisions
could prevent a potential takeover, which could adversely affect the market price of our stock.
We are incorporated in the State of Nevada.
Certain provisions of Nevada corporation law could adversely affect the market price of our common stock. Because Nevada corporation
law requires board approval of a transaction involving a change in our control, it would be more difficult for someone to acquire
control of us. Nevada corporate law also discourages proxy contests making it more difficult for you and other shareholders to
elect directors other than the candidate or candidates nominated by our board of directors.
Risks Related to this Offering
We are registering an aggregate of
20,000,000 shares of common stock to be issued under the equity line of credit; the sale of such shares could depress the market
price of our common stock.
We are registering an aggregate of 20,000,000
shares of common stock under this registration statement for issuance pursuant to the equity line of credit. These shares may be
sold into the public market by Kodiak Capital or a transferee of it.  As of June 20, 2012, there were 9,790,760 shares
of our common stock issued and outstanding, an 7,050,000 issuable upon the conversion of our outstanding Series A Preferred Stock
and 262,500 issuable upon conversion of our outstanding Series B Preferred Stock.
Assuming the Company utilizes the maximum amount available
under the equity line of credit, existing shareholders could experience substantial dilution upon the issuance of common stock.
Our equity line of credit with Kodiak Capital
contemplates the potential future issuance and sale of up to $1,000,000 of common stock to Kodiak Capital, subject to certain restrictions
and obligations. We are limiting this registration statement to 20,000,000 shares of common stock with respect to the equity line
of credit. The following table is an example of the number of shares that could be issued at various prices assuming we utilize
the maximum amount remaining available under the equity line of credit:
Price Per Share (1)
No of Shares
Issuable (2)
Shares Outstanding
After Issuance (3)
Percent of Shares
Outstanding (4)
$
0.05
20,000,000
29,790,760
67.1
%
$
0.09
11,111,111
20,901,871
53.2
%
$
0.13
7,692,308
17,483,068
44.0
%
(1)
Assumes a price of 80% of the volume weighted price per share.
(2)
Represents the number of shares issuable if the entire commitment of $1,000,000 under the equity line of credit were drawn down at the indicated purchase prices.
(3)
Based on 9,790,760 shares of common stock outstanding as of July 5, 2012.
7
(4)
Percentage of our total outstanding shares of common stock represented by shares issued under the equity line of credit, after the issuance of the shares indicated.
Kodiak will pay less than the then-prevailing market price
for our common stock.
The common stock to be issued to Kodiak
pursuant to the Investment Agreement will be purchased at a eighty percent (80%) discount to the lowest closing "best bid"
price (the lowest posted bid price) of the common stock during the five consecutive trading days immediately following the date
of our notice to Kodiak of our election to put shares pursuant to the Investment Agreement. Kodiak has a financial incentive to
sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted
price and the market price. If Kodiak sells the shares, the price of our common stock could decrease. If our stock price decreases,
Kodiak may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact
on our stock price.
The size of the put we are able to exercise will not permit
us to generate adequate funds.
The Investment Agreement provides that
the dollar value that we will be permitted to put to Kodiak will be $25,000.  Given our current rate of expenditures,
it is unlikely these puts may provide adequate funding for our planned operations.
SHOULD ONE OR MORE OF THE FOREGOING 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
USE OF PROCEEDS
This prospectus relates
to the sale of shares of our common stock to Kodiak Capital pursuant to the exercise of our put right under our Investment Agreement
with Kodiak Capital. The Company will receive proceeds from the sale of our common stock to Kodiak Capital pursuant to the investment
agreement. We will not receive any proceeds from the sales of stock by the other selling shareholders, including sales made by
Kodiak Capital. We will pay the cost of registering under the Securities Exchange Act of 1933 the shares offered by this prospectus.
The proceeds from the Company's exercise of the put right pursuant to the investment agreement will be used for working capital
and general corporate expenses. The Company anticipates the proceeds received from any "Puts" tendered to Kodiak under
the Equity Line of Credit to be used for working capital.
DETERMINATION OF OFFERING PRICE
The offering price for the shares sold
to Kodiak under the Put will equal 80% of the lowest closing bid price of the common stock of the Company during the five consecutive
trading days immediately after the date that Kodiak receives a Put Notice of draw down by the Company of a portion of the equity
line of credit with Kodiak.
There will be no underwriter discounts or commissions.
DILUTION
The difference between the price per share
pursuant to the exercise of the put right and the as adjusted pro forma net tangible book value per share of common stock after
this offering constitutes the dilution to investors in this offering.  Net tangible book value per share is determined
by dividing the net tangible book value (total assets less intangible assets and total liabilities) by the number of outstanding
shares of common stock.
8
As of July 5, 2012, our pro forma net
tangible book value of was $51,349 or approximately $0.005 per share of common stock. Pro forma net tangible book value per share
consists of total assets less intangible assets and liabilities, divided by the total number of shares of common stock outstanding.
Without giving effect to any changes in such pro forma net tangible book value after July 5, 2012, other than to give effect to
sale of 10,416,667 shares of common stock at an assumed purchase price of $0.096 per share, the pro forma net tangible book value
at July 5, 2012, would have been $1,051,349 or approximately $0.052 per share. As of July 5, 2012, the net tangible book value
per share of common stock owned by our current shareholders would have increased by approximately $0.047 without any additional
investment on their part and the purchasers of common stock will incur an immediate dilution of approximately $0.044 per share
from the purchase price. "Dilution" means the difference between the offering price and the pro forma net tangible
book value per share after giving effect to the offering. Holders of common stock may be subjected to additional dilution if any
additional securities are issued as compensation or to raise additional financing. The following table illustrates the dilution
which investors participating in this offering will incur and the benefit to current shareholders as a result of this offering:
Price per share(1)
$
0.096
Pro forma net tangible book value per share as of  July 5, 2012 (2)
$
0.005
Increase per share attributable to the exercise of the put right
$
0.047
Pro forma net tangible book value after the exercise of the put right
$
0.052
Dilution per share to new investors
$
0.044
(1)
Assumes that $0.88 is 80% of the volume weighted price per share after the put right is exercised.
SELLING SHAREHOLDERS
We agreed to register
for resale 20,0000,000 Shares that we will put to Kodiak Capital pursuant to the Investment Agreement. The Investment Agreement
with Kodiak Capital provides that Kodiak Capital is committed to purchase up to $1,000,000 of our common stock.  We may
draw on the facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the
Investment Agreement. We will not receive any proceeds from the sale of these shares of common stock offered by Selling Security
Holder. However, we will receive proceeds from the sale of our Put Shares under the Investment Agreement. The proceeds will be
used for working capital or general corporate purposes.
We are unable to estimate
the number of shares Kodiak Capital may sell under our put right.  If Kodiak Capital is successful in selling all of
the shares it purchases from us, it will own none of our shares.
The following table
details the name of the Selling Stockholder, the number of shares owned by that Selling Stockholder, and the number of shares that
may be offered by each Selling Stockholder for resale under this prospectus. Kodiak Capital Group, LLC is a broker-dealer. The
table assumes that pursuant to the Investment Agreement we will put to Kodiak and Kodiak and Kodiak will sell all 20,000,000 shares
of our Common Stock registered pursuant to this prospectus from time to time in one or more offerings under this prospectus. The
following table has been prepared on the assumption that all shares offered under this prospectus will be sold to parties unaffiliated
with the selling stockholders.
Name of selling security holder
Amount of
securities of the
class owned by
the security
holder before
this offering
Amount to be
offered for the
security holder's
account
Amount and (if
one percent or
more)
percentage of the
class to be owned
by security
holder after the
offering is
complete
Kodiak Capital Group, LLC
(1)
20,000,000
20,000,000
0
%
9
* For the purpose of the table set forth above, we have included
all shares of common stock beneficially owned by the selling security holder as of July 5, 2012.
(1)
Applicable percentage of ownership is based on 9,790,760 shares of our Common Stock issued and outstanding as of July 5, 2012, together with securities exercisable or convertible into shares of Common Stock within 60 days as of June 20, 2012 for the Selling Shareholders. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.  Shares of common stock are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not as outstanding for the purpose of computing the percentage ownership of any other person.
INVESTMENT AGREEMENT
Pursuant to our investment
agreement with Kodiak Capital, we have the right to "put" to Kodiak Capital up to $1,000,000 million in price of shares
of our common stock (i.e., we can compel Kodiak Capital to purchase our common stock at a pre-determined formula). Accordingly,
this prospectus relates to the resale of up to 20,000,000 shares of our common stock by Kodiak Capital.
In conjunction with
our investment agreement with Kodiak Capital, we issued a total of 500,000 shares of our common stock to Kodiak Capital and its
designee as a commitment fee.  The shares are restricted stock as defined in Rule 144 under the Securities Act.
For the purpose of
determining the number of shares of common stock to be offered by this prospectus, we have assumed that we will issue not more
than 20,000,000 shares pursuant to the exercise of the put right, although the number of shares that we will actually issue pursuant
to the put right may be more or less than 20,000,000, depending on the trading price of our common stock.  We currently
do not intend to exercise the put right in a manner which would result in our issuance of more than 20,000,000 shares.
The investment agreement
provides, in part, that following notice to Kodiak Capital, we may put to Kodiak Capital up to $1,000,000 in shares of our common
stock for a purchase price equal to 80% percent of the lowest closing "best bid" price (the highest posted bid price)
of the common stock during the five consecutive trading days immediately following the date of our notice to Kodiak Capital of
an election to put shares pursuant to the investment agreement.  The aggregate dollar value that we will be permitted
to put to Kodiak will be $25,000.  Kodiak Capital has indicated that it will resell those shares in the open market,
resell our shares to other investors through negotiated transactions, or hold our shares in its portfolio. This prospectus covers,
in part, the resale of our stock by Kodiak Capital either in the open market or to other investors through negotiated transactions.
Kodiak Capital's obligations under the investment agreement are not transferrable and this registration statement does not
cover sales of our common stock by transferees of Kodiak Capital.
Kodiak Capital will only purchase shares
when we meet the following conditions:
·
a registration statement has been declared effective and remains effective for the resale of the common stock subject to the equity line of credit;
·
our common stock has not been suspended from trading for a period of two consecutive trading days and we have not been notified of any pending or threatened proceeding or other action to delist or suspend our common stock;
·
we have complied with our obligations under the investment agreement and the attendant registration rights agreement;
·
no injunction has been issued and remains in force, and no action has been commenced by a governmental authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of our common stock; and
·
we have not filed a petition in bankruptcy, either voluntarily or involuntarily, and there shall not have been commenced any proceedings under any bankruptcy or insolvency laws.
10
The investment agreement will terminate
when any of the following events occur:
·
Kodiak has purchased an aggregate of $1,000,000 of our common stock or twenty four months after the effective date;
·
we file or otherwise enter an order for relief in bankruptcy; or
·
our common stock ceases to be registered under the Exchange Act.
As we draw down on
the equity line of credit, shares of our common stock will be sold into the market by Kodiak Capital.  The sale of these
additional shares could cause our stock price to decline.  In turn, if the stock price declines and we issue more puts,
more shares will go into the market, which could cause a further drop in the stock price.  You should be aware that there
is an inverse relationship between the market price of our common stock and the number of shares to be issued under the equity
line of credit.  If our stock price declines, we will be required to issue a greater number of shares under the equity
line of credit.  We have no obligation to utilize the full amount available under the equity line of credit.
PLAN OF DISTRIBUTION
The selling shareholders and any of their
pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock
being offered under this prospectus on any stock exchange, market or trading facility on which shares of our common stock are traded
or in private transactions. These sales may be at fixed or negotiated prices. The selling shareholders may use any one or more
of the following methods when disposing of shares:
·
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
·
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
·
purchases by a broker-dealer as principal and resales by the broker-dealer for its account;
·
an exchange distribution in accordance with the rules of the applicable exchange;
·
privately negotiated transactions;
·
to cover short sales made after the date that the registration statement of which this prospectus is a part is declared effective by the Commission;
·
broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share;
·
a combination of any of these methods of sale; and
·
any other method permitted pursuant to applicable law.
The shares may also be sold under Rule
144 under the Securities Act of 1933, as amended ("Securities Act"), if available, rather than under this prospectus.
The selling shareholders have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if they
deem the purchase price to be unsatisfactory at any particular time.
The selling shareholders may pledge their
shares to their brokers under the margin provisions of customer agreements. If a selling security holder defaults on a margin loan,
the broker may, from time to time, offer and sell the pledged shares.
Broker-dealers engaged by the selling shareholders
may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling
shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated,
which commissions as to a particular broker or dealer may be in excess of customary commissions to the extent permitted by applicable
law.
If sales of shares offered under this prospectus
are made to broker-dealers as principals, we would be required to file a post-effective amendment to the registration statement
of which this prospectus is a part. In the post-effective amendment, we would be required to disclose the names of any participating
broker-dealers and the compensation arrangements relating to such sales.
11
The selling shareholders and any broker-dealers
or agents that are involved in selling the shares offered under this prospectus may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with these sales. Commissions received by these broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities
Act. Any broker-dealers or agents that are deemed to be underwriters may not sell shares offered under this prospectus unless and
until we set forth the names of the underwriters and the material details of their underwriting arrangements in a supplement to
this prospectus or, if required, in a replacement prospectus included in a post-effective amendment to the registration statement
of which this prospectus is a part.
The selling shareholders and any other
persons participating in the sale or distribution of the shares offered under this prospectus will be subject to applicable provisions
of the Exchange Act and the rules and regulations under that act, including Regulation M. These provisions may restrict activities
of and limit the timing of purchases and sales of any of the shares by the selling shareholders or any other person. Furthermore,
under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making
and other activities with respect to those securities for a specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares.
If any of the shares of common stock offered
for sale pursuant to this prospectus are transferred other than pursuant to a sale under this prospectus, then subsequent holders
could not use this prospectus until a post-effective amendment or prospectus supplement is filed, naming such holders. We offer
no assurance as to whether any of the selling shareholders will sell all or any portion of the shares offered under this prospectus.
We have agreed to pay all fees and expenses
we incur incident to the registration of the shares being offered under this prospectus. However, each selling security holder
and purchaser are responsible for paying any discounts, commissions and similar selling expenses they incur.
The selling shareholders and the issuer
have agreed to indemnify one another against certain losses, damages and liabilities arising in connection with this prospectus,
including liabilities under the Securities Act. Under the securities laws of certain states, the shares of common stock may be
sold in such states only through registered or licensed brokers or dealers. The selling shareholders are advised to ensure that
any brokers, dealers or agents effecting transactions on behalf of the selling shareholders are registered to sell securities in
all fifty states. In addition, in certain states the shares of common stock may not be sold unless the shares have been registered
or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
We will pay all the expenses incident to
the registration, offering and sale of the shares of common stock to the public hereunder other than commissions, fees and discounts
of brokers, dealers and agents. We estimate that the expenses of the offering to be borne by us will be approximately $40,255.42.
The estimated offering expenses consist of: a SEC registration fee of $255.42, accounting fees of $10,000, legal fees of $20,000
and printing miscellaneous expenses of $10,000. We will not receive any proceeds from the sale of any of the shares of common stock
by the selling shareholders.
The selling shareholders should be aware
that the anti-manipulation provisions of Regulation M under the Securities Exchange Act of 1934 will apply to purchases and sales
of shares of common stock by the selling shareholders, and that there are restrictions on market-making activities by persons engaged
in the distribution of the shares. Under Regulation M, the selling shareholders or their agents may not bid for, purchase, or attempt
to induce any person to bid for or purchase, shares of common stock of the Company. while such selling shareholders are distributing
shares covered by this prospectus. Accordingly, except as noted below, the selling shareholders are not permitted to cover short
sales by purchasing shares while the offering is taking place. The selling shareholders are advised that if a particular offer
of common stock is to be made on terms constituting a material change from the information set forth above with respect to this
Plan of Distribution, then, to the extent required, a post-effective amendment to the accompanying registration statement must
be filed with the Securities and Exchange Commission.
12
Blue Sky Restrictions on Resale
If a selling security holder wants to sell
shares of our common stock under this registration statement in the United States, the selling shareholders will also need to comply
with state securities laws, also known as "Blue Sky laws," with regard to secondary sales. All states offer a variety
of exemption from registration for secondary sales. Many states, for example, have an exemption for secondary trading of securities
registered under Section 12(g) of the Securities Exchange Act of 1934 or for securities of issuers that publish continuous disclosure
of financial and non-financial information in a recognized securities manual, such as Standard & Poor's. The broker for
a selling security holder will be able to advise a selling security holder which states our common stock is exempt from registration
with that state for secondary sales.
Any person who purchases shares of our
common stock from a selling security holder under this registration statement who then wants to sell such shares will also have
to comply with Blue Sky laws regarding secondary sales.
When the registration statement becomes
effective, and a selling security holder indicates in which state(s) he desires to sell his shares, we will be able to identify
whether it will need to register or will rely on an exemption there from.
DESCRIPTION OF SECURITIES
Common Stock
Number of Authorized
and Outstanding Shares.
The securities subject to this registration statement are shares of common stock of the Company, par
value $0.008 per share ("Common Stock"). The Company's Amended and Restated Articles of Incorporation authorizes the
issuance of 125,000,000 shares of Common Stock, of which 9,790,760 shares of Common Stock outstanding on July 5, 2012, which were
held by 90 shareholders of record.
Voting Rights
.
Holders of shares of Common Stock are entitled to one vote for each share on all matters to be voted on by the shareholders. Holders
of Common Stock have no cumulative voting rights. Accordingly, the holders of in excess of 50% of the aggregate number of shares
of Common Stock outstanding will be able to elect all of the directors of the Company and to approve or disapprove any other matter
submitted to a vote of all shareholders.
Other
. No shareholder
has any preemptive right or other similar right to purchase or subscribe for any additional securities issued by the Company, and
no shareholder has any right to convert the common stock into other securities. No shares of common stock are subject to redemption
or any sinking fund provisions. All the outstanding shares of the Company's common stock are fully paid and non-assessable. Subject
to the rights of the holders of the preferred stock, if any, the Company's shareholders of common stock are entitled to dividends
when, as and if declared by the Board from funds legally available therefore and, upon liquidation, to a pro-rata share in any
distribution to shareholders. The Company does not anticipate declaring or paying any cash dividends on the common stock in the
foreseeable future.
Preferred Stock
The Company's Amended and Restated Articles
of Incorporation authorizes the issuance of 50,000,000 shares of "Blank Check" Preferred Stock, par value $0.001 per
share ("Preferred Stock"), subject to any limitations prescribed by law, without further vote or action by the shareholders,
to issue from time to time shares of preferred stock in one or more series. There are no shares of Preferred Stock issued and outstanding.  Each
such series of Preferred Stock shall have such number of shares, designations, preferences, voting powers, qualifications, and
special or relative rights or privileges as shall be determined by the Company's board of directors, which may include, among others,
dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.
Series A Convertible Preferred Stock
The Company has authorized a total of 9,400,000
shares of Series A Convertible Preferred Stock (the "Series A"). The Series A is convertible at any time into shares
of the Company's common stock at the conversion rate of one share of Common Stock per each share of Series A converted.  If
the Company reports net income in two of the four years following the Exchange, the Series A shall be convertible into Common Stock
at the conversion rate of two shares of Common Stock per each share of Series A converted.  The Series A is treated on
an "as converted" basis for both voting and liquidation rights. There are currently 7,050,000 shares of Series A issued
and outstanding.
13
Series B Convertible Preferred Stock
The Company has authorized a total of 2,600,000
shares of 6% Series B Convertible, Redeemable Preferred Stock (the "Series B").  The Series B accrues annual
dividends at the rate of 6% per year in shares of Common Stock at the dividend conversion rate of $1.00.  The Series
B, together with any unpaid dividends, is convertible at any time into shares of the Company's common stock at the conversion
rate of one share of Common Stock per each share of Series B converted.  Following the second anniversary of the Exchange,
the Series B, together with any unpaid dividends, shall be convertible into Common Stock at the conversion price of forty cents
($0.40) or seventy percent (70%) of the daily volume weighted average price of the Common Stock for the twenty trading days immediately
prior to the conversion.  The Series B is redeemable by the Company, at any time prior to December 31, 2015, in cash
at the redemption rate of $1.00 per share of Series B plus any accrued and unpaid dividends.  On December 31, 2015, all
outstanding shares of Series B shall be redeemed by the Company at a per share redemption price equal to $1.00 per share of Series
B plus an amount of Common Stock equal to the amount of the accrued and unpaid dividend thereon.  The Series B has a
liquidation preference of $2,600,000 and ranks prior to the Series A and the Common Stock.  The Series B votes on an
"as converted" basis.  There are currently 265,500 shares of Series B outstanding.
Warrants
As of July 5, 2012, there were warrants outstanding to
purchase 62,500 shares of Common Stock at the exercise price of $0.50.
Options
As of the July 5, 2012, there were no
options issued or outstanding.
Securities Authorized for Issuance Under Equity Compensation
Plans
The Company has reserved 284,722 shares
of common stock for issuance under the terms of the AmbiCom Holdings 2010 Incentive Plan. The 2010 Plan is intended to promote
the interests of the Company by attracting and retaining exceptional employees, consultants, directors, officers and independent
contractors (collectively referred to as the "Participants"), and enabling such Participants to participate in the
long-term growth and financial success of the Company. Under the 2010 Plan, the Company may grant stock options, which are intended
to qualify as "incentive stock options" under Section 422 of the Internal Revenue Code of 1986, as amended (the "Incentive
Stock Options"), non-qualified stock options (the "Nonqualified Stock Options"), stock appreciation rights ("SARs")
and restricted stock awards (the "Restricted Stock Awards"), which are restricted shares of Common Stock (the Incentive
Stock Options, the Nonqualified Stock Options, the SARs and the Restricted Stock Awards are collectively referred to as "Incentive
Awards"). Incentive Awards may be granted pursuant to the 2010 Plan for 10 years from the Effective Date.
From time to time, we may issue Incentive Awards pursuant to
the 2010 Plan.  Each of the awards will be evidenced by and issued under a written agreement.
If an incentive award granted under the
2010 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive
award, the shares subject to such award and the surrendered shares will become available for further awards under the Plan.
The number of shares subject to the 2010
Plan, and the number of shares and terms of any Incentive Award may be adjusted in the event of any change in our outstanding Common
Stock by reason of any stock dividend, spin-off, stock split, reverse stock split, recapitalization, reclassification, merger,
consolidation, liquidation, business combination or exchange of shares, or similar transaction.
14
Transfer Agent
Shares of Common Stock are registered at
the transfer agent and are transferable at such office by the registered holder (or duly authorized attorney) upon surrender of
the Common Stock certificate, properly endorsed.  No transfer shall be registered unless the Company is satisfied that
such transfer will not result in a violation of any applicable federal or state securities laws. The Company's transfer agent for
its Common Stock is VStock Transfer, LLC, 77 Spruce Street, Suite 201, Cedarhurst, New York, 11516, Telephone (212) 828-8436.
Penny Stock
The Securities and Exchange Commission
has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are
generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges
or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities
is provided by the exchange or system).
Our shares are considered penny stock under
the Securities and Exchange Act.  The shares will remain penny stocks for the foreseeable future.  The classification
of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult
for a purchaser to liquidate his/her investment.  Any broker-dealer engaged by the purchaser for the purpose of selling
his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act.  Rather than
creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document, which:
·
Contains a description of the nature and level of risk in the market for penny stock in both public offerings and secondary trading.
·
Contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the Securities Act of 1934, as amended.
·
Contains a brief, clear, narrative description of a dealer market, including "bid" and "ask"  price for the penny stock and the significance of the spread between the bid and ask price.
·
Contains a toll-free telephone number for inquiries on disciplinary actions.
·
Defines significant terms in the disclosure document or in the conduct of trading penny stocks.
·
Contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, to the customer:
·
The bid and offer quotations for the penny stock.
·
The compensation of the broker-dealer and its salesperson in the transaction.
·
The number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock.
·
Monthly account statements showing the market value of each penny stock held in the customer's  account.
In addition, the penny stock rules require
that prior to a transaction in a penny stock not otherwise exempt from those 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 acknowledgment
of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated
copy of a written suitability statement.  These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, shareholders may
have difficulty selling their securities.
15
Shares Available Under Rule 144
There are currently 5,278,006 shares
of common stock that are considered restricted securities under Rule 144 of the Securities Act of 1933.  2,701,596 shares are held
by affiliates, as that term is defined in Rule 144(a)(1) and other shareholders. Under Rule 144, such shares can be publicly sold,
subject to volume restrictions and certain restrictions on the manner of sale, commencing six months after their acquisition for
those companies that have been subject to the reporting requirements of section 13 or 15(d) of the Exchange Act for a period of
at least 90 days before the sale.
Dividend Policy
We have not declared or paid dividends
on our Common Stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment
of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial
condition, results of operations, capital requirements and other factors deemed relevant by the board of directors. There are no
contractual restrictions on our ability to declare or pay dividends.
INTEREST OF NAMED EXPERT AND COUNSEL
No expert or counsel named in this Prospectus
as having prepared or certified any part of this Prospectus or having given an opinion upon the validity of the securities being
registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency
basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in us or any of
our subsidiaries. Nor was any such person connected with us or any of our subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer or employee.
Legal Matters
The validity of the issuance of the shares
being offered hereby will be passed upon for us by Tarter Krinsky & Drogin LLP, New York, New York.
Experts
Our financial statements included in this prospectus to the
extent and for the fiscal year ended July 31, 2011 (as indicated in their reports) have been audited by Kim & Lee Corporation,
Los Angeles, California an independent registered public accounting firm and are included herein in reliance upon the authority
as experts in giving said reports.
DESCRIPTION OF THE BUSINESS
Background
Organization in the Last Five Years
AmbiCom
was organized under the laws of the State of Nevada on July 29, 2008.  AmbiCom is a holding company whose operating company,
AmbiCom, Inc., is a designer and developer of wireless products focusing on the wireless medical industry.  AmbiCom's
wireless modules and devices are based on the Company's innovative application software and Wi-Fi or Bluetooth
â
technologies.
16
On January 15, 2010, Med Control, Inc.
(the "Registrant") authorized its Articles of Incorporation (the "Amendment") to change its name to AmbiCom
Holdings, Inc., to increase the number of its authorized shares of capital stock from 75,000,000 to 1,050,000,000 shares of which
1,000,000,000 were designated common stock and 50,000,000 were designated preferred stock, par value $0.001 per share (the "Preferred
Stock") and to effect a forward-split such that 131.2335958 shares of Common Stock were issued for every 1 share of Common
Stock issued and outstanding immediately prior to filing of the amendment (the "Forward Split").  The Registrant
also amended its Bylaws on January 15, 2010.  On January 15, 2010, the Registrant entered into an Agreement and Plan
of Share Exchange (the "Exchange Agreement") with AmbiCom Acquisition Corp., a Nevada corporation ("AmbiCom"),
whereby the Registrant acquired all of the issued and outstanding capital stock of AmbiCom in exchange (the "Exchange")
for 20,000,000 newly issued shares of Common Stock (the "Common Exchange Shares"), 2,600,000 shares of Series B Preferred
Stock, options to purchase 5.5 million common shares and 2,350,000 shares of Series A Preferred Stock at the purchase price of
$.01 per share, and 500,000 warrants to purchase 500,000 shares of Common Stock at $0.50 per share.  As a result of the
Exchange, the AmbiCom equity holders surrendered all of their issued and outstanding capital stock of AmbiCom in consideration
for the Exchange Shares, and AmbiCom Acquisition Corp. became a wholly-owned subsidiary of Med Control, Inc.
Simultaneously therewith, the Company accepted
subscriptions in an offering (the "Offering") of its Common Stock at a price of $0.40 per share, offered pursuant to
Regulation D of the Securities Act of 1933, as amended (the "Securities Act"). The Company sold an aggregate of 1,250,000
shares of Common Stock for an aggregate offering price of $500,000.
At the Closing, our board of directors
was reconstituted by the appointment of John Hwang, Kenneth Cheng and Robert Radoff as directors immediately prior to the resignation
of Ms. Elaine Mayumi Kato from her role as sole principal officer and director of the Company. Our executive management team also
was reconstituted following the resignation of Ms. Kato, and Mr. Cheng and Mr. Hwang were appointed as president and CEO in place
of our former officers.
Prior to the Exchange, the AmbiCom Holdings,
Inc. 2010 Incentive Plan (the "Plan") was adopted by the Board and the Company's Stockholders. Under the Plan,
[284,722] shares of Common Stock were reserved for issuance as incentive awards to be granted to executive officers, key employees,
consultants and directors after the closing of the transactions described herein.
The parties have taken the actions necessary
to provide that the Exchange is treated as a "tax free exchange" under Section 368 of the Internal Revenue Code of
1986, as amended.
The Offering
Simultaneously upon the Closing, the Company
closed an offering (the "Offering") of its Common Stock for a at a price of $0.40 per share for a minimum of 1,000,000
shares (the "Minimum Offering") and a maximum offering of 1,500,000 shares (the "Maximum Offering").  The
Company accepted subscriptions for an aggregate of 1,250,000 shares of Common Stock for aggregate offering price of $500,000.  The
shares of Common Stock were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities
Act and Rule 506 of Regulation D promulgated there under. The agreements executed in connection with this sale contain representations
to support the Registrant's reasonable belief that the investors had access to information concerning the Registrant's
operations and financial condition, the investors acquired the securities for their own account and not with a view to the distribution
thereof in the absence of an effective registration statement or an applicable exemption from registration, and that the investors
are sophisticated within the meaning of Section 4(2) of the Securities Act and are "accredited investors" (as defined
by Rule 501 under the Securities Act). In addition, the issuances did not involve any public offering; the Registrant made no solicitation
in connection with the sale other than communications with the investors; the Registrant obtained representations from the investors
regarding their investment intent, experience and sophistication; and the investors either received or had access to adequate information
about the Registrant in order to make an informed investment decision.
Split-Off Agreement
In addition, contemporaneously with the
Closing, the Company and our former principal stockholder, Ms. Kato, split-off  its wholly owned subsidiary, MCI Acquisition
Corp., a newly-formed Nevada corporation ("MCAC"), whereby the Company assigned all of its previous operating assets
to MCAC in consideration for the assumption of all of the Company's liabilities to Ms. Kato, who is currently the principal
shareholder of MCI and the retirement and cancellation of Ms. Kato's 6,000,000 shares of Common Stock pursuant to the terms
and conditions of a split-off agreement by and among the Company, Ms. Kato, and MCAC (the "Split-Off Agreement").
17
Pro Forma Ownership
Following the issuance of the Exchange
Shares and the retirement of Ms. Kato's shares pursuant to the Split-Off Agreement, the former stockholders of AmbiCom and/or
their designees now beneficially own approximately fifty-five percent (55%) of the total outstanding shares of Common Stock, and
after giving effect to the conversion of the Series B in accordance with their respective terms (and the satisfaction of certain
conditions to the conversion of such shares) seventy-six percent (76%) of the total outstanding shares of Common Stock on a fully-diluted
basis.  For financial accounting purposes, the acquisition was a reverse acquisition of the Company by AmbiCom Acquisition
Corp., under the purchase method of accounting, and was treated as a recapitalization with AmbiCom Acquisition Corp. as the acquirer.  Upon
consummation of the Exchange, the Company adopted the business plan of AmbiCom Acquisition Corp.
Company Overview
AmbiCom Holdings, Inc. ("AmbiCom
Holdings" "the Company", "us", "our" or "we,") was incorporated as Med Control,
Inc. in the State of Nevada as a for-profit company on July 1, 2008 and established a fiscal year end of July 31. Prior to the
Exchange, the Company was a development-stage company organized to sell a product called "Med Time", an electronic
and portable device aimed to control the doses and schedules of medications taken by elderly individuals. As a result of the Exchange
with AmbiCom Acquisition Corp., we have adopted the business plan of AmbiCom Acquisition Corp's wholly-owned subsidiary,
AmbiCom, Inc., a California corporation, and now design and develop wireless products focusing on the wireless medical industry.
AmbiCom
is a designer and developer of wireless products focusing on the wireless medical industry.  AmbiCom's wireless
modules and devices are based on the Company's innovative application software and Wi-Fi or Bluetooth
â
technologies.  While AmbiCom's focus is on the development of products for the healthcare industry, AmbiCom will
continue its plans to develop and explore solutions for non-healthcare applications.
Sales in the wireless medical device industry have grown at
a rapid pace in the past few years.  AmbiCom believes the reason for this growth and its strategy to focus on this industry
includes:
·
Healthcare providers and insurers are seeking increased out-patient services.  Wireless applications have the ability to provide "virtual nurse" services such as condition monitoring and alerts.
·
Wireless applications may eliminate or reduce the need for certain services that previously required a person, such as nurses, physicians, and billing positions.
·
Automated monitoring and alerts may produce improved patient outcomes and enable medical care providers to "virtually" monitor patients around the clock.
·
Improved usability may enhance quality of life and enable better, easier care provision.
·
Can enable or improve mobility and greater convenience.
AmbiCom's business strategy targets
and prioritizes areas of need and problems that could be improved or solved via the application of wireless capabilities.  It
then attempts to develop solutions that combine existing hardware and new software applications which AmbiCom develops to customize
a device.  AmbiCom's wireless device solutions and applications include infusion pumps, heart monitoring machines,
and glucose meters.
AmbiCom sells its products through multi-channel
distribution and original equipment manufacturer ("OEM") channels.  The Company delivers its medical device
modules to OEM companies such as CareFusion, and Roche.
AmbiCom will introduce wireless home medical
devices as well as non-healthcare related wireless devices during its upcoming fiscal year.
The Company is headquartered in Milpitas,
California, where all corporate and design operations are based.  AmbiCom's manufacturing operations and capacity
are highly scalable and cost effective via several manufacturing partners in Asia.
18
Business Strategy
AmbiCom' s primary goal is to continue
to provide consumers high quality mobile wireless products.  The Company is committed to wireless design and development
of software and hardware, and to bringing new and innovative products to the wireless medical and other wireless markets.
AmbiCom intends to grow both organically
and through selective acquisitions.  The Company believes many medical devices lack the technological and operational
efficiency to succeed in today's advanced technology environment.  The Company's internal growth objective
is to position AmbiCom as a leading designer of application software and hardware, via the following approaches and others:
·
Leverage its current customer base
·
Capitalize on its competitive advantage of proprietary technology and software
·
Exploit the growing need for cost reduction
·
Build strategic partnerships for scalability, efficiencies and leverage
·
Expand sales and marketing activities
Our Competitive Advantages
The Company believes its strengths include the following:
·
Proven Results:
Deep domain expertise in wireless technologies and developing new product applications that innovatively leverage wireless technology to create innovative products with breakthrough functionalities
.
Since the year 2000, AmbiCom has sold over one million devices to customers worldwide.
·
Low Cost Operating Structure
– AmbiCom maintains a low cost operating structure, focusing resource allocation on its core corporate functions including sales, marketing, research and development, administration, and outsourcing manufacturing to several companies in Asia.  This operating structure has allowed the Company to maintain strong gross margins.
Products
We expect our markets to remain competitive
and to reflect rapid technological evolution and continuously evolving customer and regulatory requirements.  Our ability
to remain competitive depends in part upon our success in maintaining our intellectual knowledge base and developing new and enhanced
advanced wireless solutions and introducing these systems at competitive prices on a timely basis.
Sales and Marketing
We believe our intellectual capability,
technology, sales, and marketing efforts have established our reputation for providing innovative solutions that meet our customers'
needs in a timely, cost-efficient manner. Our ability to leverage our distribution network will be an important factor in our success.
The sales and marketing of our products largely depends upon the type of product, location and target customer.
Manufacturing and Suppliers
We currently outsource production of our
products primarily to manufacturers in Asia.  Many of the key components and sub-components are purchased from third
party suppliers. We have selected such suppliers based on their ability to consistently produce these components per our specifications,
striving for the best quality product at the most cost effective price.
Research and Product Development
The general focus of our research and development
team is the design and integration of wireless medical devices.  Through these efforts, we constantly seek to enhance
our existing products, design new products and develop solutions for customer applications.  We believe that our responsiveness
to current and perceived future customer demands differentiates us from many of our competitors, as we rapidly introduce new products
to address market needs.  We intend to expand our research and development team as we believe that increased levels of
spending on research and development will be necessary to successfully develop products that will have a niche value.
19
Employees
As of July 5, 2012, we had 8 employees. We believe we have
good employee relations. None of our employees are members of any labor union, and we are not a party to any collective bargaining
agreement.
CORPORATE INFORMATION
The Company's corporate headquarters are located at 500 Alders
Drive, Milpitas, CA.
DESCRIPTION OF PROPERTY
Our principal executive office address
is 500 Alder Drive, Milpitas, California 95035.  We lease approximately 7,313 square feet of office and warehouse space
at a monthly rental of $4,425 under the terms of a 63 month lease that expires on May 31, 2016.  The rent increases three
percent annually.
We currently have no investment policies
as they pertain to real estate, real estate interests or real estate mortgages.
LEGAL PROCEEDINGS
The Company had an ongoing litigation over
accounts receivable and payable with Ambeon Corporation, a related party by virtue of common ownership. The dispute started in
2004 and was settled in favor of the Company under the Shih Lin District Court of Taiwan on August 20, 2008. The Company agreed
to pay a sum of $560,000 and the remaining disputed payable balances were decreased in favor of the Company, and settlement income
of $843,572 was realized in year 2008. As of April 30, 2012, the Company has paid $490,000 towards the settlement. The remaining
minimum payments due under the settlement are as follows:
Year Ending July 31:
2012
$
15,000
2013
55,000
Total
$
70,000
The Company is not a party and its property is not subject
to any other material pending legal proceedings nor is the Company aware of any threatened or contemplated proceeding by any governmental
authority against the Company.
MARKET FOR COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS.
Market for Common Equity and Related Shareholder Matters
Our common stock is quoted on the Over-the-Counter
Bulletin Market under the symbol "ABHI.OB". We received our listing for quotation on June __, 2012.  The
table below sets forth the high and low prices for the Company's Common Stock for the quarters included within 2011. Quotations
reflect inter-dealer prices, without retail mark-up, mark-down commission, and may not represent actual transactions. Since the
Company's common stock trades sporadically, there is not an established active public market for its common stock. No assurance
can be given that an active market will exist for the Company's common stock and the Company does not expect to declare dividends
in the foreseeable future since the Company intends to utilize its earnings, if any, to finance its future growth, including possible
acquisitions.
20
Year
Quarter
High
Low
2010
First
0.00
0.00
2010
Second
0.00
0.00
2010
Third
0.65
0.24
2010
Fourth
0.48
0.13
2011
First
0.19
0.11
2011
Second
0.18
0.07
2011
Third
0.10
0.05
2011
Fourth
0.08
0.04
Holders
As of July 5, 2012, there were approximately 9,790,760 shares
of common stock issued and outstanding and there were 80 holders of record of our common stock.
Dividends
We have never declared or paid cash dividends
on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion
of our business and do not anticipate paying any cash dividends in the foreseeable future.
Anti-Takeover Effects of Provisions
of Nevada State Law
We may be or in the future we may become
subject to Nevada's control share law. A corporation is subject to Nevada's control share law if it has more than 200 shareholders,
at least 100 of whom are shareholders of record and residents of Nevada, and if the corporation does business in Nevada or through
an affiliated corporation.
The law focuses on the acquisition of a
"controlling interest" which means the ownership of outstanding voting shares is sufficient, but for the control share
law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election
of directors: (1) one-fifth or more but less than one-third, (2) one-third or more but less than a majority, or (3) a majority
or more. The ability to exercise such voting power may be direct or indirect, as well as individual or in association with others.
The effect of the control share law is
that the acquiring person, and those acting in association with that person, obtain only such voting rights in the control shares
as are conferred by a resolution of the shareholders of the corporation, approved at a special or annual meeting of shareholders.
The control share law contemplates that voting rights will be considered only once by the other shareholders. Thus, there is no
authority to take away voting rights from the control shares of an acquiring person once those rights have been approved. If the
shareholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent
non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire
a controlling interest, their shares do not become governed by the control share law.
If control shares are accorded full voting
rights and the acquiring person has acquired control shares with a majority or more of the voting power, any shareholder of record,
other than an acquiring person, who has not voted in favor of approval of voting rights, is entitled to demand fair value for such
shareholder's shares.
Nevada's control share law may have the
effect of discouraging corporate takeovers.
In addition to the control share law, Nevada
has a business combination law, which prohibits certain business combinations between Nevada corporations and "interested
shareholders" for three years after the "interested shareholder" first becomes an "interested shareholder"
unless the corporation's board of directors approves the combination in advance. For purposes of Nevada law, an "interested
shareholder" is any person who is (1) the beneficial owner, directly or indirectly, of ten percent or more of the voting power
of the outstanding voting shares of the corporation, or (2) an affiliate or associate of the corporation and at any time within
the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then
outstanding shares of the corporation. The definition of the term "business combination" is sufficiently broad to cover
virtually any kind of transaction that would allow a potential acquirer to use the corporation's assets to finance the acquisition
or otherwise to benefit its own interests rather than the interests of the corporation and its other shareholders.
21
The effect of Nevada's business combination law is to potentially
discourage parties interested in taking control of the Company from doing so if it cannot obtain the approval of our Board of Directors.
Provisions Having A Possible Anti-Takeover Effect
We are subject to the State of Nevada's
business combination statute. In general, the statute prohibits a publicly held Nevada corporation from engaging in a business
combination with a person who is an interested shareholder for a period of three years after the date of the transaction in which
that person became an interested shareholder, unless the business combination is approved in a prescribed manner. A business combination
includes a merger, asset sale or other transaction resulting in a financial benefit to the interested shareholder. An interested
shareholder is a person who, together with affiliates, owns, or, within three years prior to the proposed business combination,
did own 15% or more of our voting stock. The statute could prohibit or delay mergers or other takeovers or change in control attempts
and accordingly, may discourage attempts to acquire our Company.
22
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
The following discussion and analysis
should be read in conjunction with our financial statements and related notes thereto included elsewhere in this annual report.
Portions of this document that are not statements of historical or current fact are forward-looking statements that involve risk
and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in
this annual report should be read as applying to all related forward-looking statements wherever they appear in this annual report.
You can identify forward-looking statements by the use of words such as the words "expect," "anticipate,"
"estimate," "may," "will," "should," "intend," "believe,"
and similar expressions. From time to time, we may publish forward-looking statements relative to such matters as anticipated financial
performance, business prospects, technological developments and similar matters. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. All statements other than statements of historical fact included in
this section or elsewhere in this report are, or may be deemed to be, forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Important factors that could cause actual
results to differ materially from those discussed in such forward-looking statements include, but are not limited to, the following:
changes in the economy or in specific customer industry sectors; changes in customer procurement policies and practices; changes
in product manufacturer sales policies and practices; the availability of product and labor; changes in operating expenses; the
effect of price increases or decreases; the variability and timing of business opportunities including acquisitions, alliances,
customer agreements and supplier authorizations; our ability to realize the anticipated benefits of acquisitions and other business
strategies; the incurrence of debt and contingent liabilities in connection with acquisitions; changes in accounting policies and
practices; the effect of organizational changes within the Company; the emergence of new competitors, including firms with greater
financial resources than ours; adverse state and federal regulation and legislation; and the occurrence of extraordinary events,
including natural events and acts of God, fires, floods and accidents.
The following discussion and analysis of our plan of operations
should be read in conjunction with our financial statements and related notes appearing elsewhere in this report. This discussion
and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially
from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those
presented under the heading of "Risk Factors" and elsewhere in this prospectus.
Acquisition and Reorganization
On January 15, 2010, the acquisition of
AmbiCom was completed, and the business of AmbiCom was adopted as our business. As such, the following Management Discussion is
focused on the current and historical operations of AmbiCom, and excludes the prior operations of the Registrant.
Overview
AmbiCom
is a designer and developer of wireless products focusing on Wi-Fi and Bluetooth
â
applications for the medical and healthcare industry. AmbiCom purchases standard wireless products and designs and develops features
and packaging to customize these products to their target OEM markets. The Company believes that there are unique opportunities
as a result of the sheer size of the wireless healthcare market and the Company's innovative approach and exemplary customer
service. AmbiCom will also continue to develop and explore solutions for non-healthcare applications although these are not material
at present.
On August 30, 2011, Kenneth Cheng resigned
as the Company's President, as a member of the Board of Directors, and all other positions with the Company's subsidiaries.
On October 19, 2011, the Company effectuated
a one-for-eight reverse split of its shares, effective September 8, 2011. The reverse decreased the total authorized, issued and
outstanding common shares and Series B Preferred Convertible Stock by the same one-for-eight ratio as well as amended the par value
per share from $0.001 to $0.008. The total authorized common shares decreased from 1,000,000,000 to 125,000,000.
23
On October 31, 2011, the Company entered
into an Investment Agreement and a Registration Rights Agreement with Kodiak Capital Group, LLC (the "Investor") to purchase
up to $1,000,000 of the company's common stock. Upon Registration, the Company may obtain capital in increments of up to $25,000
as working capital is needed.  The facility sets the purchase price at 80% of the volume weighted average over five consecutive
trading days.
On January 4, 2012, the Company entered
into a Public Relations Agreement with Cape MacKinnon Inc. for investor relations services in exchange for 150,000 shares of the
Company's restricted common stock for each month of service provided.
On February 2, 2012, Kenneth Cheng exercised
the conversion rights to convert 2,350,000 shares of Preferred A stock into 2,350,000 shares of the Company's common stock.
On April 4, 2012, the Company entered into
a Consulting Agreement with Strategic Partners Inc. for consulting services in exchange for 340,000 shares of restricted common
stock.
On April 16, 2012, the Company issued a
6% stock dividend on its Preferred B stock.
Results of Operations
The following table sets forth, for the
periods indicated, certain financial data as a percentage of total revenue:
Three Months Ended April 30,
Nine Months Ended April 30,
2012
2011
2012
2011
Sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
35.3
%
50.7
%
39.9
%
46.9
%
Gross profits
64.7
%
49.3
%
60.1
%
53.1
%
Operating Expenses
Depreciation
0.3
%
0.2
%
0.5
%
0.1
%
Professional fees
17.1
%
9.0
%
38.2
%
5.6
%
Selling and general expenses
43.2
%
45.7
%
69.6
%
38.0
%
Total operating expenses
60.6
%
54.9
%
108.3
%
43.7
%
Income (loss) from operations
4.1
%
-5.6
%
-48.2
%
9.4
%
Other income (expense)
Other income and expense, net
0.0
%
-0.3
%
0.3
%
-1.6
%
Interest expense, net
0.0
%
-1.0
%
-0.3
%
-0.7
%
Net other income (expense)
0.0
%
-1.3
%
0.0
%
-2.3
%
Total income (loss) before income taxes
4.1
%
-6.9
%
-48.2
%
7.1
%
Income taxes
0.0
%
0.0
%
0.0
%
0.0
%
Net income (loss)
4.1
%
-6.9
%
-48.2
%
7.1
%
Revenue
Revenue is derived from sales of our wireless device products
and non-recurring engineering (NRE) project fees. The products consist of routers, Compact flash Adapters/Modules, USB Adapters/Modules,
Mini PCI Modules, PCI Express Mini Modules and mobile wireless products. The Company operates in a market characterized by long
term growth prospects as businesses adopt the convenience of wireless connectivity and switch from traditional wired solutions.
We provide optimized wireless products to the medical industry which has concentrated on using wireless solutions as a way to reduce
healthcare costs as a whole. Total revenue for the three and nine months ended April 30, 2012 and 2011 is summarized in the following
table:
24
Three
    Months Ended April 30,
Nine
    Months Ended April 30,
2012
2011
Change
    in Dollars
Change
    in
Percent
2012
2011
Change
    in Dollars
Change
    in
Percent
$
458,040
$
781,780
$
(323,740
)
-41
%
$
1,065,801
$
2,984,941
$
(1,919,140
)
-64
%
Our sales declined by 41% in the three
months ended April 30, 2012 compared to the three months ended April 30, 2011. Our sales declined by 64% in the nine months ended
April 30, 2012 compared to the nine months ended April 30, 2011, mainly as a result of a large portion of our products reaching
the end of their product life cycle. We expect revenue from our existing products to continue to decline which will be partially
offset by new products that have been introduced during this quarter and also partially offset by revenue from non-recurring engineering
project fees.
Customer Concentration Information
One customer accounted for more than 10% of total revenue for
the three months ended April 30, 2012, and two customers accounted for more than 10% for the three months ended April 30, 2011.
Three customers accounted for more than 10% of total revenue for the nine months ended April 30, 2012, and one customer accounted
for more than 10% for the nine months ended April 30, 2011.
Cost of Sales
Our cost
of sales consists primarily of the amounts paid to third-party manufacturers for the products we purchase for resale, related packaging
costs, as well as labor and material costs associated with our NRE
projects. Our cost of sales for the three and nine months
ended April 30, 2012 and 2011 are summarized in the following table:
Three
    Months Ended April 30,
Nine
    Months Ended April 30,
2012
2011
Change
    in Dollars
Change
    in Percent
2012
2011
Change
    in Dollars
Change
    in Percent
$
161,586
$
396,000
$
(234,414
)
-59
%
$
425,295
$
1,400,297
$
(975,002
)
-70
%
Our cost of sales decreased by 59% in the
three months ended April 30, 2012 compared to the three months ended April 30, 2011. Our cost of sales decreased by 70% in the
nine months ended April 30, 2012 compared to the nine months ended April 30, 2011. The decrease in cost of sales was at a greater
rate than the decrease in revenue for the period due to shifts in products purchased.
Gross Profit & Gross Margin
Our gross profit decreased by 23% from
$385,780 in the three months ended April 30, 2011 to $296,454 in the three months ended April 30, 2012. Gross profit decreased
by 60% from $1,584,644 for the nine months ended April 30, 2011 to $640,506 for the nine months ended April 30, 2012, mainly due
to the reduced sales volume from our older products reaching the ends of their product life cycles which was partly offset by newly
introduced products this quarter. Our gross margin will continue to be affected by a variety of factors, including the product
mix that our customers demand, changes in supply costs, outsourcing costs for ongoing projects, the average sales prices on sales
of our products, the stages of our product life cycle, and the introduction of new products.
25
Operating Expenses
Three
    Months Ended April 30,
Nine
    Months Ended April 30,
2012
2011
Change
    in Dollars
Change
    in
Percent
2012
2011
Change
    in Dollars
Change
    in
Percent
$
277,585
$
428,720
$
(151,135
)
-35
%
$
1,153,457
$
1,307,330
$
(153,873
)
-12
%
Our operating expenses are categorized
to include depreciation, professional fees and selling, general and administrative expenses. Overall operating expenses decreased
by $151,135 for the three months ended April 30, 2012 compared to the same period in 2011, a decrease of 35%. Operating expenses
decreased by $153,873 for the nine months ended April 30, 2012 compared to April 30, 2011, a decrease of 12%.
Depreciation expense was $1,496 for the
three months ended April 30, 2012 and $1,709 for the three months ended April 30, 2011. Depreciation expense was $4,891 for the
nine months ended April 30, 2012 and $3,913 for the nine months ended April 30, 2011. Our depreciation rate policy remained unchanged.
The increase was due to additional fixed assets purchased during the year.
Our professional fees increased to $78,170
in the three months ended April 30, 2012 from $70,095 in the three months ended April 30, 2011. Professional fees increased to
$406,743 for the nine months ended April 30, 2012 from $167,787 for the nine months ended April 30, 2011. Professional fees are
a significant part of our operating expenses as a direct result of our reporting and filing requirements as a public company since
the merger in 2010. The main increase in professional fees for the nine months ended April 30, 2012 was for the fees paid to Kodiak
Capital related to the investment agreement and fees paid to Strategic Consulting for consulting expenses.
Selling, general and administrative expenses
consist primarily of salaries and associated costs for employees in finance, human resources, sales, information technology and
administrative activities. In addition, selling, general and administrative expenses may from time to time include charges relating
to insurance or stock-based compensation under Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment."
Our selling, general and administrative expenses decreased by $158,997 or 45% to $197,919 in the three months ended April 30, 2012
from $356,916 in the three months ended April 30, 2011. Selling, general and administrative expenses decreased by $393,807 or 35%
to $741,823 for the nine months ended April 30, 2012 from $1,135,630 for the nine months ended April 30, 2011.
The decrease was mainly due to decreases
in salary and headcount, reductions in R&D expenditures and marketing expenses which were partly offset by the increased professional
fees.
Income (Loss) from Operations
Income (loss) from operations indicates
the amount available from operating activities after we have deducted our operating expenses from our gross profit. Our income
(loss) from operations increased from a loss of $42,940 in the three months ended April 30, 2011 to a net income of $18,870 in
the three months ended April 30, 2012, with decreases in revenue and gross profit offset by greater decreases in selling, general
and administrative expenses. Our income (loss) from operations decreased from an income of $277,314 for the nine months ended April
30, 2011 to a loss of $512,951 for the nine months ended April 30, 2012. This was mainly due to decreases in revenue and increased
professional fees for the nine months ended April 30, 2012
.
Other Income and Expenses
Other income and expenses arise from non-operating
events and transactions, principally interest charges. We did not have other income and expenses, net, for the three months ended
April 30, 2012 compared to a net expense of $2,154 for the three months ended April 30, 2011. Other income and expenses, net, was
a net income of $2,696 for the nine months ended April 30, 2012 compared to a net expense of $48,578 for the nine months ended
April 30, 2011.
26
Provision for Income Taxes
Our effective tax rate for the years ended
July 31, 2011 and 2010 was 42.8%. We made no provisions for income taxes in either the first nine months of 2012 or 2011 as we
had significant NOL carry-forwards to cover our liability for the these periods.
Net Income (Loss)
Net
income (loss) for the three and the nine months ended April 30, 2012 and 2011 is summarized in the following table
:
Three Months Ended April 30,
Nine Months Ended April 30,
2012
2011
Change in
Dollars
Change in
Percent
2012
2011
Change in
Dollars
Change in
Percent
$
18,870
$
(52,917
)
$
71,787
136
%
$
(513,338
)
$
208,394
$
(721,732
)
-346
%
For the three months ended April 30, 2012,
net income was $18,870, an increase of 136% compared to the three months ended April 30, 2011 net loss of $52,917. For the nine
months ended April 30, 2012, net loss was $513,338, a decrease of 346% compared to the nine months ended April 30, 2011 net income
of $208,394. The decrease in net income for nine months ended April 30, 2012 compared to the nine months ended April 30, 2011 was
mainly due to the decrease in revenues resulting from our products reaching the end of their product life cycles as well as increased
professional fees. The increase in net income for the three months ended April 30, 2012 was due to reduced selling and general
expenses from decrease in salary and headcount.
Capital Resources and Liquidity
Cash and cash equivalents were $131,593
at April 30, 2012 and $524,512 at July 31, 2011. The net decrease in cash over the period was mainly due to the decreased sales
volume for the period and the payoff of the line of credit. Our total current assets decreased 49% to $406,273 at April 30, 2012
from $804,198 at July 31, 2011 while our current liabilities decreased by 28% to $330,202 at April 30, 2012 from $456,840 at July
31, 2011. Total working capital decreased to $76,071 at April 30, 2012 compared to $347,358 at July 31, 2011, a decrease of $271,287.
The Company negotiated a $1.3 million secured
line of bank credit as of May 9, 2011, and at July 31, 2011, the balance outstanding under this facility was $290,000. The covenants
relating to the line of bank credit include monthly unaudited, compliance certifications requiring a minimum current asset to current
liability ratio of 1:2, a maximum debt to tangible net worth ratio of 2.5:1, and a minimum quarterly EBITDA of at least $30,000
on a rolling four quarter basis.
At April 30, 2012, the company was in violation
of the restrictive covenant pertaining to a minimum quarterly EBITDA of not less than $30,000. The lender issued a forbearance
for the violation of the restrictive covenant.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
27
Critical Accounting Policies
The process of preparing financial statements
requires the use of estimates on the part of our management. The estimates used by management are based on our historical experiences
combined with management's understanding of current facts and circumstances. Certain of our accounting policies are considered
critical as they are both important to the portrayal of our financial condition and results and require significant or complex
judgment on the part of management. For a description of what we believe to be our most critical accounting policies and estimates,
please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our
Annual Report on Form 10-K, for the year ended July 31, 2011, which was filed with the Securities and Exchange Commission
on November 9, 2011.
Critical accounting policies affecting
us, the critical estimates made when applying them, and the judgments and uncertainties affecting their application have not changed
materially since July 31, 2011.
Recent Accounting Pronouncements
See Note 3 "Summary of Significant
Accounting Policies" in the Notes to the Unaudited Condensed Consolidated Financial Statements for a full description of
relevant recent accounting pronouncements including the respective expected dates of adoption.
GOING CONCERN
Our operating losses since inception raise
substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of assets or the amounts or classification of liabilities
that might be necessary should we be unable to continue as a going concern. For the foreseeable future, we will have to fund all
our operations and capital expenditures from the net proceeds of equity or debt offerings we may have, cash on hand, etc. Although
we plan to pursue additional financing, there can be no assurance that we will be able to secure financing when needed or to obtain
such financing on terms satisfactory to us, if at all. If we are unable to secure additional financing in the future on acceptable
terms, or at all, we may be unable to complete the development of our new products. In addition, we could be forced to reduce or
discontinue product development, reduce or forego sales and marketing efforts and forego attractive business opportunities in order
to improve our liquidity to enable us to continue operations.
The following discussion should be read
in conjunction with the information contained in the consolidated financial statements of the Company and the notes thereto appearing
elsewhere herein and in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations
set forth in (1) the Company's Annual Report on Form 10-K for the year ended July 31, 2011. Readers should carefully review the
risk factors disclosed therein and other documents filed by the Company with the SEC.
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
The Company is not exposed to market risk related to interest
rates on foreign currencies.
FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
The required Financial Statements and the notes thereto are
contained in a separate section of this report beginning with the page following the signature page.
28
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
The following table sets forth information
regarding the members of the Company's board of directors and its executive officers. All directors hold office until the
first annual meeting of the shareholders of the Company and until the election and qualification of their successors or their earlier
removal or retirement.
Officers are elected annually by the board of directors and
serve at the discretion of the board.
Name
Age
Title
John Hwang
49
Chief Executive Officer, Director
Robert Radoff
43
Director
John Hwang, 49 Chief Executive Director,
From 2002 through 2007, Mr. Hwang was a member of the office of the Chairman of Techno Concepts, Inc., a developer and manufacturer
of wireless communications devices.  Mr. Hwang also has over twenty years' corporate and entrepreneurial leadership
experience in semiconductor technology and consumer electronics.  Mr. Hwang was President of Osicom, a fiber optic and
network technologies manufacturer from 1996 through 1998, Executive Vice-President of Relialogic, from 1992 to 1996, and a Vice-President
and Corporate Manger of Samsung America, Inc. from 1985 to 1991, where he helped launch its new computer and monitor division.  Mr.
Hwang has a Bachelor of Science Degree in Economics from Rutgers University.
Robert Radoff, 43 Director
.  Mr.
Radoff has created and managed a national broker network, monitoring sales, distribution, packaging and setting up logistics of
new and existing products, setting objectives and goals for the sales force and creating presentations to major accounts. He has
also helped develop and sell national brand and private label and other brands to major accounts in the U.S. and international
markets.  Mr. Radoff served on active duty in the United States Army from 1986-1990 and competed his reserve obligations
through 1995.
Elaine Mayumi Kato, Director.   Mr.
Kato resigned from her role as the Registrant's sole principal officer and director on January 15, 2010.
Kenneth Cheng, President, Director. Mr.
Cheng resigned from his role as the Registrant's President and Director on August 26, 2011.
Compensation of Directors
At this time, directors receive no remuneration
for their services as directors of the Company, nor does the Company reimburse directors for expenses incurred in their service
to the Board of Directors.  The Company does not expect to pay any fees to its directors for the 2012 fiscal year.
Code of Ethics
We do not currently have a code of ethics.  Because
we currently have only limited business operations and two officers and directors, we believe a code of ethics would have limited
utility. We intend to adopt a code of ethics as our business operations expand and we have additional directors, officers and employees.
Audit Committee.
The
Company intends to establish an audit committee, which will consist of independent directors. The audit committee's duties would
be to recommend to the Company's board of directors the engagement of independent auditors to audit the Company's financial statements
and to review its accounting and auditing principles. The audit committee would review the scope, timing and fees for the annual
audit and the results of audit examinations performed by the internal auditors and independent public accountants, including their
recommendations to improve the system of accounting and internal controls. The audit committee would at all times be composed exclusively
of directors who are, in the opinion of the Company's board of  directors, free from any relationship which would interfere
with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally
accepted accounting principles.
29
Compensation Committee.
Our
board of directors does not have a standing compensation committee responsible for determining executive and director compensation.  Instead,
the entire board of directors fulfills this function, and each member of the Board participates in the determination.  Given
the small size of the Company and its Board and the Company's limited resources, locating, obtaining and retaining additional independent
directors is extremely difficult.  In the absence of independent directors, the Board does not believe that creating
a separate compensation committee would result in any improvement in the compensation determination process.  Accordingly,
the board of directors has concluded that the Company and its shareholders would be best served by having the entire board of directors'
act in place of a compensation committee.  When acting in this capacity, the Board does not have a charter.
In considering and determining executive
and director compensation, our board of directors review compensation that is paid by other similar public companies to its officers
and takes that into consideration in determining the compensation to be paid to the Company's officers.  The board
of directors also determines and approves any non-cash compensation to any employee.  The Company does not engage any
compensation consultants to assist in determining or recommending the compensation to the Company's officers or employees.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all of the compensation awarded
to, earned by or paid to (i) each individual serving as our principal executive officer during our last completed fiscal year;
and (ii) each other individual that served as an executive officer at the conclusion of the fiscal years ended July 31, 2011 and
who received in excess of $100,000 in the form of salary and bonus during such fiscal year (collectively, the Named Executives).
Name &
Principal
Position
Year
Salary
(a)
Bonus
Restricted
Stock
Awards
Option
Awards
(b)
Non-Equity
Incentive Plan
Compensation
All Other
Compensation
Total
John Hwang
2011
$240,000
$
-
7,050,000
(1)
-
$
-
$
-
$
240,000
2010
$120,000
$
-
5,000,000
(1)
-
$
-
$
-
$
120,000
$
Kenneth Cheng
2011
$240,000
$
-
-
2,350,000
$
-
$
23,500
$
263,500
2010
$260,250
$
-
-
5,500,000
(1)
$
-
$
7,000
$
267,250
(1) Granted in connection with the reverse merger under the
terms of the Exchange Agreement
Compensation Policy
: Our
Company's executive compensation plan is based on attracting and retaining qualified professionals who possess the skills
and leadership necessary to enable our Company to achieve earnings and profitability growth to satisfy our stockholders.  Therefore,
we must create incentives for these executives to achieve both Company and individual performance objectives through the use of
performance-based compensation programs.  No one component is considered by itself, but all forms of the compensation
package are considered in total.  Wherever possible, objective measurements will be utilized to quantify performance,
but many subjective factors still come into play when determining performance.
Compensation Components
:
As an early-stage development company, the main elements of our compensation package consist of base salary, stock options and
bonuses.
30
Base Salary
: As we continue
to grow and financial conditions improve, these base salaries, stock options, and bonuses will be reviewed for possible adjustments.  Base
salary adjustments will be based on both individual and Company performance and will include both objective and subjective criteria
specific to each executive's role and responsibility with the Company.
COMPENSATION OF DIRECTORS
At this time, directors receive no remuneration for their services
as directors of the Company, nor does the Company reimburse directors for expenses incurred in their service to the Board of Directors.  The
Company does not expect to pay any fees to its directors for the 2012 fiscal year.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE
IN CONTROL ARRANGEMENTS
On January 15, 2010, the Company entered
into employment agreements with its two executive officers, John Hwang and Kenneth Cheng.
Each employment agreement provides for a three year term with
minimum annual base salary of $240,000.  Under the agreement, they will be subject to customary non-competition and employee
non-solicitation restrictions while they are employed by the Company and for a period of 2 year(s) thereafter.
On August 30, 2011, Kenneth Cheng resigned as the Company's
President, a member of the Board of Directors, and all other positions with the Company's subsidiaries.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table summarizes certain
information regarding the beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of outstanding Common Stock as of June 20, 2012 (after giving effect to the Exchange) by (i) each person known by us to be the
beneficial owner of more than 5% of the outstanding Common Stock, (ii) each of our directors, (iii) each of our named executive
officers (as defined in Item 403(a) of Regulation S-K under the Securities Act), and (iv) all executive officers and directors
as a group. Except as indicated in the footnotes below, the security and stockholders listed below possess sole voting and investment
power with respect to their shares.
Name of Beneficial Owner
Amount of Beneficial Owner(1)
Percent
of Class(2)
John Hwang (3)(4)
7,675,000
43.93
%
Robert Radoff
12,500
*
All Directors and Executive Officers as a Group (2 persons)
7,687,500
44.02
%
* Less than 1%.
(1) "Beneficial Owner" means
having or sharing, directly or indirectly (i) voting power, which includes the power to vote or to direct the voting, or (ii) investment
power, which includes the power to dispose or to direct the disposition, of shares of the common stock of an issuer. The definition
of beneficial ownership includes shares, underlying options or warrants to purchase common stock, or other securities convertible
into common stock, that currently are exercisable or convertible or that will become exercisable or convertible within 60 days.
Unless otherwise indicated, the beneficial owner has sole voting and investment power.
(2) For each shareholder, the calculation
of percentage of beneficial ownership is based upon 9,790,760 shares of Common Stock outstanding as of June 11, 2012, and shares
of Common Stock subject to options, warrants and/or conversion rights held by the shareholder that are currently exercisable or
exercisable within 60 days, which are deemed to be outstanding and to be beneficially owned by the shareholder holding such options,
warrants, or conversion rights. The percentage ownership of any shareholder is determined by assuming that the shareholder has
exercised all options, warrants and conversion rights to obtain additional securities and that no other shareholder has exercised
such rights.
31
(3) Does not include 141,388 shares of
Common stock held beneficially by family members.
(4) Assumes conversion of 7,050,000 shares Series A
Convertible Preferred Stock beneficially owned by Mr. Hwang.
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
Except as otherwise disclosed herein, there
have been no related party transactions, or any other transactions or relationships, including matters related to director independence,
required to be disclosed pursuant to Items 404 or 407(a) of Regulation S-K.
Currently, we have one independent director
on our Board of Directors, and have no formal procedures in effect for reviewing and pre-approving any transactions between us,
our directors, officers and other affiliates. We will use our best efforts to insure that all transactions are on terms at least
as favorable to the Company as we would negotiate with unrelated third parties.
32
PART II - INFORMATION NOT REQUIRED IN
PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with
the issuance and distribution of the securities being registered hereby.  All such expenses will be borne by the Company;
none shall be borne by any selling shareholders.
SEC Registration Fee
$
275.04
Legal Fees and Expenses
$
20,000.00
Accounting Fees and Expenses
$
10,000.00
Miscellaneous
$
10,000.00
TOTAL
$
40,275.04
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Indemnification of Directors and Officers
Nevada Revised Statutes ("NRS") Sections 78.7502
and 78.751 provide the Company with the power to indemnify any of our directors and officers. The director or officer must have
conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to our best interests.
In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was
unlawful.
Under NRS Section 78.751, advances for expenses may be made
by agreement if the director or officer affirms in writing that he/she believes he/she has met the standards and will personally
repay the expenses if it is determined such officer or director did not meet the standards.
Pursuant to the Company's Articles of Incorporation and
bylaws, we may indemnify an officer or director who is made a party to any proceeding, because of his position as such, to the
fullest extent authorized by Nevada Revised Statutes, as the same exists or may hereafter be amended. In certain cases, we may
advance expenses incurred in defending any such proceeding.
To the extent that indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions,
we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable. If a claim for indemnification against such liabilities (other than the payment by us of expenses
incurred or paid by a director, officer or controlling person of our company in the successful defense of any action, suit or proceeding)
is asserted by any of our directors, officers or controlling persons in connection with the securities being registered, we will,
unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of that issue.
RECENT ISSUANCES OF UNREGISTERED SECURITIES
BY THE REGISTRANT
Since inception of the Company on July 1, 2008 we have sold
unregistered securities to the following shareholders:
On July 22, 2007 we issued 6,000,000 shares
of Common  Stock to Ms. Kato, who at the time was the Registrant's sole officer and director in exchange for  the
payment of $6,000, or $0.001 per share.
33
On January 15, 2010, the Registrant authorized
the issuance of 20,000,000 shares of Common Stock, 2,600,000 shares of Series B Preferred Stock, options to purchase 5,500,000
shares of Common Stock and 2,350,000 shares of Series A Preferred Stock at the purchase price of $0.01 per share,  and
warrants to purchase 500,000 shares of Common Stock at the exercise price of $0.50 per share, in connection with the execution
of an Agreement and Plan of Share Exchange with the shareholders of AmbiCom Acquisition Corp. (the "Exchange").
On January 15, 2010, the Registrant sold
1,250,000 shares of Common Stock at the price of $0.40 per share for an aggregate offering of $500,000.
On January 4, 2012, the Company issued
150,000 shares of restricted common stock for services provided.
Except as noted above, the sales of the
securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities
and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant
to Section 4(2) thereof and rules promulgated thereunder. Each of the above-referenced investors in our stock represented to us
in connection with their investment that they were "accredited investors" (as defined by Rule 501 under the Securities
Act) and were acquiring the shares for investment and not distribution, that they could bear the risks of the investment and could
hold the securities for an indefinite period of time. The investors received written disclosures that the securities had not been
registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from
such registration. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement
on Form S-1 under the Securities Act with the SEC for the securities offered hereby. This prospectus, which constitutes a part
of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits
and schedules which are part of the registration statement. For additional information about us and our securities, we refer you
to the registration statement and the accompanying exhibits and schedules. Statements contained in this prospectus regarding the
contents of any contract or any other documents to which we refer are not necessarily complete. In each instance, reference is
made to the copy of the contract or document filed as an exhibit to the registration statement, and each statement is qualified
in all respects by that reference. Copies of the registration statement and the accompanying exhibits and schedules may be inspected
without charge (and copies may be obtained at prescribed rates) at the public reference facility of the SEC at Room 1024, 100 F
Street, N.E. Washington, D.C. 20549.
You can request copies of these documents
upon payment of a duplicating fee by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the
operation of its public reference rooms. Our filings, including the registration statement, will also be available to you on the
Internet web site maintained by the SEC at
http://www.sec.gov
.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this registration
statement:
Exhibit
No.
Description
3.1
Amended and Restated Articles of Incorporation of the Registrant (1)
3.2
By-laws (1)
3.3
Certificate of Designation of Rights and Preferences of Series A Preferred Stock
3.4
Certificate of Designation of Rights and Preferences of 6% Series B Convertible, Redeemable Preferred Stock
4.1
Form of Subscription Agreement of Med Control, Inc. (1)
5.1
Opinion of Tarter Krinsky & Drogin LLP (2)
10.1
Investment Agreement between the Registrant and Kodiak Capital Group LLC dated October 31, 2011(3)
34
10.2
Registration Rights Agreement between the Registrant and Kodiak Capital Group LLC dated October 31, 2011(3)
10.3
Employment Agreement between Med Control, Inc. and John Hwang dated January 15, 2010.(1)
10.4
Employment Agreement between Med Control, Inc. and Kenneth Cheng dated January 15 2010. (1)
10.5
2010 Equity Incentive Plan (1)
23.1
Consent of Kim & Lee Corporation (2)
24.1
Power of Attorney (4)
(1) Incorporated by reference to our Current Report on
Form 8-K filed with the SEC on January 22, 2010.
(2) Filed herewith.
(3) Incorporated by reference to our Current Report on Form
8-K filed with the SEC on November 7, 2011.
(4) Included on signature page of this Registration Statement.
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during
any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(a) To include any
Prospectus required by Section 10(a)(3) of the Securities Act;
(b) To reflect in the
Prospectus any facts or events arising after the effective date of this Registration Statement, or most recent post-effective amendment,
which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement;
and notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospects filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement; and
(c) To include any
material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material
change to such information in the registration statement.
2. That, for the purpose
of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration
by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the termination of
the offering.
4. For determining
liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities,
the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this Registration
Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:
(a) Any preliminary
Prospectus or Prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (Sec.
230.424);
(b) Any free writing
Prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the registrant;
35
(c) The portion of
any other free writing Prospectus relating to the offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and
(d) Any other communication that is an offer
in the offering made by the undersigned registrant to the purchaser.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to
the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons
in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons
in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification is against public
policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of
the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing this Form S-1 and has authorized this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Milpitas, State of California, on July 5, 2012.
AMBICOM HOLDINGS, INC.
By:
/s/
John Hwang
Name: John Hwang
Title: Chief Executive Officer  and Chief Financial
        Officer
(Principal Executive Officer and Principal Financial Officer)
36
POWER OF ATTORNEY
Know all persons by these presents that each individual whose
signature appears below constitutes and appoints John Hwang, our Chief Executive Officer as a true and lawful attorney-in-fact
and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this registration statement, and to sign any registration
statement for the same offering covered by this registration statement that is to be effective upon filing under Rule 462 promulgated
under the Securities Act of 1933, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be
done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any one of them, or his or their substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature
Title
Date
/s/ John Hwang
Chief Executive Officer, Chief Financial Officer, Director
July 5, 2012
John Hwang
(Principal Executive Officer and Principal Financial Officer)
/s/ Robert Radoff
Director
July 5, 2012
Robert Radoff
37
AMBICOM HOLDINGS, INC.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
For the Years Ended July 31, 2011 and
2010
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets as of July 31, 2011 and 2010
F-3
Consolidated Statements of Cash Flows for the years ended July 31, 2011 and 2010
F-5
Consolidated Statement of Stockholders' Equity as of July 31, 2011
F-6
Notes to Consolidated Financial Statements
F-7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Ambicom Holdings, Inc.
We have audited the accompanying consolidated balance sheets
of Ambicom Holdings, Inc. and subsidiaries (collectively, the "Company") as of July 31, 2011 and 2010, and the related
consolidated statements of operations, stockholders' equity and cash flows for the years then ended.  These consolidated
financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion
on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States of America).  Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our
audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We
believe that our audit provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of the Company as of July 31, 2011 and 2010, and the
results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted
in the United States of America.
Kim and Lee Corporation, CPAs
Los Angeles, California
October 28, 2011
F -
2
AMBICOM HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JULY 31,
2011
2010
ASSETS
Current assets:
Cash and cash equivalents
$
524,512
$
165,848
Accounts receivable, net of
    allowance for doubtful accounts of $9,329 and $20,761 as of July 31, 2011 and 2010, respectively
139,853
639,910
Inventory, net of reserve balances of $37,814 and $42,381 as of July 31, 2011 and 2010, respectively
113,770
161,863
Other receivables, current
-
11,251
Prepaid expenses and other current assets
26,063
1,296
Total current assets
804,198
980,168
Property and equipment, net
25,641
16,293
Deposit
20,695
4,138
Total assets
$
850,534
$
1,000,599
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$
47,094
$
89,047
Accounts payable - other
47,582
44,677
Deferred revenue
12,164
1,800
Due to related party
-
100,000
Line of credit payable
290,000
100,000
Notes payable - current portion
60,000
115,000
Total current liabilities
456,840
450,524
Notes payable, net of current
55,000
120,000
Total liabilities
511,840
570,524
Commitment and contingency (Note 4)
Stockholders' equity:
Common stock, $0.001 par value; 1,000,000,000 shares authorized; 52,577,449 and 51,750,000 shares issued and outstanding at July 31, 2011 and July 31, 2010, respectively
52,577
51,750
Preferred stock, Series A, $0.001 per share; 9,400,000 shares authorized; 9,400,000 and 0 shares issued and outstanding at July 31, 2011 and July 31, 2010, respectively
9,400
-
Preferred stock, Series B, $0.001 per share 2,600,000 shares authorized; 2,600,000 and 2,600,000 shares issued and outstanding at July 31, 2011 and July 31, 2010, respectively
2,600
2,600
Additional paid in capital
11,170,697
11,084,749
Accumulated deficit
(10,896,580
)
(10,709,024
)
Total stockholders' equity
338,694
430,075
$
850,534
$
1,000,599
The accompanying notes are an integral
part of these consolidated financial statements.
F -
3
AMBICOM HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JULY 31,
2011
2010
Sales
$
3,263,786
$
3,540,104
Cost of sales
1,553,858
1,763,974
Gross profits
1,709,928
1,776,130
Operating Expenses
Depreciation
5,756
2,876
Professional fees
217,356
287,550
Selling and general expenses
1,612,446
1,427,013
Total operating expenses
1,835,558
1,717,439
Income (loss) from operations
(125,630
)
58,691
Other income (expense)
Other income and expense, net
(34,998
)
12,940
Interest expense, net
(25,172
)
(17,700
)
Net other expense
(60,170
)
(4,760
)
Total income (loss) before income taxes
(185,800
)
53,931
Income taxes
1,600
5,050
Net income (loss)
$
(187,400
)
$
48,881
Net income (loss) per share  - basic
$
(0.004
)
$
0.002
Net income (loss) per share  - diluted
$
(0.003
)
$
0.002
Weighted average shares outstanding — basic
52,577,449
25,471,154
Weighted average shares outstanding — diluted
56,744,116
28,071,154
The accompanying notes are an integral
part of these consolidated financial statements.
F -
4
AMBICOM HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JULY 31,
2011
2010
Cash flows from operating activities:
Net income (loss)
$
(187,400
)
$
48,881
Net income items not affecting cash:
Depreciation and amortization
5,756
2,876
Non cash bonus
-
55,000
Stock-based compensation
96,019
41,861
Inventory valuation adjustment
-
35,078
Reduction in bad debt reserve
(11,432
)
-
Reduction in reserve for inventory loss
(4,567
)
-
Decrease / (Increase) in operating assets:
Accounts receivable
511,489
(371,316
)
Inventory
52,661
(122,544
)
Other receivables
11,251
(753
)
Prepaid expense
(22,330
)
79,307
Deposit
(16,558
)
-
Increase / (Decrease) in operating liabilities:
Accounts payable - trade
2,417
(29,836
)
Accrued payable - other
(39,770
)
7,514
Unearned revenue
10,364
1,665
Net cash provided by (used) in operating activities
407,900
(252,267
)
Cash flows from investing activities:
Payment of notes to related parties
(100,000
)
(65,000
)
Capital expenditures
(19,236
)
(7,545
)
Net cash used in investing activities
(119,236
)
(72,545
)
Cash flows from financing activities:
Proceeds from sale of common stock
-
500,000
Proceeds from sale of preferred stock
2,600
Proceeds from line of credit
190,000
100,000
Payments on notes payable
(120,000
)
(150,000
)
Cash used in reverse merger, net of cash received
-
(98,153
)
Net cash provided by financing activities
70,000
354,447
Net increase in cash and cash equivalents
358,664
29,635
Cash and cash equivalents, beginning of year
165,848
136,213
Cash and cash equivalents, end of year
$
524,512
$
165,848
Supplemental information:
Income taxes paid
$
1,600
$
2,740
Interest paid
$
25,172
$
17,700
The accompanying notes are an integral
part of these consolidated financial statements.
F -
5
AMBICOM HOLDINGS, INC.
Consolidated Statement of Changes in
Stockholders' Equity
Consolidated Statements of Changes in
Stockholders' Equity
Preferred
Stock
Series B #
Preferred
Stock
Series B
Amount
Preferred
Stock
Series A #
Preferred
Stock
Series A
Amount
Common
Stock #
Common
Stock
Amount
Additional
Paid-in
Capital
Accumulated
Deficit
Total
Balance at August 1, 2009
-
$
-
-
$
-
20,000,000
$
20,000
$
10,582,714
$
(10,757,905
)
$
(155,191
)
New shares issued as part of reverse merger
2,600,000
2,600
25,000,000
25,000
(23,076
)
4,524
Proceeds from raise of capital
1,250,000
1,250
498,750
500,000
Expenses related to capital raise
(65,000
)
(65,000
)
Stock option expense
41,861
41,861
Common stock option exercised
5,500,000
5,500
49,500
55,000
Net income for the year ended July 31, 2010
48,881
48,881
Balance at July 31, 2010
2,600,000
$
2,600
-
$
-
51,750,000
$
51,750
$
11,084,749
$
(10,709,024
)
$
430,075
Employee stock option expense
15,469
15,469
Investor relations expense
350,000
350
27,150
27,500
Advisory board expense
321,430
321
22,179
22,500
Annual 6% common stock dividend for Preferred B holders per Preferred
    B agreement
156,015
156
(156
)
-
Bonus to Kenneth Cheng for stock option exercise of Preferred A
    shares
23,500
23,500
Exercise of Preferred A shares by Kenneth Cheng
2,350,000
2,350
(2,350
)
-
Preferred A grant to John Hwang per merger agreement
7,050,000
7,050
7,050
Net loss for the year ended July 31, 2011
(187,400
)
(187,400
)
Balance at July 31, 2011
2,600,000
$
2,600
9,400,000
$
9,400
52,577,445
$
52,577
$
11,170,697
$
(10,896,580
)
$
338,694
The accompanying notes are an integral
part of these consolidated financial statements.
F -
6
AMBICOM HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2011 AND 2010
NOTE 1 – Organization and Principal Activities
AmbiCom Holdings, Inc. ("AmbiCom Holdings" or the
'Company") was incorporated as Med Control, Inc. ("Med Control") under the laws of the State of Nevada
on July 1, 2008.  Med Control was a development stage enterprise until January 15, 2010.  All of Med Control's
activities prior to January 15, 2010 related to its organization, initial funding and share issuances.  On January 15,
2010, Med Control Inc. changed its name to AmbiCom Holdings, Inc.
On January 15, 2010, Med Control, Inc. (the "Registrant")
authorized its Articles of Incorporation (the "Amendment") to change its name to AmbiCom Holdings, Inc., to increase
the number of its authorized shares of capital stock from 75,000,000 to 1,050,000,000 shares of which 1,000,000,000 were designated
common stock and 50,000,000 were designated preferred stock, par value $0.001 per share (the "Preferred Stock") and
to effect a forward-split such that 131.2335958 shares of Common Stock were issued for every 1 share of Common Stock issued and
outstanding immediately prior to filing of the amendment (the "Forward Split").
On January 15, 2010, the Company acquired AmbiCom Acquisition
Corp. a privately owned Nevada corporation ("AmbiCom"), pursuant to an Agreement and Plan of Share Exchange (the "Exchange").  AmbiCom
was organized under the laws of the State of Nevada on July 29, 2008.  AmbiCom is a holding company whose operating company,
AmbiCom, Inc., is a designer and developer of wireless products focusing on the wireless medical industry.  AmbiCom's
wireless modules and devices are based on its innovative application software and Wi-Fi or Bluetooth technologies.
Pursuant to the terms of the Exchange, the Company acquired
AmbiCom from the AmbiCom equity holders in exchange for an aggregate of 20,000,000 newly issued shares of Common Stock,  2,600,000
shares of Series B Preferred Stock, an option to purchase 5,500,000 shares of Common Stock and 2,350,000 shares of Series A Preferred
Stock at the purchase price of $.01 per share,  and warrants to purchase 500,000 shares of Common Stock at the exercise
price of $0.50 per share (collectively, the "Exchange Shares").  As a result of the Exchange, the AmbiCom
equity holders surrendered all of their issued and outstanding capital stock of AmbiCom in consideration for the Exchange Shares
and AmbiCom became a wholly-owned subsidiary of the Company.
Simultaneously upon the Closing, the Company closed an offering
(the "Offering") of its Common Stock at a price of $0.40 per share for an aggregate of 1,250,000 shares of Common Stock
for aggregate offering price of $500,000.
In addition, contemporaneously with the Closing, the Company
and our former principal stockholder, Ms. Kato, split-off its wholly owned subsidiary, MCI Acquisition Corp., a newly-formed Nevada
corporation ("MCAC"), whereby the Company assigned all of its previous operating assets to MCAC in consideration for
the assumption of all of the Company's liabilities to Ms. Kato, who is currently the principal shareholder of MCI and the
retirement and cancellation of Ms. Kato's 6,000,000 shares of Common Stock pursuant to the terms and conditions of a split-off
agreement by and among the Company, Ms. Kato, and MCAC (the "Split-Off Agreement").
Following the issuance of the Exchange Shares and the retirement
of Ms. Kato's shares pursuant to the Split-Off Agreement, the former stockholders of AmbiCom and/or their designees now beneficially
own approximately fifty-five percent (55%) of the total outstanding shares of Common Stock, and after giving effect to the conversion
of the Series B in accordance with their respective terms (and the satisfaction of certain conditions to the conversion of such
shares) seventy-six percent (76%) of the total outstanding shares of Common Stock on a fully-diluted basis.
F -
7
Details of the Company's subsidiaries as of July 31, 2011
are as follows:
Name
Place and Date of
Establishment/
Incorporation
Relationships
Principal Activities
E-Care USA, Inc.
Nevada
March 15, 2011
Wholly-owned subsidiary of AmbiCom Holdings, Inc.
Designer and developer of wireless home medical devices
AmbiCom Technology, Inc.
Nevada
May 17, 2010
Wholly-owned subsidiary of AmbiCom Holdings, Inc.
Planned acquisition company
Inter-company accounts and transactions have been eliminated
in consolidation.
NOTE 2 – Basis of Presentation
The accompanying consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and accounting principles
generally accepted in the United States for financial information.  The preparation of financial statements in accordance
with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect
the amounts reported in the financial statements. Actual results could differ from those estimates. Significant estimates made
in preparing the financial statements include revenue recognition and costs of revenue, inventory valuations, long-lived and intangible
asset valuations and loss contingencies. In the opinion of management, the financial statements include all adjustments (which
are of a normal and recurring nature) necessary for the fair presentation of the results of the periods presented.
For financial accounting purposes, the acquisition was a reverse
acquisition of the Company by AmbiCom, under the purchase method of accounting, and was treated as a recapitalization with AmbiCom
as the acquirer.  Upon consummation of the Exchange, the Company adopted the business plan of AmbiCom.  Accordingly,
the consolidated statements of operations include the results of operations of AmbiCom and its subsidiaries from August 1, 2010
and 2009, and the results of operations of Med Control from the acquisition date through July 31, 2011.
NOTE 3 – Summary of Significant Accounting Policies
The summary of significant accounting policies is presented
to assist in understanding the Company's financial statements.  These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the preparation of the financial statements.
a) Description of Business -
The Company is a
leading designer and developer of wireless technologies which emphasize wireless medical and other wireless products.
b) Segment Information
-
The Company follows ASC
Topic 280, "Disclosures about Segments of an Enterprise and Related Information." Topic 280 requires that a company
report financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise
for which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance. The Company's chief operating decision maker currently evaluates
the Company's operations from a number of different operational perspectives including but not limited to a client by client
basis. The Company derives all significant revenues from a single reportable operating segment of business. Accordingly, the Company
does not report more than one segment; nevertheless, management evaluates, at least annually, whether the Company continues to
have one single reportable segment.
c) Use of Estimates -
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
may differ from those estimates, and the differences may be material to the financial statements. Estimates are used primarily
in determining the depreciable lives of fixed assets, and inventory valuation. In addition, estimates form the basis for the reserves
for sales allowances, accounts receivable and inventory.  Various assumptions go into the determination of these estimates.
The process of determining significant estimates requires consideration of factors such as historical experience and current and
expected economic conditions.
F -
8
d) Cash and Cash Equivalents -
The Company considers
all highly liquid investments and time deposits with original maturities of three months or less when purchased to be cash equivalents.
All cash and cash equivalents are maintained with nationally recognized financial institutions.
e) Allowance for Doubtful Accounts -
An allowance
for doubtful accounts is computed based on the Company's historical experience and management's analysis of possible
bad debts.  Accounts receivable are shown net of an allowance for doubtful accounts of $9,329 and $20,761 as of July
31, 2011 and 2010, respectively.
f) Inventories -
Inventories are stated at the
lower of cost or market on an average basis. Inventory reserves are recorded for damaged, obsolete, excess and slow-moving inventory.
Market value of inventory is estimated based on the impact of market trends, an evaluation of economic conditions and the value
of current orders relating to the future sales of this type of inventory.  As of July 31, 2011 and July 31, 2010, the
value of the inventory reserve was $37,814 and $42,381 respectively.
g)  Income Taxes -
The Company accounts
for income taxes pursuant to the FASB ASC Topic 740, "Accounting for Uncertainty in Income Taxes", ("Topic 740").
Topic 740 clarifies the accounting for uncertainty in income taxes recognized in the Company's financial statements in accordance
with generally accepted accounting principles.  The calculation of the Company's tax provision involves the application
of complex tax rules and regulations within multiple jurisdictions. The Company's tax liabilities include estimates for all income-related
taxes that the Company believes are probable and that can be reasonably estimated. To the extent that the Company's estimates
are understated, additional charges to the provision for income taxes would be recorded in the period in which the Company determines
such understatement. If the Company's income tax estimates are overstated, income tax benefits will be recognized when realized.  Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment. Topic 740 prescribes a recognition threshold and measurement attributes
for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
h) Revenue Recognition -
The majority of the Company's
product revenues are recognized upon shipment or delivery and acceptance of products by customers, when pervasive evidence of a
sales arrangement exists, the price is fixed or determinable, the title has transferred and collection of resulting receivables
is reasonably assured.  For merchandise products, the Company recognizes revenue upon shipment of products, when title
is passed and the amount collectible can reasonably be determined.  All amounts billed to a customer related to shipping
and handling are classified as revenue, while all costs incurred by the Company for shipping and handling are classified as selling
expenses.  For NRE projects, revenue is recognized for the deliverable portions that meet the revenue recognition criteria
that persuasive evidence that an agreement exists, delivery has occurred or services have been rendered, the price is fixed and
determinable, and collectability is reasonably assured.
i) Research and Development Costs -
Research and
development costs are expensed as incurred.
j
) Stock-Based Compensation -
The Company adopted
ASC Topic 718 "Share-Based Payment". As permitted, the Company elected to adopt disclosure-only provisions of ASC 718
in accordance with generally accepted accounting principles. Under the provisions of Topic ASC 718, compensation expense is recognized
based on the fair value of options on the grant date.
F -
9
k) Fair Value of Financial Instruments
- ASC Topic
820, "Fair Value Measurements", requires disclosure of the level within the fair value hierarchy in which fair value
measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets
or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). The Company's
financial instruments consist of cash and cash equivalents, short-term trade receivables and payables at July 31.
Fair Value of Financial Instruments
The following table presents the carrying amounts and estimated
fair values of the Company's financial instruments at:
2011
2010
Carrying
amount
Fair value
Carrying
amount
Fair value
Financial assets:
Cash and cash equivalents
524,512
524,512
165,848
165,848
Accounts receivable
139,853
139,853
639,910
639,910
Financial liabilities:
Accounts payable and accrued liabilities
94,676
94,676
133,724
133,724
Due to related party
0
0
100,000
100,000
Line of credit
290,000
290,000
100,000
100,000
Notes payable
115,000
112,598
235,000
229,296
The fair values of the financial instruments shown in the above
table represent the amounts that would be received when those assets are sold or that would be paid when those liabilities are
transferred in an orderly transaction between market participants at the measurement date.  Those fair value measurements
maximize the use of observable inputs.
However, in situations where there is little, if any, market
activity for the asset or liability at the measurement date, the fair value measurement reflects the Company's own judgments
about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the
Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted
discount rates, available observable and unobservable inputs.
The Company uses the following methods and assumptions in estimating
the fair value disclosures for financial instruments:
Cash equivalents
The carrying amount reported in the balance sheets of cash equivalents
approximate fair value because of the relatively short time to maturity.
Accounts receivable
The carrying amount reported in the balance sheets of accounts
receivable approximate fair value because of the relatively short time to maturity.
Accounts payable and accrued liabilities
The carrying amount reported in the balance sheets of accrued
payable and accrued liabilities approximate fair value because of the relatively short time to maturity.
Due to related party
The carrying amount reported in the balance sheets of due to
related party approximate fair value because of the relatively short time to maturity.
Line of credit
The carrying amount reported in the balance sheets of due to
related party approximate fair value because of the relatively short time to maturity.
F -
10
Notes payable
The fair value of the Company's notes payable are measured
using quoted offer-side prices when quoted market prices are available.  If quoted market prices are not available, the
fair value is determined by discounting the future cash flows of each instrument at rates that reflect rates currently observed
in publicly traded debt markets for debt of similar terms to companies with comparable credit risk. For long-term debt measurements,
where there are no rates currently observable in publicly traded debt markets of similar terms with comparable credit, the Company
uses market interest rates and adjusts that rate for all necessary risks, including its own credit risk.
Fair Value Hierarchy
The following table presents the placement in the fair value
hierarchy of assets and liabilities that are measured at fair value on a recurring basis at :
Fair value measurements at
reporting date using
2011
Quoted prices in
active markets
for identical
assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Notes payable
115,000
112,598
Fair value measurements at
reporting date using
2010
Quoted prices in
active markets
for identical
assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Notes payable
235,000
229,296
l) Translation of Foreign Currency -
The Company
accounts for its foreign operations in accordance with ASC Topic 830, "Foreign Currency Translation". For the branch,
non-monetary balance sheet items and related income statements items are translated at historical exchange rates, while monetary
balance sheet items are translated at current exchange rates. Income statement items, other than monetary, are translated at the
weighted average exchange rate during the year. Deferred taxes are not provided on translation gains and losses where the Company
expects earnings of a foreign branch to be permanently reinvested.
m) Concentration -
Financial instruments which
potentially subject the Company to concentrations of credit risk are primarily accounts receivable. The Company performs ongoing
credit evaluations of its customers' financial condition. If the collection of the receivable becomes doubtful, the Company
establishes a reserve in an amount determined appropriate for the perceived risk.  The Company maintains its cash accounts
at commercial banks. From time to time, cash balances maintained in such banks may exceed the insured amount by the Federal Deposit
Insurance Corporation (FDIC). As of July 31, 2011 and July 31, 2010, management does not believe they are exposed to any significant
risk on their cash balances.  The Company's products are primarily sold to global medical device companies. These
customers can be significantly affected by changes in economic, competitive or other factors. The Company makes substantial sales
to a relatively few, large customers, where company is seeking to capture more business from other targeted medical device companies.
Four customers accounted for $57,800 (39%), $40,579 (27%), $35,430
(24%) and $23,559 (16%) of receivables at July 31, 2011 while two customers accounted for $370,011 (56%) and $139,400 (21%) of
accounts receivable as of July 31, 2010.
F -
11
One customer accounted for $1,791,400 (55%) and $2,246,511 (63%)
of the revenues for the years ended July 31, 2011 and 2010 respectively.
Two vendors accounted for $25,000 (61%) and $10,018 (25%) of
accounts payable as of July 31, 2011 and, $35,000 (39%) and $18,000 (20%) at July 31, 2010, respectively.
One vendor accounted for $1,253,753 (86%) and $1,657,500 (88%)
of the purchases for the years ended July 31, 2011 and 2010 respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
In October 2009, the FASB issued guidance on multiple-deliverable
arrangements to address how to separate deliverables and how to measure and allocate arrangement consideration.  This
guidance requires vendors to develop the best estimate of selling price for each deliverable and allocate the arrangement consideration
using this selling price. This guidance also expands the disclosure requirements to include both quantitative and qualitative information.
This guidance is effective for fiscal years beginning after June 15, 2010.  The Company does not expect the adoption
to have a material impact on its consolidated financial position, results of operations or cash flows.
In January 2010, the FASB issued guidance that expands the interim
and annual disclosure requirements of fair value measurements, including the information about movement of assets between level
1 and 2 of the three-tier fair value hierarchy established under its fair value measurement guidance. This guidance also requires
separate disclosure for each of purchases, sales, issuance, and settlements in the reconciliation for fair value measurements using
significant unobservable inputs, level 3. Except for the detailed disclosure in the level 3 reconciliation, which is effective
for the fiscal years beginning after December 15, 2010, all the other disclosures under this guidance are effective for the fiscal
years beginning after December 15, 2009.  The Company does not expect the adoption to have a material impact on its consolidated
financial position, results of operations or cash flows.
In February 2010, the FASB issued ASU No. 2010-09, "Amendments
to Certain Recognition and Disclosure Requirements," which addresses both the interaction of the requirements of Topic 855,
Subsequent Events, with the SEC's reporting requirements and the intended breadth of the reissuance disclosures provision
related to subsequent events.  Specifically, the amendments state that SEC filers are no longer required to disclose
the date through which subsequent events have been evaluated in originally issued and revised financial statements.  The
standard was effective immediately upon issuance.  The Company does not expect the adoption to have a material impact
on its consolidated financial position, results of operations or cash flows.
In April 2010, the FASB issued ASU 2010-13 "Compensation-Stock
Compensation (Topic 718) Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market
in Which the Underlying Equity Security Trades" (ASU 2010-13). Topic 718 is amended to clarify that a share-based payment
award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity
securities trades shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not
to be classified as a liability if it otherwise qualifies as equity classification. The amendments in this standard are effective
for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The guidance should be
applied by recording a cumulative-effect adjustment to the opening balance of retained earnings for all outstanding awards as of
the beginning of the fiscal year in which the amendments are initially applied.  The Company does not expect the adoption
to have a material impact on its consolidated financial position, results of operations or cash flows.
In December 2010, the FASB issued ASU 2010-29, "Business
Combinations (ASC Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations – a consensus of
the FASB Emerging Issues Task Force".  This ASU clarifies existing disclosure requirements for public entities
with business combinations that occur in the current reporting period.  The ASU stipulates that if an entity is presenting
comparative financial statements, revenue and earnings of the combined entity should be disclosed as though the business combinations
that occurred during the current year had occurred as of the beginning of the comparative prior annual reporting period.  The
ASU also expands the supplemental pro forma disclosures required by ASC Topic 805 to include a description of the nature and amount
of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro
forma revenue and earnings.  This guidance is effective prospectively for business combinations with acquisition dates
on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.  Early adoption
is permitted.  The Company does not expect the adoption to have a material impact on its consolidated financial position,
results of operations or cash flows.
F -
12
Management does not believe that any other recently issued,
but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
NOTE 4 –Commitments and Contingencies
The Company leases its office and warehouse. The maturity date
for the lease is May 2016. The minimum rental commitment under the lease for the years ended July 31 are:
Year Ending July 31:
2012
53,696
2013
55,133
2014
56,570
2015
58,007
2016
49,537
Total
$
272,943
The rent expense for the years ended July 31, 2011 and 2010
was $65,221, and $67,000, respectively.
NOTE 5 – Liquidity and Shareholders' Equity
Cash and cash equivalents were $524,512 and $165,848 at July
31, 2011 and 2010, respectively.  Our working capital was $347,358 and $529,643 at July 31, 2011 and 2010, respectively.
Preferred Stock
The Company's Amended Articles of Incorporation authorizes the
issuance of 50,000,000 shares of Preferred Stock, par value $0.001 per share, subject to any limitations prescribed by law, without
further vote or action by the stockholders, to issue from time to time shares of preferred stock in one or more series. Each such
series of Preferred Stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special
or relative rights or privileges as shall be determined by the Company's board of directors, which may include, among others, dividend
rights, voting rights, liquidation preferences, conversion rights and preemptive rights.
Series A Convertible Preferred Stock
The Company has authorized a total of 9,400,000 shares of Series
A Convertible Preferred Stock (the "Series A").  The Series A is convertible at any time into shares of the
Company's common stock at the conversion rate of one share of Common Stock per each share of Series A converted.  The
Series A is treated on an "as converted" basis for both voting and liquidation rights. There are currently 9,400,000
shares of Series A issued and outstanding.  In June 2011, an amendment was filed with the Secretary of State of Nevada
whereby the conversion price of Series A would remain unchanged in event of stock split, stock dividend on the common stock, a
reclassification of the common stock or distribution to holders of common stock.  If the Company reports net income in
two of the following four years following the Exchange, the Series A shall be convertible into Common Stock at the conversion rate
of two shares of Common Stock per each share of Series A converted.
F -
13
Series B Convertible Preferred Stock
The Company has authorized a total of 2,600,000 shares of 6%
Series B Convertible, Redeemable Preferred Stock (the "Series B").  The Series B accrues annual dividends
at the rate of 6% per year in shares of Common Stock at the dividend conversion rate of $1.00.  The Series B, together
with any unpaid dividends, is convertible at any time into shares of the Company's common stock at the conversion rate of
one share of Common Stock per each share of Series B converted.  Following the second anniversary of the Exchange, the
Series B, together with any unpaid dividends, shall be convertible into Common Stock at the conversion price of forty cents ($0.40)
or seventy percent (70%) of the daily volume weighted average price of the Common Stock for the twenty trading days immediately
prior to the conversion.  The Series B is redeemable by the Company, at any time prior to December 31, 2015, in cash
at the redemption rate of $1.00 per share of Series B plus any accrued and unpaid dividends.  On December 31, 2015, all
outstanding shares of Series B shall be redeemed by the Company at a per share redemption price equal to $1.00 per share of Series
B plus an amount of Common Stock equal to the amount of the accrued and unpaid dividend thereon.  The Series B has a
liquidation preference of $2,600,000 and ranks prior to the Series A and the Common Stock.  The Series B votes on an
"as converted" basis.  There are currently 325,000 shares of Series B outstanding.
Warrants
As of July 31, 2010, there were warrants outstanding to purchase
500,000 shares of Common Stock at the exercise price of $0.50.
As of July 31, 2011, there were warrants outstanding to purchase
500,000 shares of Common Stock at the exercise price of $1.60.
Options
As of the Exchange date, there were fully vested options outstanding
to purchase 5,500,000 shares of Common Stock and 2,350,000 shares of Series A Preferred Stock, both at a purchase price of $0.01
per share as well as 7,050,000 shares of Series A Preferred Stock as part of the Exchange.  On April 27, 2010 the Board
granted a non cash bonus to Mr. Kenneth Cheng of $55,000 upon receipt of which, all 5,500,000 options for Common Stock were exercised.  On
July 20, 2011, Mr. Kenneth Cheng exercised all 2,350,000 options for Series A Preferred Stock.  On June 1, 2011, all
7,050,000 shares for Series A Preferred Stock were issued to Mr. John Hwang as part of the Exchange agreement.
As of July 31, 2010, there were options outstanding for the
purchase of 2,350,000 of Series A Preferred Stock.
As of July 31, 2011, there were no options issued or outstanding.
2010 Equity Incentive Plan
On January 15, 2010, our Board and Stockholders approved and
adopted the 2010 Equity Incentive Plan (the "2010 Plan"). A copy of the 2010 Plan was attached as Exhibit 10.4 to Form
8-K filed with the Securities and Exchange Commission on January 22, 2010.
The 2010 Plan is intended to promote the interests of the Company
by attracting and retaining exceptional employees, consultants, directors, officers and independent contractors (collectively referred
to as the "Participants"), and enabling such Participants to participate in the long-term growth and financial success
of the Company. Under the 2010 Plan, the Company may grant stock options, which are intended to qualify as "incentive stock
options" under Section 422 of the Internal Revenue Code of 1986, as amended (the "Incentive Stock Options"),
non-qualified stock options (the "Nonqualified Stock Options"), stock appreciation rights ("SARs") and
restricted stock awards (the "Restricted Stock Awards"), which are restricted shares of Common Stock (the Incentive
Stock Options, the Nonqualified Stock Options, the SARs and the Restricted Stock Awards are collectively referred to as "Incentive
Awards"). Incentive Awards may be granted pursuant to the 2010 Plan for 10 years from the Effective Date.
From time to time, the Company may issue Incentive Awards pursuant
to the 2010 Plan.  Each of the awards will be evidenced by and issued under a written agreement. In accordance with the
rules of the plan, the exercise price of options granted shall be not less than 110% of the average of the closing price for the
30 days preceding the grant date.
F -
14
The Board reserved a total of 2,277,778 shares of our Common
Stock for issuance under the 2010 Plan. If an incentive award granted under the 2010 Plan expires, terminates, is unexercised or
is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to such award and
the surrendered shares will become available for further awards under the Plan.
The number of shares subject to the 2010 Plan, any number of
shares subject to any numerical limit in the 2010 Plan, and the number of shares and terms of any Incentive Award may be adjusted
in the event of any change in our outstanding Common Stock by reason of any stock dividend, spin-off, stock split, reverse stock
split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares, or similar
transaction.
On September 1, 2010, 840,000 options were granted to eight
employees at an exercise price of $0.20 per share.  Using the Black-Scholes option pricing model with the following assumptions:
risk-free interest rate of 1.79%; volatility of 40%; expected life of 10 years; and, all option grants without payment of dividends,
the Company recognized a non-cash stock compensation charge of $15,469 for the twelve months ended July 31, 2011 in connection
with the issuance and vesting of these options.  At July 31, 2011, 1,437,778 options remain available for future grant
under the Plan.
For the year ended July 31, 2010, based on the fair value of
Common Stock and Series A Preferred Stock options granted during the year, the Company recognized stock option expense of $41,861.  The
fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following
assumptions: risk-free interest rate of 1.79%; volatility of 70%; expected life of 4 years; and, all option grants without payment
of dividends.
As of July 31, 2011, no options were issued or outstanding under
the terms of the 2010 Plan.
Common Stock
On April 30, 2010, the Company Amended and Restated its Articles
of Incorporation to authorize the issuance of up to 1,000,000,000 shares of common stock, $0.001 par value per share, of which
52,577,449 shares and 51,750,000 were outstanding as of July 31, 2011 and July 31, 2010, respectively.
NOTE 6 – Related Party Transactions and Gain on Settlement
Shareholder
The Company did not have notes payable to related parties as
of July 31, 2011, and had two notes payable to related parties of $70,000 and $30,000 as of July 31, 2010.
July 31, 2011
July 31, 2010
Note payable to a shareholder, bearing interest at 10% per annum.  The note was repaid to shareholder February 2011.
$
-
$
30,000
Note payable to an employee, bearing interest at 10% per annum.  The note was repaid to employee June 2011.
-
70,000
Total
$
-
$
100,000
Litigation settlement
The Company had an ongoing litigation over accounts receivable
and payable with Ambeon Corporation, a related party by virtue of common ownership. The dispute started in 2004 and was settled
in favor of the Company under the Shih Lin District Court of Taiwan on August 20, 2008. The Company agreed to pay a sum of $560,000
and the remaining disputed payable balances were decreased in favor of the Company, and settlement income of $843,572 was realized
in year 2008. As of July 31, 2011, the company has paid $445,000 towards the settlement.  The remaining minimum payments
due under the settlement are as follows:
F -
15
Year Ending July 31:
2012
60,000
2013
55,000
Total
$
115,000
NOTE 7 – Property and Equipment
Property and equipment are stated at cost. Depreciation is calculated
using the straight-line method over the following estimated useful lives of the assets: furniture and fixtures –seven years;
machinery and equipment –five years; software – five years; leasehold improvements –the life of the current facility
lease. Major additions and betterments are capitalized and repairs and maintenance are charged to operations in the period incurred.
July 31,
2011
July 31,
2010
Furniture and fixture
$
27,635
$
14,901
Machinery and equipment
24,157
23,641
Software
359,417
359,416
Leasehold Improvements
5,985
-
417,194
397,958
Accumulated depreciation
(391,553
)
(381,665
)
Property and equipment, net
$
25,641
$
16,293
Note 8 – Revolving Line of Credit
On May 9, 2011, the Company completed negotiations to renew
and expand its secured line of bank credit for up to one million three hundred thousand dollars and extend the line by one year
to July 2012. Advances under the credit line will be secured with substantially all of the Company's assets, be subject to
interest at 1% above the Wall Street Journal prime rate index, and be subject to the following restrictive covenants: (i) the current
ratio shall not be less than 1.2 times; (ii) the debt to tangible net worth ratio shall not exceed 2.5 times; and (iii) the quarterly
EBITDA shall not be less than $30,000 on a rolling four quarter basis.  At July 31, 2011, the company was in violation
of the restrictive covenant pertaining to a minimum quarterly EBITDA of not less than $30,000.  The lender issued forbearance
for the violation of the restrictive covenant.  The credit line will expire on July 14, 2012.  At July 31,
2011, the Company had drawn $290,000 under this credit line.
The Company incurred interest expense of $25,172 and $17,700
during the years ended July 31, 2011, and 2010, respectively.
Note 9 - Notes Payable
Notes payable, which are unsecured, consist of the following
as of July 31, 2011 and July 31, 2010:
Notes Payable Consist of the Following at:
July 31, 2011
July 31, 2010
Note payable to Ambeon Corporation, a related party by virtue of common ownership, bearing interest at 5% per annum.
$
115,000
$
235,000
Note payable to a shareholder, bearing interest at 10% per annum.  The note was repaid to shareholder February 2011.
-
30,000
Note payable to an employee, bearing interest at 10% per annum.  The note was repaid to employee June 2011.
-
70,000
Total notes payable
115,000
335,000
Less current portion
Due to related party
-
100,000
Due to third party
60,000
115,000
60,000
215,000
Long-term notes payable
$
55,000
$
120,000
F -
16
Note 10 – Income Taxes
The consolidated income tax expense for
the years ended July 31, 2011 and 2010 was determined based upon estimates of the Company's consolidated effective income
tax rates for the years ending July 31, 2011 and 2010, respectively. The difference between the consolidated effective income tax
rate and the U.S. federal statutory rate is primarily attributable to state income taxes, and the effect of certain permanent differences.
FASB Topic 740, Accounting for Uncertainty
in Income Taxes, prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. Generally accepted accounting principles require that the Company
recognizes in the financial statements a liability for tax uncertainty if it is more likely than not that the position will be
sustained on an audit, based on the technical merits of the position. They also provide guidance on de-recognition, classification,
interest and penalties, accounting in interim periods and disclosure. The Company has not recorded any liability for unrecognized
tax benefits as of July 31, 2011. There have been no material changes in unrecognized tax benefits at July 31, 2011.
The Company's tax returns are subject
to examination by federal, state and foreign taxing authorities. As of July 31, 2011, the statute of limitations for examining
the Company's federal income tax returns has not expired for the years ended July 31, 2006 through 2010. As of July 31, 2011,
the statutes of limitation for tax examinations in the state of California have not expired for tax returns filed for the years
ended July 31, 2006 through 2010.  As of July 31, 2011, the statute of limitation for tax examinations in Taiwan have
not expired for tax returns filed for the years ended July 31, 2006 through 2010.
The Company provided $1,600 and $5,050 for income taxes in the
years ended July 31, 2011 and 2010 respectively.  The effective tax rates takes into consideration federal and state
minimum tax rates and foreign taxes.
The Company has accumulated NOLs of $1.45 million, which, if
unutilized, will begin to expire in 2018. Future tax benefits, which may arise as a result of these losses, have not been recognized
in these financial statements, and have been offset by a valuation allowance since there is no assurance that we will be able to
utilize these NOLs. Details of future income tax assets are as follows:
Future income tax assets
July 31, 2011
July 31, 2010
NOL available for carry forward
$
1,452,077
$
1,307,775
R&D credit
220,220
140,553
Other temporary timing differences
123,269
66,643
1,795,566
1,514,971
Statutory tax rate (combined federal and state)
42.28
%
42.84
%
Net deferred tax asset
759,165
649,014
Valuation allowance
(759,165
)
(649,014
)
$
-
$
-
F -
17
Note 11 – Subsequent Events
On August 30, 2011, Kenneth Cheng resigned
as the Company's President, as a member of the Board of Directors, and all other positions with the Company's subsidiaries.
On October 19, the Company effectuated
a one-for-eight reverse split of its shares, effective September 8, 2011. The reverse decreased the total authorized, issued and
outstanding common shares and Series B Preferred Convertible Stock by the same one-for-eight ratio as well as amended the par value
per share from $0.001 to $0.008.  The total authorized common shares decreased from 1,000,000,000 to 125,000,000.
On October 31, 2011 the Company entered
into an Investment Agreement and a Registration Rights Agreement with Kodiak Capital Group, LLC (the "Investor") to purchase
up to $1,000,000 of the company's common stock.  Upon Registration, the Company may  obtain capital in increments
of up to $25,000 as working capital is needed.  The facility sets the purchase price at 80% of the volume weighted average
over five consecutive trading days.
Management performed an evaluation of the
Company's activity through the date these financials were issued to determine if they must be reported.  The Management
of the Company determined that there were no other reportable subsequent events to be disclosed.
F -
18
ITEM 1. Financial Statements
Page
Condensed Consolidated Balance Sheets as of January 31, 2012 (Unaudited) and July 31, 2011 (Audited)
2
Condensed Consolidated Statements of Operations for the Three and Six Months Ended January 31, 2012 and 2011 (Unaudited)
3
Condensed Consolidated Statements of Cash Flows for the Six Months Ended January 31, 2012 and 2011 (Unaudited)
4
Notes to Condensed Consolidated Financial Statements for the Three and Six Months Ended January 31, 2012 and 2011 (Unaudited)
5
AMBICOM HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
January 31,
July 31,
2012
2011
(Unaudited)
(Audited)
ASSETS
Current assets:
Cash and cash equivalents
$
225,546
$
524,512
Accounts receivable, net of allowance for doubtful accounts of $5,837 and $9,329 as of January 31, 2012, and July 31, 2011, respectively
182,587
139,853
Inventory, net of reserve balances of $31,657 and $37,814 as of January 31, 2012, and July 31, 2011, respectively
11,287
113,770
Prepaid expenses and other current assets
9,159
26,063
Total current assets
428,579
804,198
Property and equipment, net
22,247
25,641
Deposit
20,695
20,695
Total assets
$
471,521
$
850,534
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$
77,084
$
47,094
Accounts payable - other
85,913
47,582
Deferred revenue
167,120
12,164
Line of credit payable
-
290,000
Notes payable - current portion
60,000
60,000
Total current liabilities
390,117
456,840
Notes payable, net of current
25,000
55,000
Total liabilities
415,117
511,840
Commitment and contingency (Note 10)
Stockholders' equity:
Common stock, $0.008 par value; 125,000,000 shares authorized; 9,790,760 and 6,572,181 shares issued and outstanding at January 31, 2012 and July 31, 2011, respectively
56,677
52,577
Preferred stock, Series A, $0.001 per share; 9,400,000 shares authorized; 9,400,000 and 9,400,000 shares issued and outstanding at January 31, 2012 and July 31, 2011, respectively
9,400
9,400
Preferred stock, Series B, $0.008 per share 325,000 shares authorized; 262,500 and 325,000 shares issued and outstanding at January 31, 2012 and July 31, 2011, respectively
2,100
2,600
Additional paid in capital
11,407,011
11,160,697
Accumulated deficit
(11,418,784
)
(10,886,580
)
Total stockholders' equity
56,404
338,694
$
471,521
$
850,534
The accompanying notes are
an integral part of these consolidated financial statements.
2
AMBICOM HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended January 31,
Six Months Ended January 31,
2012
2011
2012
2011
Sales
$
458,813
$
1,268,148
$
607,759
$
2,203,161
Cost of sales
189,763
503,107
263,709
997,399
Gross profits
269,050
765,041
344,050
1,205,762
Operating Expenses
Depreciation
1,602
1,102
3,394
2,205
Professional fees
59,410
58,758
328,573
97,692
Selling and general expenses
247,424
417,216
543,904
785,613
Total operating expenses
308,436
477,076
875,871
885,510
Income (loss) from operations
(39,386
)
287,965
(531,821
)
320,252
Other income (expense)
Other income and expense, net
-
(34,073
)
2,696
(46,425
)
Interest expense, net
9
(6,908
)
(3,084
)
(12,519
)
Net other income (expense)
9
(40,981
)
(388
)
(58,944
)
Total income (loss) before income taxes
(39,377
)
246,984
(532,209
)
261,308
Income taxes
-
-
-
-
Net income (loss)
$
(39,377
)
$
246,984
$
(532,209
)
$
261,308
Net income (loss) per share - basic
$
(0.006
)
$
0.038
$
(0.078
)
$
0.040
Net income (loss) per share - diluted
$
(0.002
)
$
0.036
$
(0.032
)
$
0.038
Weighted average shares outstanding — basic
7,010,000
6,475,000
6,799,202
6,475,000
Weighted average shares outstanding — diluted
16,672,488
6,800,000
16,461,690
6,800,000
The accompanying notes are an integral
part of these consolidated financial statements.
3
AMBICOM HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JANUARY 31,
2012
2011
(Unaudited)
Cash flows from operating activities:
Net income (loss)
$
(532,209
)
$
261,308
Net income items not affecting cash:
Depreciation and amortization
3,394
2,205
Stock-based compensation
5,413
16,671
Issuance of stock to investment firm
245,001
-
Reduction in bad debt reserve
(3,492
)
(11,448
)
Increase (reduction) in reserve for inventory loss
(4,203
)
5,780
Decrease / (Increase) in operating assets:
Accounts receivable
(39,242
)
(534,370
)
Inventory
106,686
14,038
Other receivables
-
13,689
Prepaid expense
16,909
(30,200
)
Increase / (Decrease) in operating liabilities:
Accounts payable - trade
29,502
(3,103
)
Accrued payable - other
38,819
(31,352
)
Unearned revenue
154,956
-
Net cash provided by (used in) operating activities
21,534
(296,782
)
Cash flows from investing activities:
Capital expenditures
-
(518
)
Net cash used in investing activities
-
(518
)
Cash flows from financing activities:
Net proceeds from (Net payments on) line of credit
(290,000
)
250,000
Payments on notes payable
(30,000
)
(60,000
)
Conversion of preferred stock
(500
)
-
Net cash provided by (used in) financing activities
(320,500
)
190,000
Net decrease in cash and cash equivalents
(298,966
)
(107,300
)
Cash and cash equivalents, beginning of year
524,512
165,848
Cash and cash equivalents, end of quarter
$
225,546
$
58,548
Supplemental information:
Income taxes paid
$
-
$
-
Interest paid
$
3,084
$
12,519
The accompanying notes are an integral
part of these consolidated financial statements.
4
AMBICOM HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JANUARY
31, 2012 AND 2011
(UNAUDITED)
NOTE 1 – Organization and Principal Activities
AmbiCom Holdings, Inc. ("AmbiCom
Holdings" or the 'Company") was incorporated as Med Control, Inc. ("Med Control") under the laws
of the State of Nevada on July 1, 2008. Med Control was a development stage enterprise until January 15, 2010. All of Med Control's
activities prior to January 15, 2010 related to its organization, initial funding and share issuances. On January 15, 2010, Med
Control Inc. changed its name to AmbiCom Holdings, Inc.
On January 15, 2010, Med Control, Inc.
(the "Registrant") authorized its Articles of Incorporation (the "Amendment") to change its name to AmbiCom
Holdings, Inc., to increase the number of its authorized shares of capital stock from 75,000,000 to 1,050,000,000 shares of which
1,000,000,000 were designated common stock and 50,000,000 were designated preferred stock, par value $0.001 per share (the "Preferred
Stock") and to effect a forward-split such that 131.2335958 shares of Common Stock were issued for every 1 share of Common
Stock issued and outstanding immediately prior to filing of the amendment (the "Forward Split").
On January 15, 2010, the Company acquired
AmbiCom Acquisition Corp. a privately owned Nevada corporation ("AmbiCom"), pursuant to an Agreement and Plan of Share
Exchange (the "Exchange"). AmbiCom was organized under the laws of the State of Nevada on July 29, 2008. AmbiCom is
a holding company whose operating company, AmbiCom, Inc., is a designer and developer of wireless products focusing on the wireless
medical industry. AmbiCom's wireless modules and devices are based on its innovative application software and Wi-Fi or Bluetooth
technologies.
Pursuant to the terms of the Exchange,
the Company acquired AmbiCom from the AmbiCom equity holders in exchange for an aggregate of 20,000,000 newly issued shares of
Common Stock, 2,600,000 shares of Series B Preferred Stock, an option to purchase 5,500,000 shares of Common Stock and 2,350,000
shares of Series A Preferred Stock at the purchase price of $.01 per share, and warrants to purchase 500,000 shares of Common Stock
at the exercise price of $0.50 per share (collectively, the "Exchange Shares"). As a result of the Exchange, the AmbiCom
equity holders surrendered all of their issued and outstanding capital stock of AmbiCom in consideration for the Exchange Shares
and AmbiCom became a wholly-owned subsidiary of the Company.
Simultaneously upon the Closing, the Company
closed an offering (the "Offering") of its Common Stock at a price of $0.40 per share for an aggregate of 1,250,000
shares of Common Stock for aggregate offering price of $500,000.
In addition, contemporaneously with the
Closing, the Company and our former principal stockholder, Ms. Kato, split-off its wholly owned subsidiary, MCI Acquisition Corp.,
a newly-formed Nevada corporation ("MCAC"), whereby the Company assigned all of its previous operating assets to MCAC
in consideration for the assumption of all of the Company's liabilities to Ms. Kato, who is currently the principal shareholder
of MCI and the retirement and cancellation of Ms. Kato's 6,000,000 shares of Common Stock pursuant to the terms and conditions
of a split-off agreement by and among the Company, Ms. Kato, and MCAC (the "Split-Off Agreement").
Following the issuance of the Exchange
Shares and the retirement of Ms. Kato's shares pursuant to the Split-Off Agreement, the former stockholders of AmbiCom and/or
their designees now beneficially own approximately fifty-five percent (55%) of the total outstanding shares of Common Stock, and
after giving effect to the conversion of the Series B in accordance with their respective terms (and the satisfaction of certain
conditions to the conversion of such shares) seventy-six percent (76%) of the total outstanding shares of Common Stock on a fully-diluted
basis.
5
Details of the Company's subsidiaries
as of January 31, 2012 are as follows:
Name
Place and Date of
Establishment/
Incorporation
Relationships
Principal Activities
E-Care USA, Inc.
Nevada
March 15, 2011
Wholly-owned subsidiary of AmbiCom Holdings, Inc.
Designer and developer of wireless home medical devices
AmbiCom Technology, Inc.
Nevada
May 17, 2010
Wholly-owned subsidiary of AmbiCom Holdings, Inc.
Planned acquisition company
Inter-company accounts and transactions
have been eliminated in consolidation.
NOTE 2 – Basis of Presentation
The accompanying consolidated financial
statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC")
and accounting principles generally accepted in the United States for financial information. The preparation of financial statements
in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Significant estimates
made in preparing the financial statements include revenue recognition and costs of revenue, inventory valuations, long-lived and
intangible asset valuations and loss contingencies. In the opinion of management, the financial statements include all adjustments
(which are of a normal and recurring nature) necessary for the fair presentation of the results of the periods presented.
For financial accounting purposes, the
acquisition was a reverse acquisition of the Company by AmbiCom, under the purchase method of accounting, and was treated as a
recapitalization with AmbiCom as the acquirer.  Upon consummation of the Exchange, the Company adopted the business plan
of AmbiCom. Accordingly, the consolidated statements of operations include the results of operations of AmbiCom and its subsidiaries
from August 1, 2011 and 2010, and the results of operations of Med Control from the acquisition date through January 31, 2012.
NOTE 3 – Summary of Significant Accounting Policies
The summary of significant accounting policies
is presented to assist in understanding the Company's financial statements. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the preparation of the financial statements.
a) Description of Business -
The
Company is a leading designer and developer of wireless technologies which emphasize wireless medical and other wireless products.
b) Segment Information
-
The
Company follows ASC Topic 280, "Disclosures about Segments of an Enterprise and Related Information." Topic 280 requires
that a company report financial and descriptive information about its reportable operating segments. Operating segments are components
of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in assessing performance. The Company's chief operating decision maker currently
evaluates the Company's operations from a number of different operational perspectives including but not limited to a client
by client basis. The Company derives all significant revenues from a single reportable operating segment of business. Accordingly,
the Company does not report more than one segment; nevertheless, management evaluates, at least annually, whether the Company continues
to have one single reportable segment.
c) Use of Estimates -
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results may differ from those estimates, and the differences may be material to the financial statements. Estimates
are used primarily in determining the depreciable lives of fixed assets, and inventory valuation. In addition, estimates form the
basis for the reserves for sales allowances, accounts receivable and inventory. Various assumptions go into the determination of
these estimates. The process of determining significant estimates requires consideration of factors such as historical experience
and current and expected economic conditions.
6
d) Cash and Cash Equivalents -
The
Company considers all highly liquid investments and time deposits with original maturities of three months or less when purchased
to be cash equivalents. All cash and cash equivalents are maintained with nationally recognized financial institutions.
e) Allowance for Doubtful Accounts
-
An allowance for doubtful accounts is computed based on the Company's historical experience and management's
analysis of possible bad debts. Accounts receivable are shown net of an allowance for doubtful accounts of $5,837 as of January
31, 2012 and $9,329 as of July 31, 2011, respectively.
f) Inventories -
Inventories
are stated at the lower of cost or market on an average basis. Inventory reserves are recorded for damaged, obsolete, excess and
slow-moving inventory. Market value of inventory is estimated based on the impact of market trends, an evaluation of economic conditions
and the value of current orders relating to the future sales of this type of inventory. As of January 31, 2012 and July 31, 2011,
the value of the inventory reserve was $31,657 and $37,814, respectively.
g) Income Taxes -
The Company
accounts for income taxes pursuant to the FASB ASC Topic 740, "Accounting for Uncertainty in Income Taxes", ("Topic
740"). Topic 740 clarifies the accounting for uncertainty in income taxes recognized in the Company's financial statements
in accordance with generally accepted accounting principles. The calculation of the Company's tax provision involves the application
of complex tax rules and regulations within multiple jurisdictions. The Company's tax liabilities include estimates for all income-related
taxes that the Company believes are probable and that can be reasonably estimated. To the extent that the Company's estimates
are understated, additional charges to the provision for income taxes would be recorded in the period in which the Company determines
such understatement. If the Company's income tax estimates are overstated, income tax benefits will be recognized when realized.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment. Topic 740 prescribes a recognition threshold and measurement
attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
h) Revenue Recognition -
The
majority of the Company's product revenues are recognized upon shipment or delivery and acceptance of products by customers, when
pervasive evidence of a sales arrangement exists, the price is fixed or determinable, the title has transferred and collection
of resulting receivables is reasonably assured. For merchandise products, the Company recognizes revenue upon shipment of products,
when title is passed and the amount collectible can reasonably be determined. All amounts billed to a customer related to shipping
and handling are classified as revenue, while all costs incurred by the Company for shipping and handling are classified as selling
expenses.
i) Research and Development Costs
-
Research and development costs are expensed as incurred.
j
) Stock-Based Compensation -
The
Company adopted ASC Topic 718 "Share-Based Payment". As permitted, the Company elected to adopt disclosure-only provisions
of ASC 718 in accordance with generally accepted accounting principles. Under the provisions of Topic ASC 718, compensation expense
is recognized based on the fair value of options on the grant date.
k) Fair Value of Financial Instruments
- ASC Topic 820, "Fair Value Measurements", requires disclosure of the level within the fair value hierarchy
in which fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets
for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs
(Level 3). The Company's financial instruments consist of cash and cash equivalents, short-term trade receivables and payables
at January 31.
7
Fair Value of Financial Instruments
The following table presents the carrying
amounts and estimated fair values of the Company's financial instruments at:
January 31, 2012
July 31, 2011
Carrying
amount
Fair value
Carrying
amount
Fair value
Financial assets:
Cash and cash equivalents
225,546
225,546
524,512
524,512
Accounts receivable
182,587
182,587
139,853
139,853
Financial liabilities:
Accounts payable and accrued liabilities
162,997
162,997
94,676
94,676
Line of credit
0
0
290,000
290,000
Notes payable
85,000
82,943
115,000
112,500
The fair values of the financial instruments
shown in the above table represent the amounts that would be received when those assets are sold or that would be paid when those
liabilities are transferred in an orderly transaction between market participants at the measurement date. Those fair value measurements
maximize the use of observable inputs.
However, in situations where there is little,
if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company's
own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed
by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted
discount rates, available observable and unobservable inputs.
The Company uses the following methods
and assumptions in estimating the fair value disclosures for financial instruments:
Cash equivalents
The carrying amount reported in the balance
sheets of cash equivalents approximate fair value because of the relatively short time to maturity.
Accounts receivable
The carrying amount reported in the balance
sheets of accounts receivable approximate fair value because of the relatively short time to maturity.
Accounts payable and accrued liabilities
The carrying amount reported in the balance
sheets of accrued payable and accrued liabilities approximate fair value because of the relatively short time to maturity.
Line of credit
The carrying amount reported in the balance
sheets of due to related party approximate fair value because of the relatively short time to maturity.
Notes payable
The fair value of the Company's notes
payable are measured using quoted offer-side prices when quoted market prices are available. If quoted market prices are not available,
the fair value is determined by discounting the future cash flows of each instrument at rates that reflect rates currently observed
in publicly traded debt markets for debt of similar terms to companies with comparable credit risk. For long-term debt measurements,
where there are no rates currently observable in publicly traded debt markets of similar terms with comparable credit, the Company
uses market interest rates and adjusts that rate for all necessary risks, including its own credit risk.
8
Fair Value Hierarchy
The following table presents the placement
in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at :
Fair value measurements at
reporting date using
January 31,
2012
Quoted prices
in active
markets for
identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Notes payable
85,000
82,943
Fair value measurements at
reporting date using
July 31, 2011
Quoted prices
in active
markets for
identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Notes payable
115,000
112,500
l) Translation of Foreign Currency
-
The Company accounts for its foreign operations in accordance with ASC Topic 830, "Foreign Currency Translation".
For the branch, non-monetary balance sheet items and related income statements items are translated at historical exchange rates,
while monetary balance sheet items are translated at current exchange rates. Income statement items, other than monetary, are translated
at the weighted average exchange rate during the year. Deferred taxes are not provided on translation gains and losses where the
Company expects earnings of a foreign branch to be permanently reinvested.
m) Concentration -
Financial
instruments which potentially subject the Company to concentrations of credit risk are primarily accounts receivable. The Company
performs ongoing credit evaluations of its customers' financial condition. If the collection of the receivable becomes doubtful,
the Company establishes a reserve in an amount determined appropriate for the perceived risk. The Company maintains its cash accounts
at commercial banks. From time to time, cash balances maintained in such banks may exceed the insured amount by the Federal Deposit
Insurance Corporation (FDIC). As of January 31, 2012 and July 31, 2011, management does not believe they are exposed to any significant
risk on their cash balances. The Company's products are primarily sold to global medical device companies. These customers
can be significantly affected by changes in economic, competitive or other factors. The Company makes substantial sales to a relatively
few, large customers, where company is seeking to capture more business from other targeted medical device companies.
Two customers accounted for $152,000 (81%)
and $28,000 (15%) of receivables at January 31, 2012 while four customers accounted for $57,800 (39%), $40,579 (27%), $35,430 (24%)
and $23,559 (16%) as of July 31, 2011, respectively.
Two customers accounted for $216,600 (47%)
and $195,780 (43%) of revenue for the three months ended January 31, 2012 and one customer accounted for $1,015,800 (80%) of revenue
for the three months ended January 31 2011. Three customers accounted for $216,600 (36%), $202,530 (33%), and $91,921 (15%) of
the revenues for the six months ended January 31, 2012 and one customer accounted for $1,589,800 (72%) of the revenues for the
six months ended January 31, 2011 respectively.
Four vendors accounted for $20,000 (26%),
$19,584 (25%), $10,000 (13%), and $9,386 (12%) of accounts payable as of January 31, 2012 and two vendors accounted for $25,000
(53%) and $10,018 (21%) as of July 31, 2011, respectively.
9
One vendor accounted for $94,338 (78%)
of the purchases for the three months ended January 31, 2012, and one vendor accounted for $447,300 (98%) of the purchases for
the three months ended January 31, 2011. Three vendors accounted for $94,338 (56%), $39,000 (23%), and $20,000 (12%) of the purchases
for the six months ended January 31, 2012, and one vendor accounted for $837,203 (87%) of the purchases for the six months ended
January 31, 2011, respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
In October 2009, the FASB issued guidance
on multiple-deliverable arrangements to address how to separate deliverables and how to measure and allocate arrangement consideration.
This guidance requires vendors to develop the best estimate of selling price for each deliverable and allocate the arrangement
consideration using this selling price. This guidance also expands the disclosure requirements to include both quantitative and
qualitative information. This guidance is effective for fiscal years beginning after June 15, 2010. The Company does not expect
the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.
In January 2010, the FASB issued guidance
that expands the interim and annual disclosure requirements of fair value measurements, including the information about movement
of assets between level 1 and 2 of the three-tier fair value hierarchy established under its fair value measurement guidance. This
guidance also requires separate disclosure for each of purchases, sales, issuance, and settlements in the reconciliation for fair
value measurements using significant unobservable inputs, level 3. Except for the detailed disclosure in the level 3 reconciliation,
which is effective for the fiscal years beginning after December 15, 2010, all the other disclosures under this guidance are effective
for the fiscal years beginning after December 15, 2009. The Company does not expect the adoption to have a material impact on its
consolidated financial position, results of operations or cash flows.
In February 2010, the FASB issued ASU No.
2010-09, "Amendments to Certain Recognition and Disclosure Requirements," which addresses both the interaction of the
requirements of Topic 855, Subsequent Events, with the SEC's reporting requirements and the intended breadth of the reissuance
disclosures provision related to subsequent events. Specifically, the amendments state that SEC filers are no longer required to
disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The
standard was effective immediately upon issuance. The Company does not expect the adoption to have a material impact on its consolidated
financial position, results of operations or cash flows.
In April 2010,
the FASB issued ASU 2010-13 "Compensation-Stock Compensation (Topic 718) Effect of Denominating the Exercise Price of a Share-Based
Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades" (ASU 2010-13). Topic 718 is amended
to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial
portion of the entity's equity securities trades shall not be considered to contain a market, performance, or service condition.
Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments
in this standard are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December
15, 2010. The guidance should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings
for all outstanding awards as of the beginning of the fiscal year in which the amendments are initially applied.
The Company
does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.
In December
2010, the FASB issued ASU 2010-29, "Business Combinations (ASC Topic 805): Disclosure of Supplementary Pro Forma Information
for Business Combinations – a consensus of the FASB Emerging Issues Task Force". This ASU clarifies existing disclosure
requirements for public entities with business combinations that occur in the current reporting period. The ASU stipulates that
if an entity is presenting comparative financial statements, revenue and earnings of the combined entity should be disclosed as
though the business combinations that occurred during the current year had occurred as of the beginning of the comparative prior
annual reporting period. The ASU also expands the supplemental pro forma disclosures required by ASC Topic 805 to include a description
of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included
in the reported pro forma revenue and earnings. This guidance is effective prospectively for business combinations with acquisition
dates on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is
permitted.
The Company does not expect the adoption to have a material impact on its consolidated financial position, results
of operations or cash flows.
10
Management does not believe that any other
recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying
financial statements.
NOTE 4 – Liquidity and Shareholders'
Equity
Cash and cash equivalents were $225,546
and $524,512 at January 31, 2012 and July 31, 2011, respectively. Our working capital was $38,462 and $347,358 at January 31, 2012
and July 31, 2011, respectively.
Preferred Stock
The Company's Amended Articles of Incorporation
authorize the issuance of 50,000,000 shares of Preferred Stock, par value $0.001 per share, subject to any limitations prescribed
by law, without further vote or action by the stockholders, and to issue, from time to time, shares, of preferred stock in one
or more series. Each such series of Preferred Stock shall have such number of shares, designations, preferences, voting powers,
qualifications, and special or relative rights or privileges as shall be determined by the Company's board of directors, which
may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.
Series A Convertible Preferred Stock
The Company has authorized a total of 9,400,000
shares of Series A Convertible Preferred Stock (the "Series A").  The Series A is convertible at any time
into shares of the Company's common stock at the conversion rate of one share of Common Stock per each share of Series A
converted.  The Series A is treated on an "as converted" basis for both voting and liquidation rights. There
are currently 9,400,000 shares of Series A issued and outstanding. In June 2011, an amendment was filed with the Secretary of State
of Nevada whereby the conversion price of Series A would remain unchanged in event of stock split, stock dividend on the common
stock, a reclassification of the common stock or distribution to holders of common stock. If the Company reports net income in
two of the following four years following the Exchange, the Series A shall be convertible into Common Stock at the conversion rate
of two shares of Common Stock per each share of Series A converted.
Series B Convertible Preferred Stock
The Company has authorized a total of 2,600,000
shares of 6% Series B Convertible, Redeemable Preferred Stock (the "Series B"). The Series B accrues annual dividends
at the rate of 6% per year in shares of Common Stock at the dividend conversion rate of $1.00.  The Series B, together
with any unpaid dividends, is convertible at any time into shares of the Company's common stock at the conversion rate of
one share of Common Stock per each share of Series B converted.  Following the second anniversary of the Exchange, the
Series B, together with any unpaid dividends, shall be convertible into Common Stock at the conversion price of forty cents ($0.40)
or seventy percent (70%) of the daily volume weighted average price of the Common Stock for the twenty trading days immediately
prior to the conversion.  The Series B is redeemable by the Company, at any time prior to December 31, 2015, in cash
at the redemption rate of $1.00 per share of Series B plus any accrued and unpaid dividends.  On December 31, 2015, all
outstanding shares of Series B shall be redeemed by the Company at a per share redemption price equal to $1.00 per share of Series
B plus an amount of Common Stock equal to the amount of the accrued and unpaid dividend thereon.  The Series B has a
liquidation preference of $2,600,000 and ranks prior to the Series A and the Common Stock.  The Series B votes on an
"as converted" basis. On October 19, 2011, the Company effectuated a reverse 1 for 8 stock split to reduce the authorized
shares to 325,000 shares of Preferred Stock B, $0.008 par value per share.
There are presently 9.4 million shares
of Series A Preferred Stock and 262,500 shares of Series B Preferred Stock outstanding.
11
Warrants
As of January 31, 2012, there were warrants
outstanding to purchase 62,500 shares of Common Stock at the exercise price of $1.60.
Options
As of the Exchange date, there were fully
vested options outstanding to purchase 5,500,000 shares of Common Stock and 2,350,000 shares of Series A Preferred Stock, both
at a purchase price of $0.01 per share as well as 7,050,000 shares of Series A Preferred Stock as part of the Exchange.  On
April 27, 2010 the Board granted a non cash bonus to Mr. Kenneth Cheng of $55,000 upon receipt of which, all 5,500,000 options
for Common Stock were exercised. On July 20, 2011, Mr. Kenneth Cheng exercised all 2,350,000 options for Series A Preferred Stock.
On June 1, 2011, all 7,050,000 shares for Series A Preferred Stock were issued to Mr. John Hwang as part of the Exchange agreement.
As of January 31, 2012 and July 31, 2011,
there were no options issued or outstanding.
2010 Equity Incentive Plan
On January 15, 2010, our Board and Stockholders
approved and adopted the 2010 Equity Incentive Plan (the "2010 Plan"). A copy of the 2010 Plan was attached as Exhibit
10.4 to Form 8-K filed with the Securities and Exchange Commission on January 22, 2010.
The 2010 Plan is intended to promote the
interests of the Company by attracting and retaining exceptional employees, consultants, directors, officers and independent contractors
(collectively referred to as the "Participants"), and enabling such Participants to participate in the long-term growth
and financial success of the Company. Under the 2010 Plan, the Company may grant stock options, which are intended to qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code of 1986, as amended (the "Incentive
Stock Options"), non-qualified stock options (the "Nonqualified Stock Options"), stock appreciation rights ("SARs")
and restricted stock awards (the "Restricted Stock Awards"), which are restricted shares of Common Stock (the Incentive
Stock Options, the Nonqualified Stock Options, the SARs and the Restricted Stock Awards are collectively referred to as "Incentive
Awards"). Incentive Awards may be granted pursuant to the 2010 Plan for 10 years from the Effective Date.
From time to time, the Company may issue
Incentive Awards pursuant to the 2010 Plan.  Each of the awards will be evidenced by and issued under a written agreement.
In accordance with the rules of the plan, the exercise price of options granted shall be not less than 110% of the average of the
closing price for the 30 days preceding the grant date.
The Board reserved a total of 284,722 shares
of our Common Stock for issuance under the 2010 Plan. If an incentive award granted under the 2010 Plan expires, terminates, is
unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to
such award and the surrendered shares will become available for further awards under the Plan.
The number of shares subject to the 2010
Plan, any number of shares subject to any numerical limit in the 2010 Plan, and the number of shares and terms of any Incentive
Award may be adjusted in the event of any change in our outstanding Common Stock by reason of any stock dividend, spin-off, stock
split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange
of shares, or similar transaction.
On September 1, 2010, 105,000 options were
granted to eight employees at an exercise price of $0.20 per share. Using the Black-Scholes option pricing model with the following
assumptions: risk-free interest rate of 1.79%; volatility of 40%; expected life of 10 years; and, all option grants without payment
of dividends, the Company recognized a non-cash stock compensation charge of $2,555 for the three months ended January 31, 2012
and $5,414 for the six months ended January 31, 2012. At January 31, 2012, 179,722 options remain available for future grant under
the Plan.
12
For the year ended July 31, 2010, based
on the fair value of Common Stock and Series A Preferred Stock options granted during the year, the Company recognized stock option
expense of $41,861. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions: risk-free interest rate of 1.79%; volatility of 70%; expected life of 4 years; and, all option
grants without payment of dividends.
As of January 31, 2012, no options were issued or outstanding
under the terms of the 2010 Plan.
Common Stock
On April 30, 2010, the Company Amended
and Restated its Articles of Incorporation to authorize the issuance of up to 1,000,000,000 shares of common stock, $0.001 par
value per share.
On September 8, 2011, FINRA approved a
one-for-eight reverse split of the Company's common shares.
On October 19, 2011, the Company effectuated
a one-for-eight reverse split of its shares, effective September 8, 2011. The reverse decreased the total authorized, issued and
outstanding common shares and Series B Preferred Convertible Stock by the same one-for-eight ratio as well as amended the par value
per share from $0.001 to $0.008. The total authorized common shares decreased from 1,000,000,000 to 125,000,000.
After the reverse split, there were 9,790,760
and 6,572,181 shares outstanding as of January 31, 2012 and July 31, 2011, respectively.
NOTE 5 – Related Party Transactions and Gain on Settlement
Shareholder
The Company did not have notes payable
to related parties as of January 31, 2012 and July 31, 2011, respectively.
Litigation settlement
The Company had an ongoing litigation over
accounts receivable and payable with Ambeon Corporation, a related party by virtue of common ownership. The dispute started in
2004 and was settled in favor of the Company under the Shih Lin District Court of Taiwan on August 20, 2008. The Company agreed
to pay a sum of $560,000 and the remaining disputed payable balances were decreased in favor of the Company, and settlement income
of $843,572 was realized in year 2008. As of January 31, 2012, the Company has paid $475,000 towards the settlement. The remaining
minimum payments due under the settlement are as follows:
Year Ending July 31:
2012
30,000
2013
55,000
Total
$
85,000
NOTE 6 – Property and Equipment
Property and equipment are stated at cost.
Depreciation is calculated using the straight-line method over the following estimated useful lives of the assets: furniture and
fixtures –seven years; machinery and equipment –five years; software – five years; leasehold improvements –
the life of the current facility lease. Major additions and betterments are capitalized and repairs and maintenance are charged
to operations in the period incurred. Depreciation expense for the three months ended January 31, 2012 and 2011 was $1,602 and
$1,102, respectively. Depreciation expense for the six months ended January 31, 2012 and 2011 was $3,394 and $2,205, respectively.
January 31, 2012
July 31, 2011
Furniture and fixture
$
27,634
$
27,634
Machinery and equipment
24,157
24,157
Software
359,417
359,417
Leasehold Improvements
5,985
5,985
417,193
417,193
Accumulated depreciation
(394,946
)
(391,552
)
Property and equipment, net
$
22,247
$
25,641
13
NOTE 7 – Revolving Line of Credit
On May 9, 2011, the Company completed negotiations
to renew and expand its secured line of bank credit for up to one million three hundred thousand dollars and extend the line by
one year to July 2012. Advances under the credit line will be secured with substantially all of the Company's assets, be
subject to interest at 1% above the Wall Street Journal prime rate index, and be subject to the following restrictive covenants:
(i) the current ratio shall not be less than 1.2 times; (ii) the debt to tangible net worth ratio shall not exceed 2.5 times; and
(iii) the quarterly EBITDA shall not be less than $30,000 on a rolling four quarter basis. At July 31, 2011, the company was in
violation of the restrictive covenant pertaining to a minimum quarterly EBITDA of not less than $30,000. The lender issued forbearance
for the violation of the restrictive covenant. The credit line will expire on July 14, 2012. At July 31, 2011, the Company had
an outstanding balance of $290,000. At January 31, 2012, the Company did not have any balance outstanding under this credit line.
The Company incurred interest expense of
$0 and $6,908 during the three months ended January 31, 2012, and 2011, respectively. The Company incurred interest expense of
$3,084 and $12,519 during the six months ended January 31, 2012, and 2011, respectively.
NOTE 8 - Notes Payable
Notes payable, which are unsecured, consist
of the following as of January 31, 2012 and July 31, 2011:
Notes Payable Consist of the Following at:
January 31, 2012
July 31, 2011
Note payable to Ambeon Corporation, a related party by virtue of common ownership, bearing interest at 5% per annum
$
85,000
$
115,000
Total notes payable
85,000
115,000
Less current portion
Due to third party
60,000
60,000
60,000
60,000
Long-term notes payable
$
25,000
$
55,000
NOTE 9 – Income Taxes
The consolidated income tax expense for
the years ended July 31, 2011 and 2010 was determined based upon estimates of the Company's consolidated effective income
tax rates for the years ending July 31, 2011 and 2010, respectively. The difference between the consolidated effective income tax
rate and the U.S. federal statutory rate is primarily attributable to state income taxes, and the effect of certain permanent differences.
FASB Topic 740, Accounting for Uncertainty
in Income Taxes, prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. Generally accepted accounting principles require that the Company
recognizes in the financial statements a liability for tax uncertainty if it is more likely than not that the position will be
sustained on an audit, based on the technical merits of the position. They also provide guidance on de-recognition, classification,
interest and penalties, accounting in interim periods and disclosure. The Company has not recorded any liability for unrecognized
tax benefits as of July 31, 2011. There have been no material changes in unrecognized tax benefits at January 31, 2012.
The Company's tax returns are subject
to examination by federal, state and foreign taxing authorities. As of July 31, 2011, the statute of limitations for examining
the Company's federal income tax returns has not expired for the years ended July 31, 2006 through 2010. As of July 31, 2011,
the statutes of limitation for tax examinations in the state of California have not expired for tax returns filed for the years
ended July 31, 2006 through 2010.  As of July 31, 2011, the statute of limitation for tax examinations in Taiwan have not
expired for tax returns filed for the years ended July 31, 2006 through 2010.
14
We did not make any provision for income
taxes in the three months ended January 31, 2012. Our effective tax rate takes into consideration federal and state minimum tax
rates, foreign taxes and net operating loss ("NOL") carry-forwards.
The Company has accumulated NOLs of $1.45
million, which, if unutilized, will begin to expire in 2018. Future tax benefits, which may arise as a result of these losses,
have not been recognized in these financial statements, and have been offset by a valuation allowance since there is no assurance
that we will be able to utilize these NOLs.
NOTE 10 – Commitments and Contingencies
The Company leases its office and warehouse.
The Company signed a new lease for its office and warehouse effective March 1, 2011 at a new location. The maturity date for the
lease is May 2016. The minimum rental commitments under the lease are as follows:
Year Ending July 31:
2012
53,696
2013
55,133
2014
56,570
2015
58,007
2016
49,537
Total
$
272,943
The rent expense for the three months ended
January 31, 2012 and 2011 was $14,010 and $19,233, respectively. The rent expense for the six months ended January 31, 2012 and
2011 was $29,204 and $34,833, respectively.
NOTE 11 – Subsequent Events
Management has evaluated all events that occurred after the
balance sheet date through the date these financial statements were issued to determine if they must be reported. Management has
determined that there were no reportable subsequent events to be disclosed.
15
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements
Page
Condensed Consolidated Balance Sheets as of April 30, 2012 (Unaudited) and July 31, 2011 (Audited)
2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended April 30, 2012 and 2011 (Unaudited)
3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2012 and 2011 (Unaudited)
4
Notes to Condensed Consolidated Financial Statements for the Three and Nine Months Ended April 30, 2012 and 2011 (Unaudited)
5
AMBICOM HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
April 30,
July 31,
2012
2011
(Unaudited)
(Audited)
ASSETS
Current assets:
Cash and cash equivalents
$
131,593
$
524,512
Accounts receivable, net of allowance for doubtful accounts of $1,237 and $9,329 as of April 30, 2012, and July 31, 2011, respectively
160,490
139,853
Inventory, net of reserve balances of $75,213 and $37,814 as of April 30, 2012, and July 31, 2011, respectively
36,138
113,770
Prepaid expenses and other current assets
78,052
26,063
Total current assets
406,273
804,198
Property and equipment, net
20,751
25,641
Deposit
20,695
20,695
Total assets
$
447,719
$
850,534
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$
83,142
$
47,094
Accounts payable - other
102,078
47,582
Deferred revenue
84,982
12,164
Line of credit payable
-
290,000
Notes payable - current portion
60,000
60,000
Total current liabilities
330,202
456,840
Notes payable, net of current
10,000
55,000
Total liabilities
340,202
511,840
Commitment and contingency (Note 10)
Stockholders' equity:
Common stock, $0.008 par value; 125,000,000 shares authorized; 9,790,760 and 6,572,181 shares issued and outstanding at April 30, 2012 and July 31, 2011, respectively
78,324
52,577
Preferred stock, Series A, $0.001 per share; 9,400,000 shares authorized; 7,050,000 and 9,400,000 shares issued and outstanding at April 30, 2012 and July 31, 2011, respectively
7,050
9,400
Preferred stock, Series B, $0.008 per share 325,000 shares authorized; 262,500 and 325,000 shares issued and outstanding at April 30, 2012 and July 31, 2011, respectively
2,100
2,600
Additional paid in capital
11,420,082
11,160,697
Accumulated deficit
(11,400,039
)
(10,886,580
)
Total stockholders' equity
107,517
338,694
$
447,719
$
850,534
The accompanying notes are an integral part of these consolidated
financial statements.
2
AMBICOM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended April 30,
Nine Months Ended April 30,
2012
2011
2012
2011
Sales
$
458,040
$
781,780
$
1,065,801
$
2,984,941
Cost of sales
161,586
396,000
425,295
1,400,297
Gross profits
296,454
385,780
640,506
1,584,644
Operating Expenses
Depreciation
1,496
1,709
4,891
3,913
Professional fees
78,170
70,095
406,743
167,787
Selling and general expenses
197,919
356,916
741,823
1,135,630
Total operating expenses
277,585
428,720
1,153,457
1,307,330
Income (loss) from operations
18,869
(42,940
)
(512,951
)
277,314
Other income (expense)
Other income and expense, net
-
(2,154
)
2,696
(48,578
)
Interest expense, net
1
(7,823
)
(3,083
)
(20,342
)
Net other income (expense)
1
(9,977
)
(387
)
(68,920
)
Total income (loss) before income taxes
18,870
(52,917
)
(513,338
)
208,394
Income taxes
-
-
-
-
Net income (loss)
$
18,870
$
(52,917
)
$
(513,338
)
$
208,394
Net income (loss) per share  - basic
$
0.002
$
(0.001
)
$
(0.073
)
$
0.004
Net income (loss) per share  - diluted
$
0.001
$
(0.001
)
$
(0.031
)
$
0.004
Weighted average shares outstanding — basic
8,425,682
51,956,015
7,050,365
51,834,670
Weighted average shares outstanding — diluted
18,088,170
54,556,015
16,712,853
54,434,670
The accompanying notes are an integral
part of these consolidated financial statements.
3
AMBICOM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
NINE MONTHS ENDED APRIL 30,
2012
2011
(Unaudited)
Cash flows from operating activities:
Net income (loss)
$
(513,338
)
$
208,394
Net income items not affecting cash:
Depreciation and amortization
4,891
3,913
Stock-based compensation
7,055
20,570
Increase (reduction) in bad debt reserve
471
(19,995
)
Increase (decrease) in reserve for inventory loss
45,974
(13,136
)
Decrease / (Increase) in operating assets:
Accounts receivable
(21,108
)
166,185
Inventory
31,658
86,278
Other receivables
-
11,251
Prepaid expense
(51,984
)
(175,807
)
Deposit
-
(16,558
)
Increase / (Decrease) in operating liabilities:
Accounts payable - trade
35,561
(14,199
)
Accrued payable - other
54,984
(33,046
)
Unearned revenue
72,818
71,970
Net cash provided by (used in) operating activities
(333,018
)
295,820
Cash flows from investing activities:
Payment of notes to related parties
-
(30,000
)
Capital expenditures
-
(18,962
)
Net cash used in investing activities
-
(48,962
)
Cash flows from financing activities:
Net proceeds from (Net payments on) line of credit
(290,000
)
300,000
Payments on notes payable
(45,000
)
(75,000
)
Issuance of stock to outside firms for services
275,100
-
Net cash provided by (used in) financing activities
(59,900
)
225,000
Net increase (decrease) in cash and cash equivalents
(392,919
)
471,858
Cash and cash equivalents, beginning of year
524,512
165,848
Cash and cash equivalents, end of quarter
$
131,593
$
637,706
Supplemental information:
Income taxes paid
$
-
$
-
Interest paid
$
3,083
$
20,342
The accompanying notes are an integral part of these consolidated
financial statements.
4
AMBICOM HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED APRIL
30, 2012 AND 2011
(UNAUDITED)
NOTE 1 – Organization and Principal Activities
AmbiCom Holdings, Inc. ("AmbiCom
Holdings" or the 'Company") was incorporated as Med Control, Inc. ("Med Control") under the laws
of the State of Nevada on July 1, 2008. Med Control was a development stage enterprise until January 15, 2010. All of Med Control's
activities prior to January 15, 2010 related to its organization, initial funding and share issuances. On January 15, 2010, Med
Control Inc. changed its name to AmbiCom Holdings, Inc.
On January 15, 2010, Med Control, Inc.
(the "Registrant") authorized its Articles of Incorporation (the "Amendment") to change its name to AmbiCom
Holdings, Inc., to increase the number of its authorized shares of capital stock from 75,000,000 to 1,050,000,000 shares of which
1,000,000,000 were designated common stock and 50,000,000 were designated preferred stock, par value $0.001 per share (the "Preferred
Stock") and to effect a forward-split such that 131.2335958 shares of Common Stock were issued for every 1 share of Common
Stock issued and outstanding immediately prior to filing of the amendment (the "Forward Split").
On January 15, 2010, the Company acquired
AmbiCom Acquisition Corp. a privately owned Nevada corporation ("AmbiCom"), pursuant to an Agreement and Plan of Share
Exchange (the "Exchange"). AmbiCom was organized under the laws of the State of Nevada on July 29, 2008. AmbiCom is
a holding company whose operating company, AmbiCom, Inc., is a designer and developer of wireless products focusing on the wireless
medical industry. AmbiCom's wireless modules and devices are based on its innovative application software and Wi-Fi or Bluetooth
technologies.
Pursuant to the terms of the Exchange,
the Company acquired AmbiCom from the AmbiCom equity holders in exchange for an aggregate of 20,000,000 newly issued shares of
Common Stock, 2,600,000 shares of Series B Preferred Stock, an option to purchase 5,500,000 shares of Common Stock and 2,350,000
shares of Series A Preferred Stock at the purchase price of $.01 per share, and warrants to purchase 500,000 shares of Common Stock
at the exercise price of $0.50 per share (collectively, the "Exchange Shares"). As a result of the Exchange, the AmbiCom
equity holders surrendered all of their issued and outstanding capital stock of AmbiCom in consideration for the Exchange Shares
and AmbiCom became a wholly-owned subsidiary of the Company.
Simultaneously upon the Closing, the Company
closed an offering (the "Offering") of its Common Stock at a price of $0.40 per share for an aggregate of 1,250,000
shares of Common Stock for aggregate offering price of $500,000.
In addition, contemporaneously with the
Closing, the Company and our former principal stockholder, Ms. Kato, split-off its wholly owned subsidiary, MCI Acquisition Corp.,
a newly-formed Nevada corporation ("MCAC"), whereby the Company assigned all of its previous operating assets to MCAC
in consideration for the assumption of all of the Company's liabilities to Ms. Kato, who is currently the principal shareholder
of MCI and the retirement and cancellation of Ms. Kato's 6,000,000 shares of Common Stock pursuant to the terms and conditions
of a split-off agreement by and among the Company, Ms. Kato, and MCAC (the "Split-Off Agreement").
Following the issuance of the Exchange
Shares and the retirement of Ms. Kato's shares pursuant to the Split-Off Agreement, the former stockholders of AmbiCom and/or
their designees now beneficially own approximately fifty-five percent (55%) of the total outstanding shares of Common Stock, and
after giving effect to the conversion of the Series B in accordance with their respective terms (and the satisfaction of certain
conditions to the conversion of such shares) seventy-six percent (76%) of the total outstanding shares of Common Stock on a fully-diluted
basis.
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Details of the Company's subsidiaries
as of April 30, 2012 are as follows:
Name
Place and Date of
Establishment/
Incorporation
Relationships
Principal Activities
E-Care USA, Inc.
Nevada
March 15, 2011
Wholly-owned subsidiary of AmbiCom Holdings, Inc.
Designer and developer of wireless home medical devices
AmbiCom Technology, Inc.
Nevada
*
May 17, 2010
*
Wholly-owned subsidiary of AmbiCom Holdings, Inc.
Planned acquisition company
*
AmbiCom
Technology, Inc. was dissolved on June 1, 2012.
Inter-company accounts and transactions
have been eliminated in consolidation.
NOTE 2 – Basis of Presentation
The accompanying consolidated financial
statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC")
and accounting principles generally accepted in the United States for financial information. The preparation of financial statements
in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Significant estimates
made in preparing the financial statements include revenue recognition and costs of revenue, inventory valuations, long-lived and
intangible asset valuations and loss contingencies. In the opinion of management, the financial statements include all adjustments
(which are of a normal and recurring nature) necessary for the fair presentation of the results of the periods presented.
For financial accounting purposes, the
acquisition was a reverse acquisition of the Company by AmbiCom, under the purchase method of accounting, and was treated as a
recapitalization with AmbiCom as the acquirer.  Upon consummation of the Exchange, the Company adopted the business plan
of AmbiCom. Accordingly, the consolidated statements of operations include the results of operations of AmbiCom and its subsidiaries
from August 1, 2011 and 2010, and the results of operations of Med Control from the acquisition date through April 30, 2012.
NOTE 3 – Summary of Significant Accounting Policies
The summary of significant accounting policies
is presented to assist in understanding the Company's financial statements. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the preparation of the financial statements.
a) Description of Business -
The
Company is a leading designer and developer of wireless technologies which emphasize wireless medical and other wireless products.
b) Segment Information
-
The
Company follows ASC Topic 280, "Disclosures about Segments of an Enterprise and Related Information." Topic 280 requires
that a company report financial and descriptive information about its reportable operating segments. Operating segments are components
of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in assessing performance. The Company's chief operating decision maker currently
evaluates the Company's operations from a number of different operational perspectives including but not limited to a client
by client basis. The Company derives all significant revenues from a single reportable operating segment of business. Accordingly,
the Company does not report more than one segment; nevertheless, management evaluates, at least annually, whether the Company continues
to have one single reportable segment.
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c) Use of Estimates -
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results may differ from those estimates, and the differences may be material to the financial statements. Estimates
are used primarily in determining the depreciable lives of fixed assets, and inventory valuation. In addition, estimates form the
basis for the reserves for sales allowances, accounts receivable and inventory. Various assumptions go into the determination of
these estimates. The process of determining significant estimates requires consideration of factors such as historical experience
and current and expected economic conditions.
d) Cash and Cash Equivalents -
The
Company considers all highly liquid investments and time deposits with original maturities of three months or less when purchased
to be cash equivalents. All cash and cash equivalents are maintained with nationally recognized financial institutions.
e) Allowance for Doubtful Accounts
-
An allowance for doubtful accounts is computed based on the Company's historical experience and management's
analysis of possible bad debts. Accounts receivable are shown net of an allowance for doubtful accounts of $1,237 as of April 30,
2012 and $9,329 as of July 31, 2011, respectively.
f) Inventories -
Inventories
are stated at the lower of cost or market on an average basis. Inventory reserves are recorded for damaged, obsolete, excess and
slow-moving inventory. Market value of inventory is estimated based on the impact of market trends, an evaluation of economic conditions
and the value of current orders relating to the future sales of this type of inventory. As of April 30, 2012 and July 31, 2011,
the value of the inventory reserve was $75,213 and $37,814, respectively.
g) Income Taxes -
The Company
accounts for income taxes pursuant to the FASB ASC Topic 740, "Accounting for Uncertainty in Income Taxes", ("Topic
740"). Topic 740 clarifies the accounting for uncertainty in income taxes recognized in the Company's financial statements
in accordance with generally accepted accounting principles. The calculation of the Company's tax provision involves the application
of complex tax rules and regulations within multiple jurisdictions. The Company's tax liabilities include estimates for all income-related
taxes that the Company believes are probable and that can be reasonably estimated. To the extent that the Company's estimates
are understated, additional charges to the provision for income taxes would be recorded in the period in which the Company determines
such understatement. If the Company's income tax estimates are overstated, income tax benefits will be recognized when realized.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment. Topic 740 prescribes a recognition threshold and measurement
attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
h) Revenue Recognition -
The
majority of the Company's product revenues are recognized upon shipment or delivery and acceptance of products by customers, when
pervasive evidence of a sales arrangement exists, the price is fixed or determinable, the title has transferred and collection
of resulting receivables is reasonably assured. For merchandise products, the Company recognizes revenue upon shipment of products,
when title is passed and the amount collectible can reasonably be determined. All amounts billed to a customer related to shipping
and handling are classified as revenue, while all costs incurred by the Company for shipping and handling are classified as selling
expenses.
i) Research and Development Costs
-
Research and development costs are expensed as incurred.
j
) Stock-Based Compensation -
The
Company adopted ASC Topic 718 "Share-Based Payment". As permitted, the Company elected to adopt disclosure-only provisions
of ASC 718 in accordance with generally accepted accounting principles. Under the provisions of Topic ASC 718, compensation expense
is recognized based on the fair value of options on the grant date.
k) Fair Value of Financial Instruments
- ASC Topic 820, "Fair Value Measurements", requires disclosure of the level within the fair value hierarchy
in which fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets
for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs
(Level 3). The Company's financial instruments consist of cash and cash equivalents, short-term trade receivables and payables
at April 30.
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Fair Value of Financial Instruments
The following table presents the carrying
amounts and estimated fair values of the Company's financial instruments at:
April 30, 2012
July 31, 2011
Carrying
amount
Fair value
Carrying
amount
Fair value
Financial assets:
Cash and cash equivalents
131,593
131,593
524,512
524,512
Accounts receivable
160,490
160,490
139,853
139,853
Financial liabilities:
Accounts payable and accrued liabilities
185,220
185,220
94,676
94,676
Line of credit
0
0
290,000
290,000
Notes payable
70,000
68,562
115,000
113,041
The fair values of the financial instruments
shown in the above table represent the amounts that would be received when those assets are sold or that would be paid when those
liabilities are transferred in an orderly transaction between market participants at the measurement date. Those fair value measurements
maximize the use of observable inputs.
However, in situations where there is
little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company's
own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are
developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately
risk-adjusted discount rates, available observable and unobservable inputs.
The Company uses the following methods
and assumptions in estimating the fair value disclosures for financial instruments:
Cash equivalents
The carrying amount reported in the balance
sheets of cash equivalents approximate fair value because of the relatively short time to maturity.
Accounts receivable
The carrying amount reported in the balance
sheets of accounts receivable approximate fair value because of the relatively short time to maturity.
Accounts payable and accrued liabilities
The carrying amount reported in the balance
sheets of accrued payable and accrued liabilities approximate fair value because of the relatively short time to maturity.
Line of credit
The carrying amount reported in the balance
sheets of due to related party approximate fair value because of the relatively short time to maturity.
Notes payable
The fair value of the Company's notes
payable are measured using quoted offer-side prices when quoted market prices are available. If quoted market prices are not available,
the fair value is determined by discounting the future cash flows of each instrument at rates that reflect rates currently observed
in publicly traded debt markets for debt of similar terms to companies with comparable credit risk. For long-term debt measurements,
where there are no rates currently observable in publicly traded debt markets of similar terms with comparable credit, the Company
uses market interest rates and adjusts that rate for all necessary risks, including its own credit risk.
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Fair Value Hierarchy
The following table presents the placement
in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at:
Fair value measurements at
reporting date using
April 30, 2012
Quoted prices
in active
markets for
identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Notes payable
70,000
68,562
Fair value measurements at
reporting date using
July 31, 2011
Quoted prices
in active
markets for
identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Notes payable
115,000
113,041
l) Translation of Foreign Currency
-
The Company accounts for its foreign operations in accordance with ASC Topic 830, "Foreign Currency Translation".
For the branch, non-monetary balance sheet items and related income statements items are translated at historical exchange rates,
while monetary balance sheet items are translated at current exchange rates. Income statement items, other than monetary, are translated
at the weighted average exchange rate during the year. Deferred taxes are not provided on translation gains and losses where the
Company expects earnings of a foreign branch to be permanently reinvested.
m) Concentration -
Financial
instruments which potentially subject the Company to concentrations of credit risk are primarily accounts receivable. The Company
performs ongoing credit evaluations of its customers' financial condition. If the collection of the receivable becomes doubtful,
the Company establishes a reserve in an amount determined appropriate for the perceived risk. The Company maintains its cash accounts
at commercial banks. From time to time, cash balances maintained in such banks may exceed the insured amount by the Federal Deposit
Insurance Corporation (FDIC). As of April 30, 2012 and July 31, 2011, management does not believe they are exposed to any significant
risk on their cash balances. The Company's products are primarily sold to global medical device companies. These customers
can be significantly affected by changes in economic, competitive or other factors. The Company makes substantial sales to a relatively
few, large customers, where company is seeking to capture more business from other targeted medical device companies.
One customer accounted for $155,628 (96%)
of receivables at April 30, 2012 while four customers accounted for $57,800 (39%), $40,579 (27%), $35,430 (24%) and $23,559 (16%)
as of July 31, 2011, respectively.
One customer accounted for $368,128 (80%)
of revenue for the three months ended April 30, 2012 and two customers accounted for $275,000 (35%) and $201,600 (26%) of revenue
for the three months ended April 30, 2011. Three customers accounted for $460,049 (43%), $247,000 (23%), and $202,530 (19%) of
the revenues for the nine months ended April 30, 2012 and one customer accounted for $1,791,400 (60%) of the revenues for the nine
months ended April 30, 2011, respectively.
Two vendors accounted for $52,480 (63%)
and $16,685 (20%) of accounts payable as of April 30, 2012 and two vendors accounted for $25,000 (53%) and $10,018 (21%) as of
July 31, 2011, respectively.
Four vendors accounted for $78,600 (34%),
$76,772 (33%), $49,735 (21%), and $27,180 (12%) of the purchases for the three months ended April 30, 2012, and one vendor accounted
for $283,950 (95%) of the purchases for the three months ended April 30, 2011. Four vendors accounted for $121,518 (30%), $78,600
(20%), $76,772 (19%) and $69,735 (17%) of the purchases for the nine months ended April 30, 2012, and one vendor accounted for
$1,121,153 (89%) of the purchases for the nine months ended April 30, 2011, respectively.
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RECENT ACCOUNTING PRONOUNCEMENTS
In October 2009, the FASB issued guidance
on multiple-deliverable arrangements to address how to separate deliverables and how to measure and allocate arrangement consideration.
This guidance requires vendors to develop the best estimate of selling price for each deliverable and allocate the arrangement
consideration using this selling price. This guidance also expands the disclosure requirements to include both quantitative and
qualitative information. This guidance is effective for fiscal years beginning after June 15, 2010. The Company does not expect
the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.
In January 2010, the FASB issued guidance
that expands the interim and annual disclosure requirements of fair value measurements, including the information about movement
of assets between level 1 and 2 of the three-tier fair value hierarchy established under its fair value measurement guidance. This
guidance also requires separate disclosure for each of purchases, sales, issuance, and settlements in the reconciliation for fair
value measurements using significant unobservable inputs, level 3. Except for the detailed disclosure in the level 3 reconciliation,
which is effective for the fiscal years beginning after December 15, 2010, all the other disclosures under this guidance are effective
for the fiscal years beginning after December 15, 2009. The Company does not expect the adoption to have a material impact on its
consolidated financial position, results of operations or cash flows.
In February 2010, the FASB issued ASU No.
2010-09, "Amendments to Certain Recognition and Disclosure Requirements," which addresses both the interaction of the
requirements of Topic 855, Subsequent Events, with the SEC's reporting requirements and the intended breadth of the reissuance
disclosures provision related to subsequent events. Specifically, the amendments state that SEC filers are no longer required to
disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The
standard was effective immediately upon issuance. The Company does not expect the adoption to have a material impact on its consolidated
financial position, results of operations or cash flows.
In April 2010,
the FASB issued ASU 2010-13 "Compensation-Stock Compensation (Topic 718) Effect of Denominating the Exercise Price of a Share-Based
Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades" (ASU 2010-13). Topic 718 is amended
to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial
portion of the entity's equity securities trades shall not be considered to contain a market, performance, or service condition.
Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments
in this standard are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December
15, 2010. The guidance should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings
for all outstanding awards as of the beginning of the fiscal year in which the amendments are initially applied.
The Company
does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.
In December
2010, the FASB issued ASU 2010-29, "Business Combinations (ASC Topic 805): Disclosure of Supplementary Pro Forma Information
for Business Combinations – a consensus of the FASB Emerging Issues Task Force". This ASU clarifies existing disclosure
requirements for public entities with business combinations that occur in the current reporting period. The ASU stipulates that
if an entity is presenting comparative financial statements, revenue and earnings of the combined entity should be disclosed as
though the business combinations that occurred during the current year had occurred as of the beginning of the comparative prior
annual reporting period. The ASU also expands the supplemental pro forma disclosures required by ASC Topic 805 to include a description
of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included
in the reported pro forma revenue and earnings. This guidance is effective prospectively for business combinations with acquisition
dates on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is
permitted.
The Company does not expect the adoption to have a material impact on its consolidated financial position, results
of operations or cash flows.
Management does not believe that any other
recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying
financial statements.
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