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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>FORM S-1</B></FONT></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>REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>ARMADA
WATER ASSETS, INC.</B></FONT></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">(Exact name of registrant as specified
in its charter)</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Nevada</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">(State or other jurisdiction of incorporation
or organization)</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">4941</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">(Primary Standard Industrial Classification
Code Number)</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">46-1255999</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">(I.R.S. Employer Identification Number)</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">1716 E. Lincoln Avenue</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Fort Collins, CO 80524</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">970-567-1414</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">(Address, including zip code, and telephone
number, including area code, of registrant&rsquo;s principal executive offices)</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">Robert L. B. Diener, Esq.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Law Offices of Robert Diener</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">56 Laenani Street</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Haiku, HI 96708</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(310) 396-1691</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">From time to time following the effective
date of this registration statement</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">(Approximate date of commencement of proposed
sale to the public)</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: 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 check the following box: </FONT><FONT STYLE="font: 10pt 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, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. </FONT><FONT STYLE="font: 10pt 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. </FONT><FONT STYLE="font: 10pt 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. </FONT><FONT STYLE="font: 10pt 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. 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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">Large
accelerated filer </FONT><FONT STYLE="font: 10pt Wingdings">&uml;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">
Accelerated filer </FONT><FONT STYLE="font: 10pt Wingdings">&uml;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">
Non-accelerated filer (Do not check if a smaller reporting company) </FONT><FONT STYLE="font: 10pt Wingdings">&uml;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">
Smaller reporting company </FONT><FONT STYLE="font: 10pt Wingdings">x</FONT></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>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="text-align: center">Title&nbsp;of&nbsp;each<BR> class&nbsp;of&nbsp;securities&nbsp;to<BR> be&nbsp;registered</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Amount&nbsp;to&nbsp;be<BR> registered</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Proposed&nbsp;maximum</FONT><BR>
    <FONT STYLE="font: 10pt Times New Roman, Times, Serif">offering&nbsp;price&nbsp;per</FONT><BR>
    <FONT STYLE="font: 10pt Times New Roman, Times, Serif">share<SUP>(2)</SUP></FONT></TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Proposed&nbsp;maximum<BR> aggregate&nbsp;offering<BR> price</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Amount&nbsp;of<BR> registration&nbsp;fee</TD><TD NOWRAP>&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">&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: 32%; font-weight: bold">Common Stock, $0.001 par value</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; font-weight: bold; text-align: right">3,000,000</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 14%; font-weight: bold; text-align: right">1.00</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">$</TD><TD STYLE="width: 14%; font-weight: bold; text-align: right">3,000,000</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 14%; font-weight: bold; text-align: right">409.20</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold">&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><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><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="font-weight: bold">Common Stock, $0.001 par value</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>3,375,750</B></FONT></TD><TD STYLE="font-weight: bold; text-align: left"><B>(1)</B></TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">$</TD><TD STYLE="font-weight: bold; text-align: right">1.00</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">$</TD><TD STYLE="font-weight: bold; text-align: right">3,375,750</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">$</TD><TD STYLE="font-weight: bold; text-align: right">460.45</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold">&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><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><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="font-weight: bold; text-align: justify">TOTAL</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">6,375,750</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">$</TD><TD STYLE="font-weight: bold; text-align: right">1.00</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">$</TD><TD STYLE="font-weight: bold; text-align: right">6,375,750</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">$</TD><TD STYLE="font-weight: bold; text-align: right">869.65</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: justify">3,375,750 shares of common stock
                                                                 are being offered for sale by selling shareholders.</TD></TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(2)</TD><TD STYLE="text-align: justify">Estimated solely for the purpose
                                                                 of calculating the registration fee in accordance with Rule 457(a)
                                                                 under the Securities Act of 1933.</TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><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 of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.</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 shareholders may not sell these securities until the registration statement
filed with the Securities Exchange Commission is effective.&nbsp;&nbsp;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; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>We are an &ldquo;emerging growth company&rdquo;
as defined in the Jumpstart Our Business Startups Act (&ldquo;Jobs Act&rdquo;), and will therefore be subject to reduced public
company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page
11.</B></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: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ARMADA WATER ASSETS, INC.</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>3,000,000 Shares of Common Stock Offered
by</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Armada Water Assets, Inc.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>3,375,750 Shares of Common Stock offered
by the Selling Shareholders</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>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Per Share</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Total</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; text-align: left">Public Offering Price sold by the Company (1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,000,000</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">Underwriting discounts and Commissions</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.00</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">Proceeds to Armada Water Assets, Inc.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,000,000</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">Net Proceeds to Armada Water Assets, Inc. (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.982</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,945,000</TD><TD STYLE="text-align: left">&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%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 7%; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(1)</FONT></TD>
    <TD STYLE="width: 79%"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;This table assumes sale of the maximum
    amount of the offering and excludes shares to be sold by selling shareholders, the proceeds from which, will not be received
    by the Company.</FONT></TD>
    <TD STYLE="width: 11%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(2)</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Total reflects an estimate of expenses including: SEC Registration
    Fee $869; accounting and audit $25,000, legal $25,000, copy and printing $2,000, $1,000 for EDGAR services; $1,000 for transfer
    agent setup and initial certificate issuances.</FONT></TD>
    <TD>&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">We are offering to the public up to 3,000,000
shares of common stock (the &ldquo;new shares&rdquo;), at $1.00 per share for a total of $3,000,000, in a &ldquo;direct public
offering&rdquo; by the Company. The Company has set a minimum amount of $500,000 to be raised in this offering. Assuming we complete
the sale of the 3,000,000 shares, raising the full $3,000,000;&nbsp;after payment of offering expenses of an estimated $55,000
as disclosed in &ldquo;Summary of the Offering&rdquo; on page 3 of this prospectus, our net proceeds will be $2,945,000. This
offering terminates in 12 months after commencement of this offering, on February 1, 2014. We are also registering for our selling
stockholders a total of 3,375,750 shares of common stock.&nbsp;&nbsp;We will not receive any of the proceeds from the sale of
our common stock by the selling stockholders.&nbsp;&nbsp;The concurrent offering of 3,375,750 shares of our common stock by the
selling stockholders is separate from our offering of 3,000,000 new 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">This is our initial public offering, and
no public market currently exists for our Shares. The securities being registered in this offering may not be liquid since they
are not listed on any exchange or quoted through an OTC market, and a market for these securities may not develop. The offering
price may not reflect the market price of our Shares after the offering. Because there is currently no active trading market,
selling stockholders will sell at the stated fixed price of $1.00 until securities are quoted through an OTC market. There is
a $500 minimum purchase requirement for prospective stockholders.&nbsp;&nbsp;All funds will be placed into a separate corporate
account, not in an escrow or trust account, and as such, it may be subject to creditor&rsquo;s claims. At this time we do not
have any outstanding creditor claims.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 stockholders have advised
us that they will sell the shares of common stock from time to time in the open market, at the initial offering price of $1.00
per share until the shares are quoted on the OTC Bulletin Board or national securities exchange, at which point the selling securities
holders may sell the registered shares&nbsp;at market prices prevailing at the time of sale, at prices related to the prevailing
market prices, at negotiated prices, or otherwise as described under the section of this prospectus titled &ldquo;Plan of Distribution.&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">Our common stock does not currently trade
in the public market.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Because we generated less than $1 billion
in total annual gross revenues during our most recently completed fiscal year, we qualify as an &quot;emerging growth company&quot;
under the Jumpstart Our Business Startups (&quot;JOBS&quot;) Act.</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">You should rely only on the information
contained in this prospectus or any prospectus supplement or amendment. We have not authorized anyone to provide you with different
information.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Investing in these securities involves
significant risks.&nbsp;&nbsp;See &ldquo;Risk Factors&rdquo; beginning on page 11.</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">Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of the securities or passed upon the adequacy or accuracy of this
prospectus.&nbsp;&nbsp;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: justify">There has been no market for our securities
and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded
on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus,
we hope to have a market maker file an application with the Financial Industry Regulatory Authority (&quot;FINRA&quot;) for our
common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed
to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation
service or that any market for our stock will develop.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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;The information contained in this
prospectus is not complete and may be changed.&nbsp;&nbsp;This prospectus is included in the registration statement that was filed
by Armada Water Assets, Inc. with the Securities and Exchange Commission.&nbsp;&nbsp;The selling stockholders may not sell these
securities until the registration statement becomes effective.&nbsp;&nbsp;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.</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">Subject to Completion, dated February
5, 2013</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">TABLE OF CONTENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&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: 90%; text-align: right; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 10%; text-decoration: none; text-align: right; border-bottom: Black 1pt solid; vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Page</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">SUMMARY</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">6</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">THE COMPANY</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">6</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">THE OFFERING</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">10</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">RISK FACTORS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">11</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">23</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">CAPITALIZATION</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">24</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">USE OF PROCEEDS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">24</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">DETERMINATION OF OFFERING PRICE</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">24</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">DILUTION</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">25</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">25</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">FINANCIAL INFORMATION; SELECTED FINANCIAL INFORMATION</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">27</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">28</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">FINANCIAL STATEMENTS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">34</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">PROPERTIES</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">34</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">34</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">DIRECTORS AND EXECUTIVE OFFICERS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">36</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">EXECUTIVE COMPENSATION</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">36</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
    DIRECTOR</FONT> <FONT STYLE="font: 10pt Times New Roman, Times, Serif">INDEPENDENCE</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">37</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">LEGAL PROCEEDINGS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">37</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT&rsquo;S COMMON
    EQUITY</FONT> <FONT STYLE="font: 10pt Times New Roman, Times, Serif">AND RELATED STOCKHOLDER MATTERS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">37</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">RECENT SALES OF UNREGISTERED SECURITIES</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">37</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">DESCRIPTION OF SECURITIES</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">38</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">SELLING SECURITY HOLDERS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">39</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">PLAN OF DISTRIBUTION</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">40</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">SHARES ELIGIBLE FOR FUTURE SALE</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">43</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">EXPERTS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">43</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">WHERE YOU CAN FIND MORE INFORMATION</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">44</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">FINANCIAL STATEMENTS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">44</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">45</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">CONTROLS AND PROCEDURES</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">45</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">PART II&mdash;INFORMATION NOT REQUIRED IN A PROSPECTUS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">48</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">INDEMNIFICATION OF OFFICERS AND DIRECTORS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">48</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">48</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">RECENT SALES OF UNREGISTERED SECURITIES</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">48</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">UNDERTAKINGS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">50</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">EXHIBITS</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">51</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">SIGNATURES</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">52</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-align: center; text-indent: 0.5in">&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following summary highlights selected
information contained in this prospectus.&nbsp;&nbsp;This summary does not contain all the information you should consider before
investing in the securities.&nbsp;&nbsp;Before making an investment decision, you should read the entire prospectus carefully,
including the &ldquo;Risk Factors&rdquo; section, the financial statements, and the notes to 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">For purposes of this prospectus, unless
otherwise indicated or the context otherwise requires, all references herein to &ldquo;AWA,&rdquo; &ldquo;we,&rdquo; &ldquo;us,&rdquo;
the &ldquo;Company&rdquo; and &ldquo;our,&rdquo; refer to Armada Water Assets, Inc., a Nevada 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 foregoing represents the Company&rsquo;s
best estimates as of the date of this Prospectus and may materially vary based upon actual experience.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 inability to obtain this funding either
in the near term and/or longer term will materially affect the ability of the Company to implement its business plan of operations
and jeopardize the viability of the Company. In that case, the Company may need to suspend its operations and reevaluate and revise
its plan of operations</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Business Overview</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="color: black">From inception
(October 23, 2012), </FONT>Armada Water Assets, Inc. (the &ldquo;Company&rdquo;) was organized as a vehicle to provide water fill
services that will provide a high volume of water to be used in connection with oil drilling operations in target markets. In
this connection and in order to commence operations, on February 1, 2013 the Company acquired 100% of the membership interests
of Barstow Production Water Solutions, LLC, which is currently engaged in water production for the oil production industry in
the Permian Shale field in Ward County, Texas.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 goal is to develop
and operate a totally-supervised &ldquo;fast fill&rdquo; facility which will provide oil and trucking companies with a reduced
cost and increased efficiency in filling water vacuum trucks used in the process of oil production and disposal or remediation
of used water. The Company&rsquo;s Officers and consultants have experience in water production and distribution, particularly
in the Company&rsquo;s target market. (See <FONT STYLE="color: black">MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS; Plan of Operation, below),</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">Any investment in the shares offered herein
involves a high degree of risk. You should only purchase shares if you can afford a loss of your investment. Our financial statements
include a statement expressing substantial doubt as to our ability to continue as a going concern.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Acquisition of Barstow Production Water
Solutions, LLC (&ldquo;Barstow&rdquo;)</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">On February 1, 2013, the Company acquired
100% of the membership interests of Barstow Production Water Solutions, LLC (&ldquo;Barstow&rdquo;) pursuant to a Membership Interest
Purchase Agreement (&ldquo;MIPA&rdquo;) between the Company, Barstow and the members of Barstow for a total consideration comprising
(a) 3,000,000 newly-issued shares of Company Series A Preferred stock and (ii) promissory notes in the aggregate principal amount
of $1,000,000 (&ldquo;Promissory Notes&rdquo;) (collectively, the &ldquo;Initial Purchase Price&rdquo;). The Promissory Notes
have a maturity date of February 1, 2016 and the Company is required under the terms of the Promissory Notes to make quarterly
payments of principal and interest (at a rate of ten percent per annum) in amounts equal to one-third of the Company&rsquo;s cash
flow (as defined in the Promissory Notes) during the prior fiscal quarter. In addition, the Company must make mandatory prepayments
on account of the Promissory Notes equal to the proceeds of any subsequent debt or equity financings completed by the Company
to the extent aggregate cumulative proceeds thereof exceed $1,000,000. The Company shall also have the right to prepay the Promissory
Notes, in whole or in part, at any time without penalty.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition to the Initial Purchase Price,
for a period of five (5) years following the closing of the transaction, if and when annual Barstow EBITDA (as defined in the
MIPA) exceeds $2,000,000 (&ldquo;EBITDA Target&rdquo;), then the Company will pay quarterly to the Barstow members an additional
purchase price (&ldquo;Additional Purchase Price&rdquo;) equal to twenty percent (20%) of the amount by which the cumulative Barstow
EBITDA during the year in question exceeds the EBITDA Target.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Barstow owns land and a facility utilized
for water production located in Barstow, Texas (north of the Midland/Odessa area and in the Permian basin) comprising fee simple
title to approximately 175 acres on which there exist four wells that either currently or will generate freshwater for sale. One
of the wells is currently operating with an approximate capacity of 55,000 barrels of fresh water per day. This water is designated
for sale and/or mixing of treated water. In the future, the Company intends to commence the operation of three other wells subject
to availability and market demand. There are currently four &ldquo;fast-load&rdquo; stations constructed and operational on the
property for filling water trucks which will service the Company&rsquo;s 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">Additionally, the Barstow facility has
bathrooms and showers on-site for drivers utilizing the property. The entire facility site has access to electrical power which
will permit the Company to expand operations if and when appropriate.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 Company intends to acquire
and construct a complete water treatment facility on the property to enable the treatment of contaminated water dropped off at
or delivered to the facility. The treated and clean water will either be marketed for resale as-is or mixed with freshwater and
sold as a mixed product.</P>

<P STYLE="font: 10pt Times New Roman, 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"><FONT STYLE="text-transform: uppercase"><B>General
Business Plan and Market</B></FONT></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, 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 most significant demand for remediated
and reusable water supplies in the Company&rsquo;s market are conventional oil and gas producers. Fracturing in the shale oil
&amp; gas and conventional oil &amp; gas sectors requires significant water supplies and produce a significant amount of water
requiring disposal or remediation.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Applicable regulations and resistance
to the issuance of on-site or off-site disposal permits drives a demand among oil and gas producers for the Company&rsquo;s services.
Additionally, the Company believes that an industry-wide need to reduce the consumption of finite local water sources and increasing
transportation costs will drive the demand for the Company&rsquo;s strategically located, state-of-the-art water treatment facilities.
The Company&rsquo;s existing and/or targeted assets are geographically centered in oilfields and high traffic water transportation
corridors.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 future, the Company intends to
focus its expansion beyond the area where it currently operates into areas where oilfields are located that have high producing
formations.</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, 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 primary goal is to
achieve profitability by providing water produced at its facilities and water disposal and remediation services to the oil and
gas industry. The Company believes that its services will significantly reduce water transportation and disposal costs and enable
its customer base of oil and gas producers to comply with applicable regulations consistent with maintaining environmental responsibility.</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, 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 several competitors and potential
competitors that currently offer certain of the technologies involved in the water remediation process (for example, electro-coagulation,
reverse osmosis, or membrane filtration). Similarly, there are competitors which have facilities offering injection wells and/or
transportation of contaminated or clean water or offer fresh water for sale. It is the Company&rsquo;s intention to combine all
of the services, technologies and commodity components required by its customer base in order to offer the oil and gas industry
in its targeted markets a simple and convenient, yet essential &ldquo;one-stop&rdquo; solution.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s management and its
advisors have well over 20 years of experience performing field services in and around the oil and gas industry. Additionally,
the Company has or intends to retain the services of senior oil and gas field engineers that have significant hands-on experience
in designing, constructing and operating water treatment facilities in and around the oil and gas industry. Following its research
and due diligence, the Company&rsquo;s management believes that there are no strategically-located facilities in the oil and gas
fields in its target markets offering an all-inclusive, collection, remediation, recycling/reuse water treatment technology to
the oil and gas industry. While Company management believes that there are other groups providing similar services, Company management
believes it can provide a water treatment and related support services that are superior to competitive offerings based on 1)
Company management&rsquo;s existing relationships with Oil and Gas field service providers with proven safety and performance
histories and 2) the Company&rsquo;s access through its existing engineering and technology partners to patented and/or proprietary
water treatment technologies that have been proven in terms of throughput, performance and reliability. Further, Company management
believes that its strategically located facilities which are either currently owned or targeted will result in a competitive advantage
in terms of convenience and reduction of transportation costs for its 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">The Company intends to negotiate both
long and short-term contracts with its customers. Once contracts are secured, they will provide an advantage for the company in
terms of minimizing market variables by determining its revenues and costs in order to maintain predictably profitable 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 Company then intends to offer additional
ancillary services such as proprietary drilling mud treatment services, vapor and emission control capabilities, as well as freshwater
sales at several of its facilities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">OPERATIONAL 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 overall goal of the Company is to
address the ongoing issue of water treatment and disposal through access to central disposal sites, reduction of transportation
costs and alleviating much of the present permitting, environmental and economic challenges currently faced by the oil and gas
industry. As set forth below, the Company currently owns, has under contract, or has targeted for near-term acquisition assets
that create the ability for the Company to achieve its goals.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Barstow, Texas: Barstow Production Water
Services (Midland/Odessa Area &ndash; Permian Basin).</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">4
                                                                                                               existing wells
                                                                                                               for fresh water</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">1
                                                                                                               well up and pumping
                                                                                                               (capacity of 55k
                                                                                                               bbls a day) (fresh
                                                                                                               water sale and
                                                                                                               /or mixing of treated
                                                                                                               water)</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">4
                                                                                                               fast load stations
                                                                                                               up and operational</FONT></TD></TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Power
                                                                                                               on both ends of
                                                                                                               the property that
                                                                                                               allow for expansion.</FONT></TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Future plans in calendar year 2013 are
to add a proprietary/patented Armada Water Treatment systems to enable complete surface treatment of contaminated water at the
facility to allow for disposal of produced water and purchase of fresh water.</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, 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 intends to consider potential
acquisitions of synergistic companies and businesses. Details of these potential transactions are yet to be determined.</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>Initial Capital Formation</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">In January 2013, the Registrant sold an
aggregate of 6,975,000 shares of Common Stock par value $0.0001 to fifteen founders at a price of $0.01 per share. This offering
netted the Company an aggregate of $69,750. Thereafter, in February 2013, the Company sold an additional 4,177,500 shares of Common
Stock par value $0.0001 to 29 investors at a price of $0.10 per share. This offering netted the Company an aggregate of $417,750.
The Registrant sold these shares of Common Stock under an exemption from registration provided by Section 4(2) 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">In January 2013, the Company entered into
a note with City National Bank, as Trustee of the Elanken Family Trust-S, dated April 24, 2002 with a face amount of $500,000
payable on or before August 1, 2013. Commencing on March 1, 2013, the Company shall pay to Payee monthly interest payments at
a rate of ten percent (10%) per annum. The note is convertible, at the option of the lender into shares of Company Common Stock
at a conversion price of $1.00 per share. The note is secured by the pledge of certain third-party assets by a shareholder of
the Company. As an inducement to making the loan, the Company issued to the lender 100,000 shares of Company 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">The Company is currently engaged in the
offering of up to 3,000,000 shares of Common Stock par value $0.0001 to investors at a price of $1.00 per share. The Company has
set a minimum offering size of 500,000 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"><B>Emerging Growth Company Status Under
the Jumpstart Our Business Startups (&quot;JOBS&quot;) Act</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">Because we generated less than $1 billion
in total annual gross revenues during our most recently completed fiscal year, we qualify as an &quot;emerging growth company&quot;
under the Jumpstart Our Business Startups (&quot;JOBS&quot;) 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">We will lose our emerging growth company
status on the earliest occurrence of any of the following events:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">1. On the last day
of any fiscal year in which we earn at least $1 billion in total annual gross revenues, which amount is adjusted for inflation
every five years;</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">2. On the last day
of the fiscal year of the issuer following the fifth anniversary of the date of our first sale of common equity securities pursuant
to an effective registration statement;</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">3. On the date on
which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt; or</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">4. On the date on
which such issuer is deemed to be a &ldquo;large accelerated filer&rdquo;, as defined in section 240.12b-2 of title 17, Code of
Federal Regulations, or any successor thereto. A &quot;large accelerated filer&quot; is an issuer that, at the end of its fiscal
year, meets the following conditions:</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 0pt 1in; text-align: justify">a. It has an aggregate worldwide
market value of the voting and non-voting common equity held by its non-affiliates of $700 million or more as of the last business
day of the issuer's most recently completed second fiscal quarter;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">b. It has been subject to the
requirements of section 13(a) or 15(d) of the Act for a period of at least twelve calendar months; and</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">c. It has
filed at least one annual report pursuant to section 13(a) or 15(d) of the Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; 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 an emerging growth company, exemptions
from the following provisions are available to us:</P>

<P STYLE="font: 10pt Times New Roman, Times, 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">1. Section 404(b)
of the Sarbanes-Oxley Act of 2002, which requires auditor attestation of internal controls;</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">2. Section 14A(a)
and (b) of the Securities Exchange Act of 1934, which require companies to hold shareholder advisory votes on executive compensation
and golden parachute compensation;</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; 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">3. Section 14(i) of
the Exchange Act (which has not yet been implemented), which requires companies to disclose the relationship between executive
compensation actually paid and the financial performance of the company;</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">4. Section 953(b)(1)
of the Dodd-Frank Act (which has not yet been implemented), which requires companies to disclose the ratio between the annual
total compensation of the CEO and the median of the annual total compensation of all employees of the companies; and</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">5. The requirement
to provide certain other executive compensation disclosure under Item 402 of Regulation S-K. Instead, an emerging growth company
must only comply with the more limited provisions of Item 402 applicable to smaller reporting companies, regardless of the issuer's
size.</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">Pursuant to Section 107 of the JOBS Act,
an emerging growth company may choose to forgo such exemption and instead comply with the requirements that apply to an issuer
that is not an emerging growth company. We have elected to maintain our status as an emerging growth company and take advantage
of the JOBS Act provisions.</P>

<P STYLE="font: 10pt Times 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>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">The shares issued or to be issued in connection
with the Company&rsquo;s most recent stock offering are not eligible for re-sale unless duly registered with the U.S. Securities
and Exchange Commission. The purpose of this registration statement is to register the shares sold or to be sold in that offering
and certain of the shares of selling shareholders of the Company.&nbsp;&nbsp;We will not receive any proceeds from any sales of
these selling shareholder 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: center"><B>THE OFFERING</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="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">New Securities Offered
    </FONT></TD>
    <TD STYLE="width: 50%; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Up to 3,000,000 shares
    of common stock, $0.0001 par value per share.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Price Per Share (1)</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$1.00</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Minimum Purchase</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$500/500 shares of common stock</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Common Stock Outstanding before Offering</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">11,252,500 shares of common stock</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Common Stock Outstanding after Offering</FONT></TD>
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Minimum&mdash;12,752,500 shares
        of common stock</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Maximum&mdash;14,252,500 shares
        of common stock</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Estimated Total Proceeds</FONT></TD>
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Minimum&mdash;$500,000</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Maximum&mdash;$3,000,000</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Offering Expenses (estimated)</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$55,000</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Net Proceeds after Offering Expenses</FONT></TD>
    <TD><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Minimum&mdash;$458,000</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Maximum&mdash;$2,958,000</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Use of Proceeds</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Other than the expenses of the offering,
    the proceeds of the offering will be used for equipment, general corporate purposes and working capital.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Subscriptions</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Subscriptions are to be made payable to &ldquo;Armada Water Assets,
    Inc.&rdquo;</FONT></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="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">(1)&nbsp;&nbsp;</FONT></TD>
    <TD STYLE="width: 94%"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Currently there is no trading market for our
    stock.&nbsp;&nbsp;We intend to apply for quotation on the OTC-QB and will require assistance of a market-maker to apply for
    quotation and there is no guarantee that a market- maker will agree to assist us. Selling stockholders will sell at $1.00
    per share until securities are quoted on the OTC-QB. Thereafter they may be sold at the prevailing market price or privately
    negotiated prices.</FONT></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><U>Selling Stockholders</U></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: 54%"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Shares offered by the selling stockholders</FONT></TD>
    <TD STYLE="width: 46%; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3,375,750 shares of common
    stock, $0.0001 par value per share.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Offering price</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Selling stockholders will sell at $1.00
    per share until securities are quoted on the OTC-QB. Thereafter they may be sold at the prevailing market price or privately
    negotiated prices.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Total proceeds raised by us from the disposition of the common
    stock by the selling stockholders or their transferees</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">We will not receive proceeds from the
    disposition of already outstanding shares of our common stock by selling stockholders or their transferees.</FONT></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>RISK FACTORS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Before you invest in our securities, you
should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other
information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties
develop into actual events, our business, financial condition or results of operations could be materially adversely affected.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We were formed in October 2012 and
have a limited operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our
business objectives.</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 a development stage company with
no operating results to date. Since we do not have an established operating history or regular sales yet, you will have no basis
upon which to evaluate our ability to achieve our business objectives.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>The absence of any significant operating
history for us makes forecasting our revenue and expenses difficult, and we may be unable to adjust our spending in a timely manner
to compensate for unexpected revenue shortfalls or unexpected expenses.</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 a result of the absence of any operating
history for us, it is difficult to accurately forecast our future revenue. In addition, we have limited meaningful historical
financial data upon which to base planned operating expenses. Current and future expense levels are based on our operating plans
and estimates of future revenue. Revenue and operating results are difficult to forecast because they generally depend on our
ability to promote and sell our services. As a result, we may be unable to adjust our spending in a timely manner to compensate
for any unexpected revenue shortfall, which would result in further substantial losses. We may also be unable to expand our operations
in a timely manner to adequately meet demand to the extent it exceeds expectations.</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>Our limited operating history does
not afford investors a sufficient history on which to base an investment decision.</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 currently in the early stages of
developing our business. There can be no assurance that at this time that we will operate profitably or that we will have adequate
working capital to meet our obligations as they become due.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Investors must consider the risks and
difficulties frequently encountered by early stage companies, particularly in rapidly evolving markets. Such risks include the
following:</P>

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

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

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

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">ability
                                                                                                               to effectively
                                                                                                               manage expanding
                                                                                                               operations; amount
                                                                                                               and timing of operating
                                                                                                               costs and capital
                                                                                                               expenditures relating
                                                                                                               to expansion of
                                                                                                               our business, operations,
                                                                                                               and infrastructure;
                                                                                                               and</FONT></TD></TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">dependence
                                                                                                               upon key personnel
                                                                                                               to market and sell
                                                                                                               our services and
                                                                                                               the loss of one
                                                                                                               of our key managers
                                                                                                               may adversely affect
                                                                                                               the marketing of
                                                                                                               our services.</FONT></TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We cannot be certain that our business
strategy will be successful or that we will successfully address these risks. In the event that we do not successfully address
these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected
and we may not have the resources to continue or expand our business 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>We have no profitable operating
history and May Never Achieve Profitability</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"><FONT STYLE="color: black">From inception
(October 23, 2012), </FONT>Armada Water Assets, Inc. was organized as a vehicle to provide water fill services that will provide
a high volume of water to be used in connection with oil drilling operations in target markets. In this connection and in order
to commence operations, on February 1, 2013 the Company acquired Barstow Production Water Solutions, LLC, which is engaged in
water production for the oil production industry in the Permian Shale field in Texas. As of the date of this prospectus, the Company
is an early development stage company. Through December 31, 2012, the Company had no activity, assets or liabilities. <FONT STYLE="color: black">Through
December 31, 2012, Barstow generated revenues of only $84,244 (all of which was derived from a third party who is no longer a
customer). The Company has operated with minimal overhead. We are an early stage company and have a limited history of operations.
We are faced with all of the risks associated with a company in the early stages of development. Our business is subject to numerous
risks associated with a relatively new, low-capitalized company engaged in our business sector. Such risks include, but are not
limited to, competition from well-established and well-capitalized companies, and unanticipated difficulties regarding the marketing
and sale of our services. There can be no assurance that we will ever generate significant commercial sales or achieve profitability.
Should this be the case, our common stock could become worthless and investors in our common stock or other securities could lose
their entire investment.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company will clearly require additional
funding for ongoing operations. There is no guarantee that we will be able to raise any additional capital and have no current
arrangements for any such financing.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The inability to obtain this funding either
in the near term and/or longer term will materially affect the ability of the Company to implement its business plan of operations
and jeopardize the viability of the Company. In that case, the Company may need to suspend its operations and reevaluate and revise
its plan of operations</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Barstow Production Water Solutions,
LLC currently has no significant sources of additional revenues</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the period from inception through
December 31, 2012, Barstow Production Water Solutions, LLC generated revenues of approximately $84,244 from providing water to
Oil Raiders Logistics, Inc. (a company related through common ownership with certain members of Barstow Production Water Solutions,
LLC prior to its purchase by the Company) as a subcontractor for ultimate third party customers. Substantially all of the revenue
earned in 2012 by Barstow Production Water Solutions, LLC was earned from one such ultimate third party customer, who stopped
doing business with Oil Raiders Logistics, Inc. and thus the Company, in early October 2012, which resulted in Barstow Production
Water Solutions, LLC not having generated significant revenue after September 30, 2012. Unless Barstow Production Water Solutions,
LLC is able to develop customer contracts of its own or is able to generate revenues from the efforts of Oil Raider Logistics,
Inc., the Company will be unable generate significant revenues in future periods.</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>Barstow Production Water Solutions,
LLC currently has no employees and is reliant on third parties for its management and operational support</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Barstow Production Water Solutions, LLC
currently does not have any employees. Because of this, the Company does not have the means to acquire and operate its business
independently, and is currently reliant on related third parties to acquire customers and to function on a day to day basis. Until
Barstow Water Solutions, LLC is operating under directly employed Company management, it could encounter operational, financial
or regulatory difficulties and the Company&rsquo;s operations could be negatively impacted as a result.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Dependence on our Management, without
whose services Company business operations could cease.</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">At this time, our management is wholly
responsible for the development and execution of our business plan. Our management is under no contractual obligation to remain
employed by us, although they have no present intent to leave. If our management should choose to leave us for any reason before
we have hired additional personnel our operations may fail. Even if we are able to find additional personnel, it is uncertain
whether we could find qualified management who could develop our business along the lines described herein or would be willing
to work for compensation the Company could afford. Without such management, the Company could be forced to cease operations and
investors in our common stock or other securities could lose their entire 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><I>Our officers and directors currently
devote limited time to the Company&rsquo;s business and are engaged in other business activities.</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At this time, none of our officers and
directors devote their full-time attention to the Company&rsquo;s business. Based upon the growth of the business, we intend to
employ additional management and staff. The limited time devoted to the Company&rsquo;s business could adversely affect the Company&rsquo;s
business operations and prospects for the future. Without full-time devoted management, the Company could be forced to cease operations
and investors in our common stock or other securities could lose their entire 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><I>Concentrated control risks; shareholders
could be unable to control or influence key corporate actions or effect changes in the Company&rsquo;s board of directors or management.</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"><FONT STYLE="color: black">Our founders
currently own 6,975,000</FONT> <FONT STYLE="color: black">shares of our common stock, representing approximately 62% of the voting
control of the Company. Our founders therefore have the power to make all major decisions regarding our affairs, including decisions
regarding whether or not to issue stock and for what consideration, whether or not to sell all or substantially all of our assets
and for what consideration and whether or not to authorize more stock for issuance or otherwise amend our charter or bylaws.</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"><B><I>Lack of additional working capital
may cause curtailment of any expansion plans while raising of capital through sale of equity securities would dilute existing
shareholders&rsquo; percentage of 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">Without taking into account the offering,
we will require additional capital to carry out our business plan and conduct ongoing operations. In addition, following this
offering, we will additionally incur public company reporting costs of approximately $100,000 per year or $25,000 per quarter.
There is no guarantee that we will be able to raise any additional capital and have no current arrangements for any such financing.
A shortage of capital would affect our ability to fund our working capital requirements. If we require additional capital, funds
may not be available on acceptable terms, if at all. In addition, if we raise additional capital through the sale of equity or
convertible debt securities, the issuance of these securities could dilute existing shareholders. If funds are not available,
we could be placed in the position of having to cease all operations.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We do not presently have a traditional
credit facility with a financial institution. This absence may adversely affect our operations</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 do not presently have a traditional
credit facility with a financial institution. The absence of a traditional credit facility with a financial institution could
adversely impact our operations. If adequate funds are not otherwise available, we may be required to delay, scale back or eliminate
portions of our operations and product development efforts. Without such credit facilities, the Company could be forced to cease
operations and investors in our common stock or other securities could lose their entire 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><I>Our inability to successfully achieve
a critical mass of revenues could adversely affect our financial condition</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">No assurance can be given that we will
be able to successfully achieve a critical mass of revenue in order to cover our operating expenses and achieve sustainable profitability.
Without such critical mass of revenues, the Company could be forced to cease 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>Our success is substantially dependent
on general economic conditions and business trends in the oil and gas industry, a downturn of which could adversely affect our
operations</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 success of our operations depends
to a significant extent upon a number of factors relating to the oil and gas industry. These factors include economic conditions,
activity in the financial markets, general business conditions, personnel cost, inflation, interest rates and taxation. Our business
is affected by the general condition and economic stability of our customer and their continued willingness to expend funds on
oil production which requires large quantities of water. An overall decline in the demand for water for oil production in our
target markets could cause a reduction in our sales and the Company could face a situation where we never achieve a critical mass
of revenues and thereby be forced to cease 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>Changes in generally accepted accounting
principles could have an adverse effect on our business financial condition, cash flows, revenue and results of operations</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 subject to changes in and interpretations
of financial accounting matters that govern the measurement of our performance. Based on our reading and interpretations of relevant
guidance, principles or concepts issued by, among other authorities, the American Institute of Certified Public Accountants, the
Financial Accounting Standards Board, and the United States Securities and Exchange Commission, our management believes that our
current contract terms and business arrangements have been properly reported. However, there continue to be issued interpretations
and guidance for applying the relevant standards to a wide range of contract terms and business arrangements that are prevalent
in the industries in which we operate. Future interpretations or changes by the regulators of existing accounting standards or
changes in our business practices could result in future changes in our revenue recognition and/or other accounting policies and
practices that could have a material adverse effect on our business, financial condition, cash flows, revenue and results of operations.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We will need to increase the size
of our organization, and may experience difficulties in managing growth.</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 a small company with no current
full-time employees. We expect to experience a period of significant expansion in headcount, facilities, infrastructure and overhead
and anticipate that further expansion will be required to address potential growth and market opportunities. Future growth will
impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate
managers. Our future financial performance and its ability to compete effectively will depend, in part, on its ability to manage
any future growth effectively.</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>We are subject to compliance with
securities law, which exposes us to potential liabilities, including potential rescission rights.</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 offered and sold our common stock
to investors pursuant to certain exemptions from the registration requirements of the Securities Act of 1933, as well as those
of various state securities laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions
depends upon our conduct and that of those persons contacting prospective investors and making the offering. We have not received
a legal opinion to the effect that any of our prior offerings were exempt from registration under any federal or state law. Instead,
we have relied upon the operative facts as the basis for such exemptions, including information provided by investors themselves.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 prior offering did not qualify
for such exemption, an investor would have the right to rescind its purchase of the securities if it so desired. It is possible
that if an investor should seek rescission, such investor would succeed. A similar situation prevails under state law in those
states where the securities may be offered without registration in reliance on the partial preemption from the registration or
qualification provisions of such state statutes under the National Securities Markets Improvement Act of 1996. If investors were
successful in seeking rescission, we would face severe financial demands that could adversely affect our business and operations.
Additionally, if we did not in fact qualify for the exemptions upon which it has relied, we may become subject to significant
fines and penalties imposed by the SEC and state securities agencies.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 incur costs associated with SEC
reporting compliance.</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 made the decision to become
an SEC &ldquo;reporting company&rdquo; in order to comply with applicable laws and regulations. We incur certain costs of compliance
with applicable SEC reporting rules and regulations including, but not limited to attorneys fees, accounting and auditing fees,
other professional fees, financial printing costs and Sarbanes-Oxley compliance costs in an amount estimated at approximately
$100,000 per year. On balance, the Company determined that the incurrence of such costs and expenses was preferable to the Company
being in a position where it had very limited access to additional capital funding.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>The availability of a large number
of authorized but unissued shares of common stock may, upon their issuance, lead to dilution of existing stockholders.</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 authorized to issue 100,000,000
shares of Common Stock, $0.0001 par value per share, of which, as of February 1, 2013, 11,252,500 shares of common stock were
issued and outstanding and 50,000,000 shares of Preferred Stock of which, as of February 4, 2013, 3,000,000 shares of Series A
Preferred Stock were issued and outstanding. Additional shares may be issued by our board of directors without further stockholder
approval. The issuance of large numbers of shares, possibly at below market prices, is likely to result in substantial dilution
to the interests of other stockholders. In addition, issuances of large numbers of shares may adversely affect the market price
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><I>Our need for additional capital
that could dilute the ownership interest of investors.</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 require substantial working capital
to fund our business. If we raise additional funds through the issuance of equity, equity-related or convertible debt securities,
these securities may have rights, preferences or privileges senior to those of the rights of holders of our common stock and they
may experience additional dilution. We cannot predict whether additional financing will be available to us on favorable terms
when required, or at all. Since our inception, we have experienced negative cash flow from operations and expect to experience
significant negative cash flow from operations in the future. The issuance of additional common stock by the Company may have
the effect of further diluting the proportionate equity interest and voting power of holders of our common stock.</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>We may not have adequate internal
accounting controls. While we have certain internal procedures in our budgeting, forecasting and in the management and allocation
of funds, our internal controls may not be adequate.</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 constantly striving to improve
our internal accounting controls. Our board of directors has not designated an Audit Committee and we do not have any outside
directors. &nbsp;We do not have a dedicated full time Chief Financial Officer. We hope to develop an adequate internal accounting
control to budget, forecast, manage and allocate our funds and account for them. There is no guarantee that such improvements
will be adequate or successful or that such improvements will be carried out on a timely basis. If we do not have adequate internal
accounting controls, we may not be able to appropriately budget, forecast and manage our funds, we may also be unable to prepare
accurate accounts on a timely basis to meet our continuing financial reporting obligations and we may not be able to satisfy our
obligations under US securities laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 not have adequate insurance
coverage</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 currently have only general liability
insurance and umbrella coverage provided to Barstow Production Water Solutions, LLC through being listed as an additional insured
on the policies of a third party. As a result, we cannot assure you that we would not face liability upon the occurrence of any
uninsured event which could result in any loss or damages being assessed against the Company or its subsidiary.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 subject to numerous laws
and regulations that can adversely affect the cost, manner or feasibility of doing 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">Our operations are subject to extensive
federal, state and local laws and regulations relating to the financial markets. &nbsp;Future laws or regulations, any adverse
change in the interpretation of existing laws and regulations or our failure to comply with existing legal requirements may result
in substantial penalties and harm to our business, results of operations and financial condition. We may be required to make large
and unanticipated capital expenditures to comply with governmental regulations. &nbsp;Our operations could be significantly delayed
or curtailed and our cost of operations could significantly increase as a result of regulatory requirements or restrictions. We
are unable to predict the ultimate cost of compliance with these requirements or their effect on 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>We do not intend to pay cash dividends
in the foreseeable 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">We currently intend to retain all future
earnings for use in the operation and expansion of our business. We do not intend to pay any cash dividends in the foreseeable
future but will review this policy as circumstances dictate.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>There is currently no market for
our securities and there can be no assurance that any market will ever develop or that our common stock will be listed for trading.</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 has not been any established trading
market for our common stock and there is currently no market for our securities. Even if we are ultimately approved for trading
on the OTC Bulletin Board (&ldquo;OTCBB&rdquo;), there can be no assurance as the prices at which our common stock will trade
if a trading market develops, of which there can be no assurance. &nbsp;Until our common stock is fully distributed and an orderly
market develops, (if ever) in our common stock, the price at which it trades is likely to fluctuate significantly.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prices for our common stock will be determined
in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common
stock, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor
perception of us and general economic and market conditions. No assurances can be given that an orderly or liquid market will
ever develop for the shares of our common stock. Due to the anticipated low price of the securities, many brokerage firms may
not be willing to effect transactions in the securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 common stock is subject to the
Penny Stock Regulations</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 will likely be subject
to the SEC's &ldquo;penny stock&rdquo; rules to the extent that the price remains less than $5.00. Those rules, which require
delivery of a schedule explaining the penny stock market and the associated risks before any sale, may further limit your ability
to sell your shares.</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 SEC has adopted regulations which
generally define &ldquo;penny stock&rdquo; to be an equity security that has a market price of less than $5.00 per share. Our
common stock, when and if a trading market develops, may fall within the definition of penny stock and subject to rules that impose
additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers
and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 or $300,000,
together with their spouse).</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 transactions covered by these rules,
the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's
prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny
stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Commission relating
to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must
disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing
recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently,
the `penny stock` rules may restrict the ability of broker-dealers to sell our common stock and may affect the ability of investors
to sell their common stock in the secondary market.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 common stock is illiquid and
subject to price volatility unrelated to our operations</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 market price of our common stock could
fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth,
quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions
in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market
is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities
issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.
Sales of substantial amounts of common stock, or the perception that such sales could occur, could adversely affect the market
price of our common stock and could impair our ability to raise capital through the sale of our equity securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 have not voluntarily implemented
various corporate governance measures, in the absence of which, shareholders may have more limited protections against interested
director transactions, conflicts of interest and similar matters.</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">Recent Federal legislation, including
the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal
requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as
the NYSE or the Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required
under the rules of national securities exchanges are those that address board of directors' independence, audit committee oversight,
and the adoption of a code of ethics.&nbsp;&nbsp;We have not yet adopted any of these corporate governance measures and, since
our securities are not yet listed on a national securities exchange, we are not required to do so.&nbsp;&nbsp;It is possible that
if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances
that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define
responsible conduct.&nbsp;&nbsp;Prospective investors should bear in mind our current lack of corporate governance measures in
formulating their investment decisions.</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">&nbsp;</P>



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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may be deemed to be a &ldquo;shell
company&rdquo;</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">Rule 405 promulgated
under the Securities Act of 1933 defines a &ldquo;shell company&rdquo; as </FONT>a registrant&hellip; that has: no or nominal
operations; and either (a) no or nominal assets; (b) assets consisting solely of cash and cash equivalents; or (c) assets consisting
of any amount of cash and cash equivalents and nominal other assets. While the Company does not believe that it is a &ldquo;shell
company&rdquo;, designation as a &ldquo;shell company&rdquo; could result in the application of Rule 144(i), which would limit
the availability of the exemption from registration provided in Rule 144 for certain shares of Company common stock and could
result in certain persons affiliated with the Company being deemed &ldquo;statutory underwriters under Rule 145(c).</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>For as long as we are an emerging
growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting
standards and disclosure about our executive compensation, that apply to other public companies.</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 April&nbsp;2012, President Obama signed
into law the Jumpstart Our Business Startups Act, or the JOBS Act. The JOBS Act contains provisions that, among other things,
relax certain reporting requirements for &ldquo;emerging growth companies,&rdquo; including certain requirements relating to accounting
standards and compensation disclosure. We are classified as an emerging growth company. For as long as we are an emerging growth
company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things,
(1)&nbsp;provide an auditor&rsquo;s attestation report on management&rsquo;s assessment of the effectiveness of our system of
internal control over financial reporting pursuant to Section&nbsp;404(b) of the Sarbanes Oxley Act of 2002, (2)&nbsp;comply with
any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation
or a supplement to the auditor&rsquo;s report in which the auditor would be required to provide additional information about the
audit and the financial statements of the issuer, (3)&nbsp;comply with any new audit rules adopted by the PCAOB after April&nbsp;5,
2012 unless the SEC determines otherwise, (4)&nbsp;provide certain disclosure regarding executive compensation required of larger
public companies or (5)&nbsp;hold shareholder advisory votes on executive compensation.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Further, our independent registered public
accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting,
and will not be required to do so for as long as we are an &ldquo;emerging growth company&rdquo; pursuant to the provisions of
the JOBS 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"><B><I>Under the JOBS Act we have elected to use an extended
period for complying with new or revised accounting standards.</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">We have elected to use the extended transition
period for complying with new or revised accounting standards under Section 102(b)(1), which allows us to delay adoption of new
or revised accounting standards that have different effective dates for public and private until those standards apply to private
companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company
effective dates.</P>

<P STYLE="font: 10pt Times New Roman, 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; background-color: white"><FONT STYLE="text-transform: uppercase"><B>Risks
Related to Our Business and Industry</B></FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our operations may be subject to
extensive environmental laws and regulations. Our operating costs may increase as a result of complying with environmental laws
and regulations. We also could incur substantial costs as a result of violations of or liabilities under such laws and regulations.</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 water operations are subject to extensive
United States Federal, state and local laws and regulations, that govern the protection of the environment, health and safety,
water allocation rights, and the manner in which we collect, treat, discharge and dispose of wastewater. These requirements include
the United States Clean Water Act of 1972, which we refer to as the Clean Water Act. We may also be required to obtain various
environmental permits from regulatory agencies for our operations. State regulatory agencies also set conditions and standards
for the water and wastewater services we deliver. If we deliver water or wastewater services to our customers that do not comply
with regulatory standards, or otherwise violate environmental laws, regulations or permits, or other health and safety and water
quality regulations, we could incur substantial fines, penalties or other sanctions or costs or damage to our reputation. In the
most serious cases, regulators could force us to discontinue operations. We will incur substantial operating and capital costs
on an ongoing basis to comply with environmental laws and regulations and other health and safety and water quality regulations.
These laws and regulations, and their enforcement, have tended to become more stringent over time, and new or stricter requirements
could increase our costs. Although we may seek to recover ongoing compliance costs in our pricing, there can be no guarantee that
such pricing may be sustained in the marketplace. We may also incur liabilities under environmental laws and regulations requiring
us to investigate and clean up environmental contamination at our properties or at off-site locations where we have disposed of
waste or caused adverse environmental impacts. The discovery of previously unknown conditions, or the imposition of cleanup obligations
in the future, could result in significant costs, and could adversely affect our financial condition, results of operations, cash
flow and liquidity. Such remediation losses may not be covered by our insurance policies and may make it difficult for us to secure
insurance in the future at acceptable rates.</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>Changes in laws and regulations
over which we have no control can significantly affect our business and results of operations.</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">Any governmental entity that regulates
our operations may enact new legislation or adopt new regulations or policies at any time, and new judicial decisions may change
the interpretation of existing legislation or regulations at any time. The individuals who serve as regulators are elected or
are political appointees. Therefore, elections which result in a change of political administration or new appointments may also
result in changes in the individuals who serve as regulators and the policies of the regulatory agencies that they serve. New
laws or regulations, new interpretations of existing laws or regulations, or changes in agency policy, including as a response
to shifts in public opinion, or conditions imposed during the regulatory hearing process may affect our business in a number of
ways.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Weather conditions, natural hazards,
availability of water supplies and competing uses may interfere with our sources of water, demand for water services and our ability
to supply water to customers.</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 ability to meet the existing and future
water demands of our customers depends on an adequate supply of water. As a general rule, sources of public water supply, including
rivers, lakes, streams and groundwater aquifers are held in the public trust and are not owned by private interests. As such,
we typically do not own the water that we use in our operations, and the availability of our water supply is established through
allocation rights and passing-flow requirements set by governmental entities. Passing-flow requirements set minimum volumes of
water that must pass through specified water sources, such as rivers and streams, in order to maintain environmental habitats
and meet water allocation rights of downstream users. Allocation rights are imposed to ensure sustainability of major water sources
and passing flow requirements are most often imposed on source waters from smaller rivers, lakes and streams. These requirements
can change from time to time and adversely impact our water supply. Drought, overuse of sources of water, the protection of threatened
species or habitats or other factors may limit the availability of ground and surface water.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Governmental restrictions on water use
may also result in decreased use of water services, even if our water supplies are sufficient to serve our customers, which may
adversely affect our financial condition and results of operations. Seasonal drought conditions that would impact our water services
are possible across all of our service areas, and drought conditions currently exist in several areas of the United States. However,
these conditions are more prevalent in the Northeast and West where supply capacity is limited and per capita water demand is
high. If a regional drought were to occur affecting our service areas and adjacent systems, governmental restrictions may be imposed
on all systems within a region independent of the supply adequacy of any individual system. Voluntary conservation efforts or
water use restrictions were implemented during certain periods in parts of New Jersey, New Mexico, New York and California. Following
drought conditions, water demand may not return to pre-drought levels even after restrictions are lifted. Cool and wet weather
may also reduce demand for water, thereby adversely affecting our financial condition, results of operations, cash flow and liquidity.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Service interruptions due to severe weather
events are possible across all our service areas. These include winter storms and freezing conditions in our colder climate service
areas, high wind conditions in our service areas known to experience tornados, earthquakes in our service areas known to experience
seismic activity, high water conditions for our facilities located in or near designated flood plains, hurricanes in our coastal
service areas and severe electrical storms which are possible across all of our service areas. These weather events may affect
the condition or operability of our facilities, limiting or preventing us from delivering water or wastewater services to our
customers, or requiring us to make substantial capital expenditures to repair any damage. Any interruption in our ability to supply
water or to collect, treat and properly dispose of wastewater, or any costs associated with restoring service, could adversely
affect our financial condition and results of operations. Furthermore, losses from business interruptions or damage to our facilities
might not be covered by our insurance policies and such losses may make it difficult for us to secure insurance in the future
at acceptable rates.</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>Declining customer water usage may
reduce our long-term revenues, financial condition and results of operations.</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">Fluctuation in demand for water by the
oil production industry may adversely affect our business. This fluctuation could be caused by a variety of factors including
reduced demand for oil production, reduced oil production in our target markets and general economic conditions. Such conditions
could adversely and materially affect our business, results of operations and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Risks associated with the collection
and delivery of water may impose significant costs.</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">If water collection systems fail, overflow
or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams
and rivers, causing damage to persons or property, injury to aquatic life and economic damages, which may not be recoverable in
rates. This risk is most acute during periods of substantial rainfall or flooding, which are the main causes of sewer overflow
and system failure. Liabilities resulting from such damage could adversely and materially affect our business, results of operations
and financial condition. Moreover, in the event that we are deemed liable for any damage caused by overflow, our losses might
not be covered by insurance policies, and such losses may make it difficult for us to secure insurance in the future at acceptable
rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Constraints on the availability
of capital could prevent us from making necessary capital expenditures to maintain our infrastructure and expand our customer
base.</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 water distribution industry can be
capital intensive. We expect the level of capital expenditures necessary to maintain the integrity of our systems to increase
in the future. We fund these projects from cash generated from operations, borrowings under a future revolving credit facility
and the issuance of long-term debt and equity securities. We can provide no assurances that we will be able to access the debt
and equity capital markets on favorable terms or at all. In order to fund capital expenditures, acquisitions and principal and
interest payments on our indebtedness, we expect that we will need additional financing. If we are unable to obtain sufficient
capital, we may fail to maintain our existing property, plant and equipment, realize our capital investment strategies, meet our
growth targets and successfully expand our customer base and revenues. Even if we have adequate resources to make required capital
expenditures, we face the additional risk that we will not complete our major capital expenditures on time, as a result of construction
delays or other obstacles. Each of these outcomes could adversely affect our financial condition and results of operations. We
also face the risk that after we make substantial capital expenditures, we may not be able to generate sufficient revenues to
allow us the opportunity to earn an appropriate rate of return on our invested capital and a return of our invested capital.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Any failure of our water sources
could result in losses and damages that may affect our financial condition and reputation.</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 distribute water obtained from a number
of sources. A failure or disruption of these sources could adversely affect our ability to make deliveries to customers or increase
the cost of such deliveries. Such failures or disruptions may limit our ability to supply water in sufficient quantities to our
customers and to meet our customers&rsquo; needs, and adversely affect our financial condition, results of operations, cash flow,
liquidity and reputation. Any business interruption or other losses might not be covered by insurance policies or be recoverable
in rates, and such losses may make it difficult for us to secure insurance in the future at acceptable rates.</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>Contamination of our sources of
water could result in service interruptions and human exposure to hazardous substances and subject our Company to civil or criminal
enforcement actions, private litigation and cleanup obligations.</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 water supplies are subject to contamination,
including contamination from naturally-occurring compounds, chemicals in groundwater systems, pollution resulting from man-made
sources, such as perchlorate and methyl tertiary butyl ether (MTBE), and possible terrorist attacks. In the event that our water
supply is contaminated, we may have to interrupt the use of that water supply until we are able to substitute the supply of water
from another water source, including, in some cases, through the purchase of water from a third-party supplier. In addition, we
may incur significant costs in order to treat the contaminated source through expansion of our current treatment facilities, or
development of new treatment methods. If we are unable to substitute water supply in a cost-effective manner, our financial condition,
results of operations, cash flow, liquidity and reputation may be adversely affected. We might not be able to recover costs associated
with treating or decontaminating water supplies through rates, or such recovery may not occur in a timely manner. Moreover, we
could be held liable for environmental damage as well as damages arising from toxic tort or other lawsuits or criminal enforcement
actions or other consequences arising out of human exposure to hazardous substances in our drinking water supplies.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 liquidity and earnings could
be adversely affected by increases in our water extraction costs.</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 incur significant production costs
in connection with the delivery of our water services. Our production costs are driven by various factors, most of which are not
within our control. These costs can and do increase unexpectedly and in substantial amounts. The inability to recover increased
higher costs can affect our financial condition, results of operations, cash flow and liquidity.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 reliance on third-party suppliers
poses significant risks to our business and prospects.</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">From time-to-time, we contract with third
parties for goods and services that are essential to our operations, such as maintenance services, transportation, pipes, chemicals,
electricity, water, gasoline, diesel and other materials. We are subject to substantial risks because of our reliance on these
suppliers. As a result of any of these factors, we may be required to find alternative suppliers for the raw materials and services
on which we rely. Accordingly, we may experience delays in obtaining appropriate raw materials and services on a timely basis
and in sufficient quantities from such alternative suppliers at a reasonable price, which could interrupt services to our customers
and adversely affect our revenues, financial condition, results of operations, cash flow and liquidity.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Risks associated with potential
acquisitions or investments may adversely affect 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">We intend to seek to acquire or invest
in additional water delivery systems, including by acquiring systems in markets in the United States where we do not currently
operate. We intend to also seek to enter into partnerships and affiliation with other water providers. These transactions are
subject to all of the risks inherent in the businesses of any potential investments or acquisitions we may target.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Any debt we may incur could affect
our business adversely and limit our ability to plan for or respond to changes in our business, and we may be unable to generate
sufficient cash flow to satisfy our liquidity needs.</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 order to meet our capital expenditure
needs, we may be required to make additional borrowings or be required to issue new debt securities in the capital markets. We
can provide no assurances that we will be able to access the debt capital markets or do so on favorable terms. If new debt is
added to our current debt levels, the related risks we now face could intensify, limiting our ability to refinance existing debt
on favorable terms. We will depend primarily on operations to fund our expenses and to pay the principal and interest on our outstanding
debt. Our ability to meet our expenses thus depends on our future performance, which will be affected by financial, business,
economic, competitive, legislative, regulatory and other factors beyond our control. If we do not have enough money to pay the
principal and interest on our outstanding debt, we may be required to refinance all or part of our existing debt, sell assets,
borrow additional funds or sell additional equity. If our business does not generate sufficient cash flow from operations or if
we are unable to incur indebtedness sufficient to enable us to fund our liquidity needs, we may be unable to plan for or respond
to changes in our business that would prevent us from maintaining or increasing our business and cause our operating results and
prospects to be affected adversely.</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>Our failure to comply with restrictive
covenants under any debt we may incur could trigger prepayment obligations.</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 failure to comply with the restrictive
covenants under any debt we may incur could result in an event of default, which, if not cured or waived, could result in us being
required to repay or refinance (on less favorable terms) these borrowings before their due date. If we are forced to repay or
refinance (on less favorable terms) these borrowings, our results of operations and financial condition could be adversely affected
by increased costs and rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Work stoppages and other labor relations
matters could adversely affect our results of operations.</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">Labor actions, work stoppages or the threat
of work stoppages and our failure to obtain favorable labor terms during may all adversely affect our financial condition, results
of operations, cash flow and liquidity.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 currently have material weaknesses
in internal control over financial reporting. If we fail to remedy our material weaknesses or otherwise maintain effective internal
control over financial reporting, we may not be able to report our financial results accurately or on a timely basis. Any inability
to report and file our financial results in an accurate and timely manner could harm our business and adversely impact the trading
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">As a public company, we are required to
comply with the Sarbanes-Oxley Act and other rules and regulations that govern public companies. In particular, we will be required
to periodically certify our compliance with Section&nbsp;404 of the Sarbanes-Oxley Act, which will require us to perform system
and process evaluation and testing of our internal control over financial reporting to allow management and our registered public
accounting firm to report on the effectiveness of our internal control over financial reporting. Our management is responsible
for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements in accordance with generally accepted accounting principles. As a public reporting company, we are required,
among other things, to maintain a system of effective internal control over financial reporting suitable to prepare our publicly
reported financial statements in a timely and accurate manner, and also to evaluate and report on such system of internal control.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the Company&rsquo;s annual or interim financial statements will not
be prevented or detected on a timely basis. The matters involving internal controls and procedures that our management considered
to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning
audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;
(2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial
disclosure and reporting processes.&nbsp;&nbsp;The aforementioned material weaknesses were identified by our management in connection
with the review of our financial statements for the period ended [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">We have initiated a remediation plan with
respect to our material weaknesses, but there can be no assurances that our remediation plan will be effective. For further discussion,
see &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations. Each of these weaknesses
could result in a material misstatement of our annual or interim consolidated financial statements. Moreover, we cannot assure
you that we have identified all, or that we will not in the future have additional, material weaknesses, any of which may subject
us to additional regulatory scrutiny, and cause future delays in filing our financial statements and periodic reports with the
SEC. Any such delays in the filing of our financial statements and periodic reports may result in a loss of public confidence
in the reliability of our financial statements and sanctions imposed on us by the SEC. We believe that such misstatements or delays
could negatively impact our liquidity, access to capital markets, financial condition and the market value 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: center"><B>About this Prospectus</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: justify">You should only rely on the information
contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus.
We are offering to sell, and seeking offers to buy, shares of our common stock on a &ldquo;direct public offering,&rdquo; &ldquo;all
or nothing,&rdquo; basis only in jurisdictions where offers and sales are permitted. Offers and sales of our securities are only
permitted in those jurisdictions where statutes exist, &ldquo;blue sky statutes&rdquo; allowing for such offers and 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: center"><B>Available Information</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: justify">We are not subject to the informational
requirements of the Securities Exchange Act of 1934, as amended. Once our securities are registered under the Securities Act of
1933, we will file reports and other information with the Securities and Exchange Commission. Once our registration statement
becomes effective we shall file supplementary and periodic information, documents and reports that are required under section
13(a) of the Exchange Act, 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; text-align: justify">All of our reports will be able to be
reviewed through the SEC&rsquo;s Electronic Data Gathering Analysis and Retrieval System (EDGAR) which is publicly available through
the SEC&rsquo;s website (http://www.sec.gov).</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 intend to furnish to our stockholders
annual reports containing financial statements audited by our independent certified public accountants and quarterly reports containing
reviewed unaudited interim financial statements for the first three-quarters of each fiscal year. You may contact the Securities
and Exchange Commission at 1-(800) SEC-0330 or you may read and copy any reports, statements or other information that Creative
App Solutions, Inc., files with the Securities and Exchange Commission at the Securities and Exchange Commission&rsquo;s public
reference room at the following location:</P>

<P STYLE="font: 10pt Times New Roman, 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">Public Reference Room</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">100 F. Street, N.E.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Washington, D.C. 20549-0405</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Telephone 1(800)-SEC-0330</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: justify">We have filed with the Commission a registration
statement on Form S-1 under the Securities Act of 1933, as amended with respect to the securities offered in this prospectus.
This prospectus does not contain all the information set forth in the registration statement, certain parts of which are omitted
in accordance with the rules and regulations of the SEC. For further information, with respect to us and the common stock offered
in this prospectus, reference is made to such registration statement, exhibits and schedules. A copy of the registration statement,
including the exhibits and schedules can be reviewed through EDGAR.</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: center"><B>SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS</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: justify">This prospectus contains forward-looking
statements.&nbsp;This prospectus includes statements regarding our plans, goals, strategies, intent, beliefs or current expectations.
These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these
expectations will be achieved or accomplished. These forward looking statements can be identified by the use of terms and phrases
such as &ldquo;believe,&rdquo; &ldquo;plan,&rdquo; &ldquo;intend,&rdquo; &ldquo;anticipate,&rdquo; &ldquo;target,&rdquo; &ldquo;estimate,&rdquo;
&ldquo;expect,&rdquo; and the like, and/or future-tense or conditional constructions &ldquo;may,&rdquo; &ldquo;could,&rdquo; &ldquo;should,&rdquo;
etc. Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and business
opportunities also constitute such forward-looking 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">Although forward-looking statements in
this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and
unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from
those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect
any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation.
Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities
and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial
condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying
assumptions prove incorrect, our actual results may vary materially from those expected or projected.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CAPITALIZATION</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: justify">The following table sets forth our capitalization
at December 31, 2012, after giving effect to and as adjusted to give effect to the sale of the 3,000,000 common shares offered
in this prospectus.</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>&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">As&nbsp;of<BR> December<BR>
    31,&nbsp;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">AS<BR> ADJUSTED<BR> For&nbsp;the<BR>
    Offering<BR> Proceeds*</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Total Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: 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="width: 70%; text-align: left; padding-left: 0.25in; text-indent: -0.125in">Common Stock, $0.0001 par value; 100,000,000
    shares authorized; 11,252,500 shares issued and outstanding</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; 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: 12%; text-align: right">1,125</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: 0.25in; text-indent: -0.125in">14,252,500 shares issued and outstanding as adjusted
    following 3,000,000 shares issued in this offering</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,425</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in">Additional paid-in capital</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">3,487,500</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: 0.125in">Offering Expenses</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">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in">Deficit accumulated during development stage</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 0.125in">Stockholders&rsquo; Equity</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">3,432,500</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 foregoing capitalization table reflects only the operations
of Armada Water Assets, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">*Includes 11,252,500 shares of Common Stock issued in January
and February 2013</P>

<P STYLE="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; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company intends to utilize the proceeds
of the offering for working capital, purchase of equipment and general corporate purposes. The amounts and timing of expenditures
for each purpose may vary significantly depending on numerous factors, including, without limitation, the progress of the building
of our customer base. We anticipate, based on currently proposed plans and assumptions relating to our operations, that our available
cash of approximately $200,000 (which Barstow had in its bank account when the Company purchased it in February 2013), the funds
we raised in January and February 2013 ($487,500), the proceeds of a $500,000 loan from a third party and the net proceeds of
this offering (up to $2,945,000), if successful, and cash flow from operations, if any, will be adequate to satisfy our capital
needs for the remainder of fiscal year 2013. In the event that our offering is successful, the first $1,000,000 in proceeds received
after the first $1,000,000 in proceeds from this offering triggers the early prepayment clauses within the promissory notes we
issued as part of the purchase price for the membership interests acquired from the members of Barstow Production Water Solutions,
LLC.</P>

<P STYLE="font: 10pt Times New Roman, 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>DETERMINATION OF OFFERING PRICE</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: justify">Since our shares are not listed or quoted
on any exchange or quotation system, the offering price of the shares of common stock was arbitrarily determined.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 offering price of the shares of our
common stock has been determined arbitrarily by us and does not necessarily bear any relationship to our book value, assets, past
operating results, financial condition or any other established criteria of value. The facts considered in determining the offering
price were our financial condition and prospects, our limited operating history and the general condition of the securities market.
Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the Over The Counter Bulletin
Board (OTCBB) concurrently with or shortly after the filing of this prospectus. In order to be quoted on the Bulletin Board, a
market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance
that a market maker will agree to file the necessary documents with the National Association of Securities Dealers, which operates
the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, there is no assurance that
our common stock will trade at market prices in excess of the initial public offering price as prices for the common stock in
any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the
depth and liquidity.</P>

<P STYLE="font: 10pt Times New Roman, 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>DILUTION</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The difference between our initial public
offering price per share of common stock and the pro forma net tangible book value per share of common stock after this offering
constitutes the dilution to investors in this offering. Our net tangible book value per share is determined by dividing our net
tangible book value (total tangible assets less total liabilities) by the number of outstanding shares of 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">Our common stock had a net tangible book
value of $0.05 using the book values from December 31, 2012 including Barstow Production Water Solutions, LLC. After giving effect
to the<B>&nbsp;</B>receipt of the net proceeds from the 3,000,000 shares offered in this prospectus at an assumed initial offering
price of $1.00 per share, our pro forma net tangible book value at December 31, 2012, would have been $3,549,000 or $0.25 per
share. This results in immediate dilution per share to investors of $2,250,000 or 75%. The following table illustrates dilution
to investors on a per share basis:</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: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 85%">Offering price per share</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net tangible book value per share before offering</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.05</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 investors</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.20</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Pro forma net tangible book value per share after offering</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,548,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Dilution per share to investors</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.75</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: justify">The following tables summarize, as of
February 1, 2013, the difference between the number of shares of common stock purchased from us, the total cash consideration
paid and the average price per share paid by existing stockholders of common stock and by the new investors purchasing shares
in this 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">The table below assumes the sale of the
3,000,000 shares offered in this prospectus at an assumed initial public offering price of $1.00 per share and before any deduction
of estimated offering expenses.</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>&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">Shares&nbsp;Purchased</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">Total<BR>
    Consideration</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; padding-bottom: 1pt">Average<BR>
    Price</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; text-align: center; border-bottom: Black 1pt solid">Amount</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">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">Amount</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">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">Per&nbsp;Share</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 25%; text-align: left">Original Stockholders</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">11,252,500</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: 12%; text-align: right">79</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">487,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">14</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.04</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Shares Sold in Offering</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">3,000,000</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">21</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,000,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">86</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; 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;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,252,500</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,487,500</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.25</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>MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS</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"><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; text-align: justify">As of February 1, 2013, there were 45
record holders of our common stock and there were 11,252,500 shares of our common stock outstanding. No public market currently
exists for shares of our common stock. We intend to apply to have our common stock listed for quotation on the Over-the-Counter
Bulletin Board.</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>The Securities Enforcement and Penny
Stock Reform Act of 1990</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 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">A purchaser is purchasing penny stock
which limits the ability to sell the stock. The shares offered by this prospectus constitute 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 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
prepared by the Commission, which:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">contains
                                                                                                             a description of
                                                                                                             the nature and level
                                                                                                             of risk in the market
                                                                                                             for penny stocks
                                                                                                             in both public offerings
                                                                                                             and secondary trading;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">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
                                                                                                             to such duties or
                                                                                                             other requirements
                                                                                                             of the Securities
                                                                                                             Act of 1934, as amended;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">contains
                                                                                                             a brief, clear, narrative
                                                                                                             description of a
                                                                                                             dealer market, including
                                                                                                             &quot;bid&quot; and
                                                                                                             &quot;ask&quot; prices
                                                                                                             for penny stocks
                                                                                                             and the significance
                                                                                                             of the spread between
                                                                                                             the bid and ask price;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">contains
                                                                                                             a toll-free telephone
                                                                                                             number for inquiries
                                                                                                             on disciplinary actions;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">defines
                                                                                                             significant terms
                                                                                                             in the disclosure
                                                                                                             document or in the
                                                                                                             conduct of trading
                                                                                                             penny stocks; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">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;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The broker-dealer also must provide, prior
to effecting any transaction in a penny stock, to the customer:</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the
                                                                                                             bid and offer quotations
                                                                                                             for the penny stock;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the
                                                                                                             compensation of the
                                                                                                             broker-dealer and
                                                                                                             its salesperson in
                                                                                                             the transaction;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">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;
                                                                                                             and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">monthly
                                                                                                             account statements
                                                                                                             showing the market
                                                                                                             value of each penny
                                                                                                             stock held in the
                                                                                                             customer's account.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have no outstanding stock options or
other equity compensation plans.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Reports</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are subject to certain reporting requirements
and will furnish annual financial reports to our stockholders, certified by our independent accountants, and will furnish unaudited
quarterly financial reports in our quarterly reports filed electronically with the SEC. All reports and information filed by us
can be found at the SEC website, www.sec.gov.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Stock Transfer Agent</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 stock transfer agent for our securities
is Island Stock Transfer, 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">&nbsp;<B>Dividend Policy</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 previously declared or paid
any dividends on our common stock and do not anticipate declaring any dividends in the foreseeable future. The payment of dividends
on our common stock is within the discretion of our board of directors. We intend to retain any earnings for use in our operations
and the expansion of our business. Payment of dividends in the future will depend on our future earnings, future capital needs
and our operating and financial condition, among other factors that our board of directors may deem relevant. We are not under
any contractual restriction as to our present or future ability to pay dividends.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have no outstanding stock options or
other equity compensation plans.</P>

<P STYLE="font: 10pt Times New Roman, 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>FINANCIAL INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SELECTED CONSOLIDATED FINANCIAL DATA</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: justify">The following selected consolidated statement
of operations data contains consolidated statement of operations data and consolidated balance sheet for the period from inception
(August 9, 2012) through December 31, 2012 from the operations of Barstow Production Water Solutions, LLC (which in effect is
our predecessor business which we purchased in February 2013). The Company had no operations during this period. There is no comparable
data for prior periods. The consolidated statement of operations data and balance sheet data were derived from the audited consolidated
financial statements. Such financial data should be read in conjunction with the consolidated financial statements and the notes
to the consolidated financial statements starting on page F-1 and with &ldquo;Management&rsquo;s Discussion and Analysis of Financial
Condition and Results of Operations.&rdquo;</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="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of<BR> December <BR>
    31, 2012</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Balance Sheet Data:</TD><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: 85%">Assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">635,502</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">44,537</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total Stockholders&rsquo; Equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">590,695</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; text-align: left">Statement of Operations Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">84,244</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">$</TD><TD STYLE="text-align: right">224,942</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,308</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">Net Loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">142,006</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Basis and Diluted Loss Per Share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.03</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Weighted Average Number of Shares Outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,000,000</TD><TD STYLE="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; text-align: center"><B>MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AND RESULTS OF OPERATIONS</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: justify"><FONT STYLE="color: black">The following
discussion of our financial condition and results of operation for the period from inception (August 9, 2012) to December 31,
2012 and should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere
in this report. </FONT>Our results of operations reflect the operations of Barstow Production Water Solutions, LLC (our predecessor
business which we purchased in February 2013). The Company had no operations during this period. <FONT STYLE="color: black">Our
discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our
plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated
in these forward-looking statements as a result of a number of factors, including those set forth under the &ldquo;Risk Factors,&rdquo;
&ldquo;Cautionary Notice Regarding Forward-Looking Statements&rdquo; and &ldquo;Our Business&rdquo; sections in this Form S-1.&nbsp;&nbsp;We
use words such as &ldquo;anticipate,&rdquo; &ldquo;estimate,&rdquo; &ldquo;plan,&rdquo; &ldquo;project,&rdquo; &ldquo;continuing,&rdquo;
&ldquo;ongoing,&rdquo; &ldquo;expect,&rdquo; &ldquo;believe,&rdquo; &ldquo;intend,&rdquo; &ldquo;may,&rdquo; &ldquo;will,&rdquo;
&ldquo;should,&rdquo; &ldquo;could,&rdquo; and similar expressions to identify forward-looking statements.</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"><B>Business Overview</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="color: black">From inception
(October 23, 2012), </FONT>Armada Water Assets, Inc. (the &ldquo;Company&rdquo;) was organized as a vehicle to provide water fill
services that will provide a high volume of water to be used in connection with oil drilling operations in target markets. In
this connection and in order to commence operations, on February 1, 2013 the Company acquired 100% of the membership interests
of Barstow Production Water Solutions, LLC, which is currently engaged in water production for the oil production industry in
the Permian Shale field in Texas.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 goal is to develop
and operate a totally-supervised &ldquo;fast fill&rdquo; facility which will provide oil and trucking companies with a reduced
cost and increased efficiency in filling water vacuum trucks used in the process of oil production and disposal or remediation
of used water. The Company&rsquo;s Officers and consultants have experience in water production and distribution, particularly
in the Company&rsquo;s target market.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Acquisition of Barstow Production Water
Solutions, LLC (&ldquo;Barstow&rdquo;)</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">On February 1, 2013, the Company acquired
100% of the membership interests of Barstow Production Water Solutions, LLC (&ldquo;Barstow&rdquo;) pursuant to a Membership Interest
Purchase Agreement (&ldquo;MIPA&rdquo;) between the Company, Barstow and the members of Barstow for a total consideration comprising
(a) 3,000,000 newly-issued shares of Company Series A Preferred stock and (ii) promissory notes in the aggregate principal amount
of $1,000,000 (&ldquo;Promissory Notes&rdquo;) (collectively, the &ldquo;Initial Purchase Price&rdquo;). The Promissory Notes
have a maturity date of February 1, 2016 and the Company is required under the terms of the Promissory Notes to make quarterly
payments of principal and interest (at a rate of ten percent per annum) in amounts equal to one-third of the Company&rsquo;s cash
flow (as defined in the Promissory Notes) during the prior fiscal quarter. In addition, the Company must make mandatory prepayments
on account of the Promissory Notes equal to the proceeds of any subsequent debt or equity financings completed by the Company
to the extent aggregate cumulative proceeds thereof exceed $1,000,000. The Company shall also have the right to prepay the Promissory
Notes, in whole or in part, at any time without penalty.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition to the Initial Purchase Price,
for a period of five (5) years following the closing of the transaction, if and when annual Barstow EBITDA (as defined in the
MIPA) exceeds $2,000,000 (&ldquo;EBITDA Target&rdquo;), then the Company will pay quarterly to the Barstow members an additional
purchase price (&ldquo;Additional Purchase Price&rdquo;) equal to twenty percent (20%) of the amount by which the cumulative Barstow
EBITDA during the year in question exceeds the EBITDA Target.</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">Barstow owns land and a facility utilized
for water production located in Barstow, Texas (north of the Midland/Odessa area and in the Permian basin) comprising fee simple
title to approximately 175 acres on which there exist four wells that either currently or will generate freshwater for sale. One
of the wells is currently operating with an approximate capacity of 55,000 barrels of fresh water per day. This water is designated
for sale and/or mixing of treated water. The Company intends to complete the permitting process and commence operation of the
three other wells subject to availability and market demand. There are currently four &ldquo;fast-load&rdquo; stations constructed
and operational on the property for filling water trucks which will service the Company&rsquo;s 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">Additionally, the Barstow facility has
bathrooms and showers on-site for drivers utilizing the property. The entire facility site has access to electrical power which
will permit the Company to expand operations if and when appropriate.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 Company intends to acquire
and construct a complete water treatment facility on the property to enable the treatment of contaminated water dropped off at
or delivered to the facility. The treated and clean water will either be marketed for resale as-is or mixed with freshwater and
sold as a mixed product.</P>

<P STYLE="font: 10pt Times New Roman, 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"><FONT STYLE="text-transform: uppercase"><B>General
Business Plan and Market</B></FONT></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, 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 most significant demand for remediated
and reusable water supplies in the Company&rsquo;s market are conventional oil and gas producers. Fracturing in the shale gas
and conventional gas sectors requires significant water supplies and produce a significant amount of water requiring disposal
or remediation.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Applicable regulations and resistance
to the issuance of on-site or off-site disposal permits drives a demand among oil and gas producers for the Company&rsquo;s services.
Additionally, the Company believes that an industry-wide need to reduce the consumption of finite local water sources and increasing
transportation costs will drive the demand for the Company&rsquo;s strategically located, state-of-the-art water treatment facilities.
The Company&rsquo;s existing and/or targeted assets are geographically centered in oilfields and high traffic water transportation
corridors.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 future, the Company intends to
focus its expansion and potentially expand its operations into oilfields in high producing formations.</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, 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 primary goal is to
achieve profitability by providing water produced at its facilities and water disposal and remediation services to the oil and
gas industry. The Company believes that its services will significantly reduce water transportation and disposal costs and enable
its customer base of oil and gas producers to comply with applicable regulations consistent with maintaining environmental responsibility.</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, 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 several competitors and potential
competitors that currently offer certain of the technologies involved in the water remediation process (for example, electro-coagulation,
reverse osmosis, or membrane filtration). Similarly, there are competitors which have facilities offering injection wells and/or
transportation of contaminated or clean water or offer fresh water for sale. It is the Company&rsquo;s intention combine all of
the services, technologies and commodity components required by its customer base in order to offer the oil and gas industry in
its targeted markets a simple and convenient, yet essential &ldquo;one-stop&rdquo; solution.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s management and its
advisors have well over 20 years of experience performing field services in and around the oil and gas industry. Additionally,
the Company has or intends to retain the services of senior oil and gas field engineers that have significant hands-on experience
in designing, constructing and operating water treatment facilities in and around the oil and gas industry. Following its research
and due diligence, the Company&rsquo;s management believes that there are no strategically-located facilities in the oil and gas
fields in its target markets offering an all-inclusive, collection, remediation, recycling/reuse water treatment technology to
the oil and gas industry. While Company management believes that there are other groups providing similar services, Company management
believes it can provide a water treatment systems and related support services that are superior to competitive offerings based
on 1) Company management&rsquo;s existing relationships with Oil and Gas field service providers with proven safety and performance
histories and 2) the Company&rsquo;s access through its existing engineering and technology partners to patented and/or proprietary
water treatment technologies that have been proven in terms of throughput, performance and reliability. Further, Company management
believes that its strategically located facilities which are either currently owned or targeted will result in a competitive advantage
in terms of convenience and reduction of transportation costs for its 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">The Company intends to negotiate both
long and short-term contracts with its customers. Once contracts are secured, they will provide an advantage for the company in
terms of minimizing market variables by determining its revenues and costs in order to maintain predictably profitable 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 Company then intends to offer additional
ancillary services such as proprietary drilling mud treatment services, vapor and emission control capabilities, as well as freshwater
sales at several of its facilities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">OPERATIONAL 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 overall goal of the Company is to
provide water and then address the ongoing issue of water treatment and disposal through access to central disposal sites, reduction
of transportation costs and alleviating much of the present permitting, environmental and economic challenges currently faced
by the oil and gas industry. As set forth below, the Company currently owns, has under contract, or has targeted for near-term
acquisition assets that create the ability for the Company to achieve its goals.</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Barstow, Texas: Barstow Production Water
Services (Midland/Odessa Area &ndash; Permian Basin).</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">4
                                                                                                               existing wells
                                                                                                               for fresh water</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">1
                                                                                                               well up and pumping
                                                                                                               (capacity of 55k
                                                                                                               bbls a day) (fresh
                                                                                                               water sale and
                                                                                                               /or mixing of treated
                                                                                                               water)</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">4
                                                                                                               fast load stations
                                                                                                               up and operational</FONT></TD></TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Power
                                                                                                               on both ends of
                                                                                                               the property that
                                                                                                               allow for expansion.</FONT></TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Future plans in calendar year 2013 are
to add a proprietary/patented Armada Water Treatment train to enable complete surface treatment of contaminated water at the facility
to allow for disposal of produced water and purchase of fresh water.</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, 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 intends to consider potential
acquisitions of synergistic companies and businesses. Details of these potential transactions are yet to be determined.</P>

<P STYLE="font: 10pt Times 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>Initial Capital Formation</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: justify">In January 2013, the Registrant sold an
aggregate of 6,975,000 shares of Common Stock par value $0.0001 to fifteen founders at a price of $0.01 per share. This offering
netted the Company an aggregate of $69,750. Thereafter, in February 2013, the Company sold an additional 4,177,500 shares of Common
Stock par value $0.0001 to 29 investors at a price of $0.10 per share. This offering netted the Company an aggregate of $417,750.
The Registrant sold these shares of Common Stock under an exemption from registration provided by Section 4(2) of the Securities
Act.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2013, the Company entered into
a note with City National Bank, as Trustee of the Elanken Family Trust-S, dated April 24, 2002 with a face amount of $500,000
payable on or before August 1, 2013. Commencing March 1, 2013, the Company shall pay to Payee monthly interest payments at a rate
of ten percent (10%) per annum. The note is convertible, at the option of the lender into shares of Company Common Stock at a
conversion price of $1.00 per share. The note is secured by the pledge of certain third-party assets by a shareholder of the Company.
As an inducement to making the loan, the Company issued to the lender 100,000 shares of Company 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">The Company is currently engaged in the
offering of up to 3,000,000 shares of Common Stock par value $0.0001 to investors at a price of $1.00 per share. The Company has
set a minimum offering size of 500,000 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">No principal of the Company has made any
formal or informal arrangement to advance funds 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: center"><B>WATER SERVICES INDUSTRY OVERVIEW</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">According to the U.S. Energy Information
Agency, in 2009 there were an estimated 1,090,000 oil and gas wells producing about 21 billion barrels (bbl) of contaminated water
annually in North America alone and for every barrel of oil and gas produced in the U.S. there is, on average, 7.6 barrels of
produced water. By 2025, the water to oil ratio is expected to reach, on average, 12 water bbl&rsquo;s to 1 oil bbl because of
the new fracking techniques. Last year alone in the United States, there were 21 billion bbl of produced water, all with regulatory
disposal issues. There are currently over 80 agencies in the domestic U.S. that are dealing with water contamination issues.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Produced water in the oil and gas industry
is the foremost short and long-term environmental contingent liability facing every oil company, majors and independents alike,
that uses fracturing techniques and transports flowback and produced water.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Historically, water generated or produced
in the process of drilling, was simply &ldquo;spilled&rdquo; on site and allowed to leech and evaporate. Eventually, the companies
gathered the water in &ldquo;pits&rdquo; (some were eventually lined to eliminate leeching). The water was then simply allowed
to evaporate into the atmosphere. Today, for the most part, contaminated water generated by the oil and gas industry is transported
by tanker trucks to &ldquo;off-site&rdquo; disposal facilities, where it is either evaporated in relatively sophisticated pits
or injected into down-hole disposal wells. In many instances, both may be harmful to the environment and many of the sites are
not EPA compliant. The transportation and treatment of the contaminated water are two major components of the cost of producing
oil and gas. Economically, dealing with this water is a key to oil and gas producers&rsquo; profitability.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Transportation is the single largest cost
for the producers. Approximately 76% of transportation costs is attributed to produce and flow back waters. Overall, almost 26%
of oil production costs is attributed to the disposal of produced and flow back contaminated water. This does not include transportation
costs.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the first time, the industry is now
accepting that the contaminated water can be successfully treated, recycled and reused in fracturing operations thereby maximizing
oil production and minimizing use of precious groundwater and underground water aquifers. The residual oils, concentrated brine
and &ldquo;clean&rdquo; water are all highly marketable commodities generated by the treatment process. Indeed, the management
of AWA has established that produced and flow back waters can be delivered to central locations and efficiently and profitably
separated into marketable derivatives; all to the benefit of the industry and the environment.</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>Results of Operations</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Results of Operations for Barstow
Production Water Solutions, LLC, our predecessor business which we acquired on February 1, 2013, for the period from August 9,
2012 (Inception) through December 31, 2012</I></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the period from inception on August
9, 2012 through December 31, 2012, Barstow generated revenues of approximately $84,000. Substantially all of this revenue was
earned as a subcontractor for Oil Raiders Logistics, Inc. (a company with common ownership to certain members of Barstow Production
Water Solutions, LLC prior to our acquisition of their interests). As of early October 2012, the one ultimate outside third party
customer of Oil Raiders Logistics, Inc. who provided substantially all of the revenues during the period terminated the relationship
with Oil Raiders Logistics, 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">For the period from inception on August
9, 2012 through December 31, 2012, cost of sales for the revenues earned by Barstow amounted to approximately $13,000. We expect
these costs to increase in future periods as we hire employees and grow 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">For the period from inception on August
9, 2012 through December 31, 2012, Barstow paid its officers, who were also two of the three members of Barstow approximately
$87,000 in compensation for their services in overseeing the buildout and operations of Barstow.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 period from inception on August
9, 2012 through December 31, 2012, Barstow incurred consulting expense and management fees of $30,000 each. Barstow was obligated
to pay a consultant $6,000 per month and an additional $6,000 per month as compensation for the services provided by Oil Raiders
Logistics, Inc. under the management and accounting service agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 period from inception on August
9, 2012 through December 31, 2012, depreciation expense amounted to approximately $8,000. We expect depreciation expense to increase
in 2013 as we continue to grow 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">For the period from inception on August
9, 2012 through December 31, 2012, Barstow incurred general and administrative expenses of approximately $57,000 which consisted
primarily of professional fees to complete the audit of its financial statements. These costs are expected to increase substantially
in 2013 due to the increased regulatory burdens required of a public 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">For the period from inception on August
9, 2012 through December 31, 2012, Barstow incurred interest expense of approximately $1,000, which was the result of the promissory
note assigned to the Company by Oil Raiders as part of the original equity contribution of two members of Barstow. The Company
expects that interest expense will increase in 2013 as part of the interest due on the seller notes from the membership interest
purchase agreement with the members of Barstow Production Water Solutions, LLC and from possibly incurring additional debt in
the future to meet capital requirements to expand the business.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Liquidity and Capital Resources</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2013, the Registrant sold an
aggregate of 6,975,000 shares of Common Stock par value $0.0001 to fifteen founders at a price of $0.01 per share. This offering
netted the Company an aggregate of $69,750. Thereafter, in February 2013, the Company sold an additional 4,177,500 shares of Common
Stock par value $0.0001 to 29 investors at a price of $0.10 per share. This offering netted the Company an aggregate of $417,750.
The Registrant sold these shares of Common Stock under an exemption from registration provided by Section 4(2) 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">In January 2013, the Company entered into
a note with City National Bank, as Trustee of the Elanken Family Trust-S, dated April 24, 2002 with a face amount of $500,000
payable on or before August 1, 2013. Commencing March 1, 2013, the Company shall pay to Payee monthly interest payments at a rate
of ten percent (10%) per annum. The note is convertible, at the option of the lender into shares of Company Common Stock at a
conversion price of $1.00 per share. The note is secured by the pledge of certain third-party assets by a shareholder of the Company.
As an inducement to making the loan, the Company issued to the lender 100,000 shares of Company Common Stock.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is currently engaged in the
offering of up to 3,000,000 shares of Common Stock par value $0.0001 to investors at a price of $1.00 per share. The Company has
set a minimum offering size of 500,000 shares. . The inability to successfully complete this offering will materially affect the
ability of the Company to implement its business plan of operations and jeopardize the viability of the Company. In that case,
the Company may need to suspend its operations and reevaluate and revise its plan of operations.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Critical Accounting Policies</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">See the footnotes to the Barstow Production
Water Solutions, LLC financial statements elsewhere in this document for our critical accounting policies.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>JOBS Act</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">In April&nbsp;2012, President Obama signed
into law the Jumpstart Our Business Startups Act, or the JOBS Act. The JOBS Act contains provisions that, among other things,
relax certain reporting requirements for &ldquo;emerging growth companies,&rdquo; including certain requirements relating to accounting
standards and compensation disclosure. We are classified as an emerging growth company. For as long as we are an emerging growth
company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things,
(1)&nbsp;provide an auditor&rsquo;s attestation report on management&rsquo;s assessment of the effectiveness of our system of
internal control over financial reporting pursuant to Section&nbsp;404(b) of the Sarbanes Oxley Act of 2002, (2)&nbsp;comply with
any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation
or a supplement to the auditor&rsquo;s report in which the auditor would be required to provide additional information about the
audit and the financial statements of the issuer, (3)&nbsp;comply with any new audit rules adopted by the PCAOB after April&nbsp;5,
2012 unless the SEC determines otherwise, (4)&nbsp;provide certain disclosure regarding executive compensation required of larger
public companies or (5)&nbsp;hold shareholder advisory votes on executive compensation.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Further, our independent registered public
accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting,
and will not be required to do so for as long as we are an &ldquo;emerging growth company&rdquo; pursuant to the provisions of
the JOBS 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">We have elected to use the extended transition
period for complying with new or revised accounting standards under Section 102(b)(1), which allows us to delay adoption of new
or revised accounting standards that have different effective dates for public and private until those standards apply to private
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"><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; text-align: justify">From time to time, new accounting pronouncements
are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company&rsquo;s
accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance
for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact
will not be material to its financial position, results of operations, and cash flows when implemented.</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>Employees</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are a development stage company and
currently have no full-time employees. In addition to hiring employees, we plan to use consultants, attorneys, accountants, as
necessary.</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: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>REPORTS TO STOCKHOLDERS</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: justify">We are not subject to the informational
requirements of the Securities Exchange Act of 1934, as amended. Once our registration statement is effective and our securities
are registered under the exchange act, we will file supplementary and periodic information, documents and reports that are required
under section 13 of the Securities Act of 1933, as amended, with the Securities and Exchange Commission. Such reports, proxy statements
and other information will be available through the Commission&rsquo;s Electronic Data Gathering Analysis and Retrieval System
which is publicly available through the Commission&rsquo;s website (http://www.sec.gov).</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 intend to furnish annual reports to
stockholders, which will include audited financial statements reported on by our Certified Public Accountants. In addition, we
will issue unaudited quarterly or other interim reports to stockholders, as we deem appropriate or required by applicable securities
regulations.</P>

<P STYLE="font: 10pt Times New Roman, 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>FINANCIAL STATEMENTS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying financial statements
have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles applicable
in the United States. Under the accrual basis of accounting, revenues are recorded as earned and expenses are recorded at the
time liabilities are incurred. The Company has adopted a December 31 year-end. In the opinion of management, all adjustments for
a fair statement of the results and operations and financial position for the interim periods presented have been included.</P>

<P STYLE="font: 10pt Times New Roman, 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>PROPERTIES</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: justify"><FONT STYLE="color: black">The Company
maintains its corporate offices at<B> </B>1716 E. Lincoln Avenue, Fort Collins, CO 80524 where it shares space with certain other
businesses controlled by Mr. Burroughs. In addition, the Company owns a parcel of approximately 175 acres in </FONT>Barstow, Texas
where is carries on water pumping, loading and treatment.</P>

<P STYLE="font: 10pt Times New Roman, 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>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL</B></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth certain
information regarding beneficial ownership of the Company's Common Stock as of February 1, 2013, by: (I) each current director;
each nominee for director, and executive officer of the Company; (ii) all directors and executive officers as a group; and (iii)
each shareholder who owns more than five percent of the outstanding shares of the Company's Common Stock. Except as otherwise
indicated, the Company believes each of the persons listed below possesses sole voting and investment power with respect to the
shares indicated.</P>

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

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: black">Name and Address</TD><TD NOWRAP STYLE="color: black">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; text-align: center">Number of Shares</TD><TD NOWRAP STYLE="color: black">&nbsp;</TD><TD NOWRAP STYLE="color: black">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; text-align: center">Percentage Owned</TD><TD NOWRAP STYLE="color: black">&nbsp;</TD><TD NOWRAP STYLE="color: black">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; text-align: center">Capacity</TD><TD NOWRAP STYLE="color: black">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 55%; color: black; text-align: left">Mitch Burroughs</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; color: black; text-align: right">250,000</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; color: black; text-align: right">2.2</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">Officer/Director</FONT></TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">6102 Keswick Ct.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black; text-align: left">Ft. Collins, CO 80524</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">J. John Combs</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">250,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.2</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">Officer/Director</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">7801 Brighton Road</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black; text-align: left">Commerce City, CO 80022</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Norman Manness</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">0</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">0</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">Director</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">45051 Macdonald Road</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black; text-align: left">Domain, Manitoba</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black; text-align: left">Canada ROGOMO</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">All officers and directors as a</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black">Group (three (3) persons)</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">4.5</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Capital Growth Investment Trust (3)</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">800,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7.2</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">5%
                                                          holder</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">13 Pasho Street</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black; text-align: left">Andover, MA 01810</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Discretionary Investment Trust (4)</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">800,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7.2</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">5%
                                                          holder</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">8 Bartlett Street</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black; text-align: left">Marblehead, MA 19145</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">KWL Exploration and</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black; text-align: left">Development LLC (5)</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">800,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7.2</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">5%
                                                          holder</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">630 West Germantown Pike</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black">Suite 180</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black; text-align: left">Plymouth Meeting, PA 19462</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">FEQ Gas, LLC (6)</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">750,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">6.7</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">5%
                                                          holder</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">24224 Kanis Road</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black; text-align: left">Little Rock, AR 72223</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Moonlight Investments Limited (7)</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">750,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">6.7</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">5%
                                                          holder</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">One Cathedral
    Square, 5<SUP>th</SUP> Floor</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black; text-align: left">Jules Koenig Street, Port Louis</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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="color: black">Mauritius</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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>
</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">(1) This table is based upon 11,252,500
shares issued and outstanding as of February 1, 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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) Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission and includes voting and investment power with respect to
the shares. Shares of Common Stock subject to options or warrants currently exercisable or exercisable within 60 days are deemed
outstanding for computing the percentage of the person holding such options or warrants, but are not deemed outstanding for computing
the percentage of any other person.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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) The beneficial owner of Capital Growth
Investment Trust is Vicki Appel.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(4) The beneficial owner of Discretionary
Investment Trust is Dana Young.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(5) The beneficial owner of KWL Exploration
and Development LLC is Kyung Won Lee.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(6) The beneficial owner of FEQ Gas, LLC
is Ernest Bartlett.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(7) The beneficial owner of Moonlight
Investments Limited is Raffaele Ricci.</P>



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

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<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">&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following individuals currently serve as our executive
officers and directors:</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: 25%; font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Name</B></FONT></TD>
    <TD STYLE="width: 2%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 15%; font-weight: bold; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Age</B></FONT></TD>
    <TD STYLE="width: 2%; padding-left: 24.6pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 56%; padding-left: 0; font-weight: bold; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Positions</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Mitch Burroughs</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">49</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">President &amp; Director</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">J. John Combs</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">54</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Secretary &amp; Director</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Norman Manness</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">51</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Treasurer &amp; Director</FONT></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">Mitch Burroughs has been President and
a Director of the Company since December 2012. Since January, 2010, Mr. Burroughs has been the principal owner of New Water Financial,
LLC, a Colorado limited liability company which owns water disposal and remediation facilities. From April 2009 through November
2010, Mr. Burroughs was the Chief Executive Officer and owner of Majestic 360, and from September 1996 until April 2009, Mr. Burroughs
was an owner of NBS Enterprises, Inc., d/b/a/Majestic West, both are Colorado based companies which provide apparel decoration
services to some of the nation&rsquo;s leading marketing agencies. Mr. Burroughs graduated from Colorado State University in 1989
with a degree in 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">J. John Combs III, Secretary and a Director
of the Company, served as the sole Officer and Director of the Company from inception (October 26, 2012) until December, 2012,
when Messrs. Burroughs and Manness were appointed as Directors and President and Treasurer, respectively. Mr. Combs is the founder,
chairman of the board of directors and Chief Executive Officer of Strategic Environmental Services, Inc. (SEER), a publicly traded
holding company that provides technology based industrial services to the environmental, energy and rail transportation services.
Mr. Combs has held these positions with SEER since 2004. Mr. Combs is Vice President of Resource Environmental Group Services,
Inc. (2004) and the founder and President of Tactical Cleaning Company (2005), which are subsidiaries of SEER. Mr. Combs, an attorney
in private practice specializes in corporate maintenance, international finance, and business litigation. He is a member of the
California and Colorado Bars. Mr. Combs is a graduate University of Colorado and received his J.D. from Duke 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">Norman Manness has been Treasurer and
Director since December 2012. From 2006 through the present, Mr. Manness has been the owner of Eyewitness Communications, a high
speed internet provider, cellular provider and a residential and commercial security company based in LaSalle, Manitoba, Canada.
Mr. Manness, since 1988 has been the owner of Avonlea Farm Sales, an Agricultural Equipment Retailer located in Domain, Manitoba,
Canada. Mr. Manness is a resident of Domain, Manitoba, Canada.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 specific business opportunity becomes
available, such persons may face a conflict in selecting between the Company and their other business interest. &nbsp;The Company
has not formulated a policy for the resolution of such conflicts.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are no family relationships between
our officers and directors.&nbsp;&nbsp;Each director is elected at our annual meeting of stockholders and holds office until the
next annual meeting of stockholders, or until his successor is elected and qualified.</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>EXECUTIVE COMPENSATION</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: justify">The following table summarizes all compensation
recorded by us since inception (October 23, 2012). During this period, we had no other executive officer serving as such whose
annual compensation exceeded $100,000, and no other individuals for whom disclosure would have been made in this table but for
the fact that the individual was not serving as an executive officer of our Company at any time:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">No executive compensation of any description
was paid by the Company during the subject period.</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>Outstanding Equity Awards at Fiscal
Year-End</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 provides information
concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding
as of February 1, 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">None</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: 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">We have not established standard compensation
arrangements for our directors and the compensation, if any, payable to each individual for their service on our Board will be
determined from time to time by our Board of Directors based upon the amount of time expended by each of the directors on our
behalf.&nbsp;&nbsp;None of our directors received any compensation for their services.</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>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,</B></P>

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

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has one &ldquo;independent&rdquo;
director, Norm Maness, within the meaning of Nasdaq Marketplace Rule 4200.</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>LEGAL PROCEEDINGS</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">None</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>MARKET PRICE OF AND DIVIDENDS ON THE
REGISTRANT&rsquo;S</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS</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"><B>Market Price of the Registrant&rsquo;s Common 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">Our stock has yet to trade on any established market.</P>

<P STYLE="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 never paid cash dividends on our
common stock.&nbsp;&nbsp;Under Nevada law, we may declare and pay dividends on our capital stock either out of our surplus, as
defined in the relevant Nevada statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year.&nbsp;&nbsp;If, however, the capital of our company, computed in accordance
with the relevant Nevada statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise,
to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having
a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits any dividends
upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock
of all classes having a preference upon the distribution of assets shall have been repaired.</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>RECENT SALES OF UNREGISTERED SECURITIES</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: justify">In January 2013, the Registrant sold an
aggregate of 6,975,000 shares of Common Stock par value $0.0001 to fifteen founders at a price of $0.01 per share. This offering
netted the Company an aggregate of $69,750. Thereafter, in February 2013, the Company sold an additional 4,177,500 shares of Common
Stock par value $0.0001 to 29 investors at a price of $0.10 per share. This offering netted the Company an aggregate of $417,750.
The Registrant sold these shares of Common Stock under an exemption from registration provided by Section 4(2) of the Securities
Act.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2013, the Company entered into
a note with City National Bank, as Trustee of the Elanken Family Trust-S, dated April 24, 2002 with a face amount of $500,000
payable on or before August 1, 2013. Commencing March 1, 2013, the Company shall pay to Payee monthly interest payments at a rate
of ten percent (10%) per annum. The note is convertible, at the option of the lender into shares of Company Common Stock at a
conversion price of $1.00 per share. The note is secured by the pledge of certain third-party assets by a shareholder of the Company.
As an inducement to making the loan, the Company issued to the lender 100,000 shares of Company 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">The Company is currently engaged in the
offering of up to 3,000,000 shares of Common Stock par value $0.0001 to investors at a price of $1.00 per share. The Company has
set a minimum offering size of 500,000 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">On February 1, 2013, the Company issued
3,000,000 shares of its Series A Preferred Stock valued at $1.000 per share to three parties as part of the consideration for
the purchase of the membership interests of Barstow Production Water Solutions, LLC pursuant to a Member Interest Purchase Agreement
dated as of February 4, 2013.</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>DESCRIPTION OF SECURITIES</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: justify">We are authorized to issue 150,000,000
shares of capital stock, 100,000,000 shares of which are designated Common Stock, $0.0001 par value per share, of which, as of
February 1, 2013, 11,252,500 shares of Common Stock were issued and outstanding and 50,000,000 shares of Preferred Stock of which,
as of February 1, 2013, 3,000,000 shares of Series A Preferred Stock were issued and outstanding. Additional shares may be issued
by our board of directors without further stockholder approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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">Holders of our common stock are entitled
to one vote for each share on all matters voted upon by our stockholders, including the election of directors, and do not have
cumulative voting rights.&nbsp;&nbsp;Subject to the rights of holders of any then outstanding shares of our preferred stock, our
common stockholders are entitled to any dividends that may be declared by our board.&nbsp;&nbsp;Holders of our common stock are
entitled to share ratably in our net assets upon our dissolution or liquidation after payment or provision for all liabilities
and any preferential liquidation rights of our preferred stock then outstanding.&nbsp;&nbsp;Holders of our common stock have no
preemptive rights to purchase shares of our stock.&nbsp;&nbsp;The shares of our common stock are not subject to any redemption
provisions and are not convertible into any other shares of our capital stock.&nbsp;&nbsp;All outstanding shares of our common
stock are, and the shares of common stock to be issued in the offering will be, upon payment therefor, fully paid and nonassessable.
The rights, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of
our preferred stock we may issue in the future.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Preferred Stock</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 designated 4,000,000 shares
of its authorized preferred stock as Series A Preferred Stock. The Certificate of Designation for the Series A Preferred Stock
provides for the following rights and preferences:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">1)</TD><TD STYLE="text-align: justify">An Original Issue Price of $1.00
                                                                per share;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">2)</TD><TD STYLE="text-align: justify">Convertible at any time after
                                                                May 14, 2014 into Company Common Stock at a conversion price to
                                                                be determined by the Cumulative EBITDA generated by the Barstow
                                                                Water Productions Solutions, LLC assets during the applicable
                                                                Measurement Period and automatic conversion to Company Common
                                                                Stock at the then-effective Conversion Rate on May 14, 2017;</TD></TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">3)</TD><TD STYLE="text-align: justify">An annual preferential dividend
                                                                at a rate of $0.05 per share (subject to adjustment);</TD></TR></TABLE>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">4)</TD><TD STYLE="text-align: justify">A Liquidation preference of $1.00
                                                                per share;</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; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">5)</TD><TD STYLE="text-align: justify">Voting rights based on a Conversion
                                                                Price of $2.00 per share; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">6)</TD><TD STYLE="text-align: justify">Board representation right to
                                                                appoint one director of five (5) total directors.</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; text-indent: 0.5in"><B>SELLING SECURITY
HOLDERS</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: justify">The following table sets forth the shares
beneficially owned, as of the date of this prospectus, by the selling stockholders prior to the offering contemplated by this
prospectus, the number of shares each selling stockholder is offering by this prospectus and the number of shares which each selling
stockholder would own beneficially if all such offered shares are sold.&nbsp;&nbsp;None of the selling stockholders is known to
us to be a registered broker-dealer or an affiliate of a registered broker-dealer.&nbsp;&nbsp;Each of the selling stockholders
has acquired his, her or its shares solely for investment and not with a view to or for resale or distribution of such securities.&nbsp;&nbsp;Beneficial
ownership is determined in accordance with SEC rules and includes voting or investment power with respect to the securities.</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="border-bottom: Black 1pt solid">Name&nbsp;(1)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; padding-bottom: 1pt">Shares&nbsp;of&nbsp;common<BR> stock&nbsp;owned&nbsp;prior<BR>
    to&nbsp;the&nbsp;offering</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; padding-bottom: 1pt">Shares&nbsp;of&nbsp;common<BR> stock&nbsp;to&nbsp;be&nbsp;sold&nbsp;(2)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; padding-bottom: 1pt">Shares&nbsp;of&nbsp;common<BR> stock&nbsp;owned&nbsp;after&nbsp;the<BR>
    offering</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; padding-bottom: 1pt">Percentage&nbsp;of<BR> common&nbsp;stock<BR> owned&nbsp;after&nbsp;this<BR>
    offering</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%; color: black; text-align: left">Burroughs and Family LLC</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; color: black; text-align: right">250,000</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; color: black; text-align: right">75,000</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; color: black; text-align: right">175,000</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; color: black; text-align: right">1.0</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Capital Growth Investment Trust</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">800,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">240,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">560,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">4.0</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Wiltomo Redemption Foundation</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">300,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">90,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">210,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">1.5</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">RMS Advisors</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">300,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">90,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">210,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">1.5</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Pawnxchange LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">150,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">350,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.5</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">FEQ Realty LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">150,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">350,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.5</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Corporate Capital Group International</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">400,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">120,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">280,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.0</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Discretionary Investment Trust</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">800,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">240,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">560,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">4.0</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">KWL Exploration and Development LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">800,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">240,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">560,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">4.0</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Austin Coal, LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">150,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">350,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.5</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">SLA Declaration of Trust</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">100,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">30,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">70,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Moggle Investors, LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">150,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">350,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.5</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">J. John Combs III</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">250,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">75,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">175,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">1.0</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">FEQ Gas, LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">750,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">225,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">525,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">3.7</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Bel-Phil Investment Partners</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">225,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">67,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">157,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">1.1</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">City National Bank, Trustee</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">100,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">30,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">70,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Sherif Salib</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">50,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">15,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">35,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">William Belzberg Revocable Living Trust</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">75,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">22,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">52,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Michael Garnick</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">150,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">350,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.5</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Clair Calvert</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">350,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">105,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">245,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.2</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Janice Thoroski</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">350,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">105,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">245,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.2</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Moonlight Investments Limited</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">750,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">225,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">535,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">3.7</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">SLD Capital Corp</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">400,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">120,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">280,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.5</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Susan and Robert deRose Family Trust dated 11/18/86</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">70,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">21,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">49,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">SPH Investments, Inc. Profit Sharing Plan f/b/o Stephen P. Harrington</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">200,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">60,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">140,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">1.2</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Lockor Incorporated</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">120,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">36,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">84,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">John Cope</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">20,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">6,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">14,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Gerald Hannahs</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">60,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">18,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">42,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Kemp Skokos</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">50,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">15,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">35,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">David Bartlett</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">20,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">6,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">14,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Donald S. Jackson Non-Exempt Trust</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Fabrizio Balestri</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Mario Litman</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2,250</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">5,250</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">William F. Miller III</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">250,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">75,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">175,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">1.6</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Excelsus Consulting, LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">150,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">45,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">105,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Anthony Magana</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">75,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">22,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">52,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Markus Winkler</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">150,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">350,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">2.5</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Jason Batansky</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Richard Faieta</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Michael Bellino</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Bryan S. Dresner</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">David Roff</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">30,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">9,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">21,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Brice Scheschuk</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">30,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">9,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">21,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Bruce Ginsberg</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Virginia Dadey</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">50,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">15,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">35,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; 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="color: black">TOTALS</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">11,252,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">3,375,750</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,876,750</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">70.0</TD><TD STYLE="color: black; text-align: left">&nbsp;</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">* Less than 1%</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>
    <TD STYLE="vertical-align: top; width: 4%; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><SUP>(1)</SUP></FONT></TD>
    <TD STYLE="vertical-align: top; width: 96%; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">All
    shares are owned of record and beneficially unless otherwise indicated. Beneficial ownership information for the selling stockholders
    is provided as of February 1, 2013, based upon information provided by the selling stockholders or otherwise known to us.</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><SUP>(2)</SUP></FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Assumes the sale
    of all shares of common stock registered pursuant to this prospectus. The selling stockholders are under no obligation known
    to us to sell any shares of common stock at this time.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>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"><B>Shares Offered by the Company</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 are offering to the public up to 3,000,000
shares of common stock, at $1.00 per share (a minimum of 500,000 shares), in a &ldquo;direct public offering,&rdquo; This offering
terminates in 12 months after the date of effectiveness of this registration, on February 1, 2014 (&ldquo;Termination Date&rdquo;).&nbsp;&nbsp;There
will be no extension offered for 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: justify">This is our initial public offering, and
no public market currently exists for our shares. The offering price may not reflect the market price of our shares after the
offering. There is a $500 minimum purchase requirement for prospective stockholders.&nbsp;&nbsp;There is no arrangement to place
funds in an escrow, trust, or similar account.</P>

<P STYLE="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 may continue to offer shares for a
period of twelve months after commencement of this offering or until we have sold all of the shares offered in this prospectus.
During the offering period, no subscriber will be entitled to any refund of any subscription.</P>

<P STYLE="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 will sell the shares on a &ldquo;direct
public offering&rdquo; according to the following plan of distribution:</P>

<P STYLE="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">You may purchase shares by completing
and manually executing a subscription agreement and delivering it with your payment in full for all shares, which you wish to
purchase, to our offices. Your subscription shall not become effective until accepted by us and approved by our counsel. Acceptance
will be based upon confirmation that you have purchased the shares in a state providing for an exemption from registration. Our
subscription process is 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" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">a
                                                                                                               prospectus with
                                                                                                               subscription agreement,
                                                                                                               is delivered by
                                                                                                               the Company to
                                                                                                               each offeree;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">the
                                                                                                               subscription is
                                                                                                               completed by the
                                                                                                               offeree, and submitted
                                                                                                               with a check to
                                                                                                               the Company;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">each
                                                                                                               subscription will
                                                                                                               be reviewed by
                                                                                                               the Company and
                                                                                                               its counsel to
                                                                                                               confirm that the
                                                                                                               subscribing party
                                                                                                               completed the form
                                                                                                               and to confirm
                                                                                                               the state of acceptance;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">once
                                                                                                               approved by counsel,
                                                                                                               the subscription
                                                                                                               is accepted by
                                                                                                               the Company and
                                                                                                               the funds are deposited
                                                                                                               into the Company&rsquo;s
                                                                                                               account within
                                                                                                               four (4) days following
                                                                                                               acceptance of the
                                                                                                               subscription;</FONT></TD></TR></TABLE>

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


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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">subscriptions
                                                                                                               not accepted are
                                                                                                               returned with the
                                                                                                               check un-deposited
                                                                                                               within 24 hours
                                                                                                               of determination
                                                                                                               of non-acceptance.</FONT></TD></TR></TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Shares Offered by the Selling Shareholders</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The selling stockholders have advised
us that they will sell the shares of common stock from time to time in the open market, at the initial offering price of $1.00
per share until the shares are quoted on the OTC Bulletin Board or national securities exchange, at which point the selling securities
holders may sell the registered shares&nbsp;at market prices prevailing at the time of sale, at prices related to the prevailing
market prices, at negotiated prices, or otherwise as described under the section of this prospectus titled &ldquo;Plan of Distribution.&rdquo;
The selling stockholders may, from time to time, sell any or all of their shares of common stock on any stock exchange, market
or trading facility on which the shares are traded or in private transactions.&nbsp;&nbsp;If the shares of common stock are sold
through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commission
or agent&rsquo;s commissions.&nbsp;&nbsp;The selling stockholders may use any one or more of the following methods when selling
shares:</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: 15%">&nbsp;</TD>
    <TD STYLE="width: 7%"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 78%"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">any national securities exchange or quotation
    service on which the securities may be listed or quoted at the time of sale;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">ordinary brokerage transactions and transactions in which the broker-dealer
    solicits purchasers;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">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;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">purchases by a broker-dealer as principal and resale by the broker-dealer
    for its account;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">transactions otherwise than on these exchanges or systems or in
    the over-the-counter market;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">through the writing of options, whether such options are listed
    on an options exchange or otherwise;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">an exchange distribution in accordance with the rules of the applicable
    exchange;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">privately negotiated transactions;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">short sales;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">broker-dealers may agree with the selling stockholders to sell
    a specified number of such shares at a stipulated price per share;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">a combination of any such methods of sale; and</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">any other method permitted pursuant to applicable law.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The selling stockholders may also sell
shares under Rule 144 under the Securities Act, if available, rather than 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">The selling stockholders may also engage
in short sales against the box, puts and calls and other transactions in our securities or derivatives of our securities and may
sell or deliver shares in connection with these trades.</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">Broker-dealers engaged by the selling
stockholders may arrange for other broker-dealers to participate in sales.&nbsp;&nbsp;Broker-dealers may receive commissions or
discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser)
in amounts to be negotiated.&nbsp;&nbsp;The selling stockholders do not expect these commissions and discounts to exceed what
is customary in the types of transactions involved.&nbsp;&nbsp;Any profits on the resale of shares of common stock by a broker-dealer
acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act.&nbsp;&nbsp;Discounts,
concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a selling stockholder.&nbsp;&nbsp;The
selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales
of the shares if liabilities are imposed on that person 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">In connection with the sale of the shares
of common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of common stock in the course of hedging in positions they assume.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 stockholders may also sell
shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales.&nbsp;&nbsp;The selling stockholders may also loan or pledge shares
of common stock to broker-dealers that in turn may sell such shares.&nbsp;&nbsp;The selling stockholders may, from time to time,
pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance
of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time
under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of
the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders 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">Each selling stockholder has informed
us that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the common stock.&nbsp;&nbsp;None
of the selling stockholders are affiliates of any broker-dealers.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 paying all fees and expenses incident
to the registration of the shares of common stock.&nbsp;&nbsp;Except as provided for indemnification of the selling stockholders,
we are not obligated to pay any of the expenses of any attorney or other advisor engaged by a selling stockholder.&nbsp;&nbsp;We
have not agreed to indemnify any selling stockholders against losses, claims, damages and liabilities, including liabilities 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">If we are notified by any selling stockholder
that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required,
we will file a supplement to this prospectus.&nbsp;&nbsp;If the selling stockholders use this prospectus for any sale of the shares
of common stock, they will be subject to the prospectus delivery requirements 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">The anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of our common stock and activities of the selling stockholders, which may limit the
timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person.&nbsp;&nbsp;Regulation
M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in passive market-making
activities with respect to the shares of common stock.&nbsp;&nbsp;Passive market making involves transactions in which a market
maker acts as both our underwriter and as a purchaser of our common stock in the secondary market.&nbsp;&nbsp;All of the foregoing
may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of 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">Once sold under the registration statement,
of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our
affiliates.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 may be deemed
to be underwriters.</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>SHARES ELIGIBLE FOR FUTURE SALE</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: justify">Prior to this offering, there has been
no public market for our common stock. Future sales of substantial amounts of common stock in the public market could adversely
affect market prices prevailing from time to time. Furthermore, since only a limited number of shares will be available for sale
shortly after this offering because of certain restrictions on resale, sales of substantial amounts of our common stock in the
public market after the restrictions lapse could adversely affect the prevailing market price and our ability to raise equity
capital in the 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; text-align: justify">Upon completion of this offering, we will
have outstanding an aggregate of 14,252,500 shares of Common Stock issued and outstanding (assuming sale of 3,000,000 newly-issued
shares). Of these shares, 6,375,750 shares will be freely tradable without restriction or further registration under the Securities
Act, unless such shares are purchased by individuals who become &ldquo;affiliates&rdquo; as that term is defined in Rule 144 under
the Securities Act, as the result of the securities they acquire in this offering which provide them, directly or indirectly,
with control or the capacity to control us. Restricted shares may be sold in the public market only if registered or if they qualify
for an exemption from registration under Rule 144. As a result of the provisions of Rules 144, additional shares will be available
for sale in the public market 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" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">no
                                                                                                               restricted shares
                                                                                                               will be eligible
                                                                                                               for immediate sale
                                                                                                               on the date of
                                                                                                               this prospectus;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">the
                                                                                                               remainder of the
                                                                                                               restricted shares
                                                                                                               will be eligible
                                                                                                               for sale from time
                                                                                                               to time thereafter
                                                                                                               upon expiration
                                                                                                               of their respective
                                                                                                               Rule 144 holding
                                                                                                               periods, subject
                                                                                                               to restrictions
                                                                                                               on such sales by
                                                                                                               affiliates.</FONT></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">Sales pursuant to Rule 144 are subject
to certain requirements relating to the availability of current public information about us. A person (or persons whose shares
are aggregated) who is not deemed to have been an affiliate of Creative App Solutions at any time during the 90 days immediately
preceding the sale and who has beneficially owned restricted shares for at least six months is entitled to sell such shares under
Rule 144 without regard to the resale limitations.</P>

<P STYLE="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 SEC has adopted rules that regulate
broker-dealer practices in connection with transactions in &ldquo;penny stocks.&rdquo; Penny stocks generally are 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. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver to the prospective purchaser a standardized risk disclosure document prepared by the Securities and
Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules;
the broker-dealer must make a special written determination that the penny stock is a suitable investment for the prospective
purchaser and receive the purchaser&rsquo;s written agreement to the transaction. Furthermore, subsequent to a transaction in
a penny stock, the broker-dealer will be required to deliver monthly or quarterly statements containing specific information about
the penny stock. It is anticipated that our common stock will be traded on an OTC market at a price of less than $5.00. In this
event, broker-dealers would be required to comply with the disclosure requirements mandated by the penny stock rules.</P>

<P STYLE="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">These disclosure requirements will likely
make it more difficult for investors in this offering to sell their common stock in the secondary market.</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>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; text-align: justify">We had no activity, assets or liabilities
in 2012 and therefore have provided unaudited financial statements which reflect that. The financial statements of Barstow Production
Water Solutions, LLC, our predecessor business, as of December 31, 2012 and for the period from inception (August 9, 2012) through
December 31, 2012 along with the related consolidated statements of operations, members&rsquo; equity and cash flows in this prospectus
have been audited by L J Soldinger Associates, LLC,  independent registered public accounting firm, to the extent
and for the periods set forth in their report, and are set forth in this prospectus in reliance upon such report given upon the
authority of them as experts in auditing and accounting.</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>WHERE YOU CAN FIND MORE INFORMATION</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: justify">Our filings are available to the public
at the SEC&rsquo;s web site at http://www.sec.gov.&nbsp;&nbsp;You may also read and copy any document with the SEC at the SEC&rsquo;s
Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.&nbsp;&nbsp;Further information on the Public Reference Room
may be obtained by calling the SEC at 1-800-SEC-0330.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 filed a registration statement
on Form S-1 with the SEC under the Securities Act for the common stock offered by this prospectus.&nbsp;&nbsp;This prospectus
does not contain all of the information set forth in the registration statement, certain parts of which have been omitted in accordance
with the rules and regulations of the SEC.&nbsp;&nbsp;For further information, reference is made to the registration statement
and its exhibits.&nbsp;&nbsp;Whenever we make references in this prospectus to any of our contracts, agreements or other documents,
the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for the
copies of the actual contract, agreement or other document.</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>FINANCIAL STATEMENTS</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: justify; text-indent: 0.5in"> The financial
statements commencing on page F-1 are included with this prospectus.&nbsp;&nbsp;These financial statements have been prepared
on the basis of accounting principles generally accepted in the United States and are expressed in US dollars.</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"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 2%; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="width: 4%; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="width: 88%; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="width: 6%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><U STYLE="text-decoration: none">Page</U></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">a)</FONT></TD>
    <TD STYLE="padding-right: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Barstow Production Water Solutions, LLC as of December 31, 2012 and for</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">the period from inception (August 9, 2012) to December 31, 2012 (audited); </FONT></TD>
    <TD STYLE="padding-right: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">F-1</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">b)</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Armada Water Assets, Inc. as of December 31, 2012 and for the period</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-right: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">from inception (October 23, 2012) to December 31, 2012 (unaudited) </FONT></TD>
    <TD STYLE="padding-right: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">F-12</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-right: 5.4pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">c)</FONT></TD>
    <TD STYLE="padding-right: 5.4pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Pro Forma Financial Information (unaudited)</FONT></TD>
    <TD STYLE="padding-right: 5.4pt; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">P-1</FONT></TD></TR>
</TABLE>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0"><B>(A Development Stage
Entity)</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>INDEX TO FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&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: 90%">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 8%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="color: black"><B>Page</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: black">Report of Independent Registered Public Accounting Firm</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: black">F-1</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: black">Balance Sheet</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: black">F-2</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: black">Statement of Operations</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: black">F-3</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: black">Statement of Changes in Members&rsquo; Equity</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: black">F-4</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: black">Statement of Cash Flows</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: black">F-5</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: black">Notes to Financial Statements</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: black">F-6</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="background-color: white">REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</FONT></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: left"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

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

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

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

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

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

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

<P STYLE="text-align: left; margin: 0pt 0"><FONT STYLE="background-color: white">To the Members</FONT><BR>
<FONT STYLE="background-color: white">Barstow Production Water Solutions, LLC</FONT></P>

<P STYLE="text-align: left; margin: 0pt 0"><FONT STYLE="background-color: white">Odessa, Texas</FONT></P>

<P STYLE="text-align: left; margin: 0pt 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="text-align: left; margin: 0pt 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="background-color: white">We have
audited the accompanying balance sheet of Barstow Production Water Solutions, LLC as of December 31, 2012 and the related statements
of operations, members&rsquo; equity, and cash flows from August 9, 2012 (inception) to December 31, 2012. Barstow Production Water
Solutions, LLC&rsquo;s management is responsible for these financial statements. Our responsibility is to express an opinion on
these financial statements based on our audit.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="background-color: white">We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our 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 purpose of expressing an opinion on the effectiveness of the company&rsquo;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
audits provide a reasonable basis for our opinion.</FONT></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="background-color: white">In our
opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Barstow
Production Water Solutions, LLC as of December 31, 2012 and the results of its operations and its cash flows from August 9, 2012
(inception) to December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&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 COLSPAN="2" STYLE="padding-right: 4.5pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">&nbsp;</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">/s/
        L J Soldinger Associates LLC</FONT></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 80%; padding-right: 4.5pt; padding-left: 4.5pt; font-size: 10pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 20%; padding-right: 4.5pt; padding-left: 4.5pt; font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-right: 4.5pt">
        <P STYLE="text-align: justify; margin: 0pt 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>
        <P STYLE="text-align: justify; margin: 0pt 0"><FONT STYLE="background-color: white">Deer Park, Illinois</FONT></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 4.5pt; padding-left: 4.5pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 4.5pt; padding-left: 4.5pt; font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 4.5pt; text-align: justify"><FONT STYLE="background-color: white">February 4, 2013</FONT></TD>
    <TD STYLE="padding-right: 4.5pt; padding-left: 4.5pt; font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 4.5pt; padding-left: 4.5pt; font-size: 10pt; text-align: justify">&nbsp;</TD>
    <TD STYLE="padding-right: 4.5pt; padding-left: 4.5pt; font-size: 10pt">&nbsp;</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>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;&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"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2012</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: rgb(204,255,204)">
    <TD STYLE="color: black; 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></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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 87%; color: black; text-align: left; padding-left: 26.4pt">Cash and cash equivalents</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">$</TD><TD STYLE="width: 10%; color: black; text-align: right">202,168</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-left: 27pt">Accounts receivable</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">130</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-left: 27pt">Prepaid expenses</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">1,579</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt; padding-left: 27pt">Due from related party</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">9,257</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Total current assets</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">213,134</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Property and equipment</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">429,882</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Less: Accumulated depreciation</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">(7,514</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">&nbsp;Net property and equipment</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">422,368</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 2.5pt">Total Assets</TD><TD STYLE="color: black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right">635,502</TD><TD STYLE="padding-bottom: 2.5pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; font-weight: bold; text-align: center">LIABILITIES AND MEMBERS&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></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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-left: 26.4pt">Accrued professional fees</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">41,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt; padding-left: 26.4pt">Accrued real estate taxes</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">93</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Total current liabilities</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">41,593</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Asset retirement obligation</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">2,944</TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Total Liabilities</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">44,537</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Commitments and contingencies</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">&ndash;</TD><TD STYLE="color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Members&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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-left: 26.4pt">Member contributions</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">732,971</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt; padding-left: 26.4pt">Deficit accumulated in the development stage</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">(142,006</TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 27pt">&nbsp;</TD><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="color: black; text-align: left; padding-bottom: 1pt">Total members&rsquo; equity</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">590,965</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 2.5pt">Total liabilities and members&rsquo; equity</TD><TD STYLE="color: black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right">635,502</TD><TD STYLE="padding-bottom: 2.5pt; color: black; 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">The accompanying notes are an integral part
of these financial statements.</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"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">August 9, 2012 (Inception) to December 31,
2012</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: rgb(204,255,204)">
    <TD STYLE="color: black">Revenues</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="width: 87%; color: black; text-align: left; padding-bottom: 1pt; padding-left: 26.4pt">Water sales</TD><TD STYLE="width: 1%; color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; color: black; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; color: black; text-align: right">84,244</TD><TD STYLE="width: 1%; padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; padding-left: 26.4pt">Cost of sales</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">13,125</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-left: 26.4pt">Consulting fees</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">30,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-left: 26.4pt">Management fees &ndash; related party</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">30,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; padding-left: 26.4pt">Depreciation</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,514</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-left: 26.4pt">Officer compensation</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">87,222</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt; padding-left: 26.4pt">Other general and administrative</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">57,081</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Total operating expenses</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">224,942</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Loss from operations</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">(140,698</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Interest expense</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">1,308</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 2.5pt">Net loss</TD><TD STYLE="color: black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right">(142,006</TD><TD STYLE="padding-bottom: 2.5pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Pro forma information (unaudited)</TD><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="color: black; text-align: left">Net loss</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">(142,006</TD><TD STYLE="color: black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Pro forma tax provision (benefit)</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">49,700</TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 27pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 2.5pt">Pro forma net loss</TD><TD STYLE="color: black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right">(92,306</TD><TD STYLE="padding-bottom: 2.5pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 2.5pt">Pro forma basic and diluted earnings per share</TD><TD STYLE="color: black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right">(0.03</TD><TD STYLE="padding-bottom: 2.5pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 2.5pt">Pro forma basic and diluted weighted average preferred stock outstanding</TD><TD STYLE="color: black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right">3,000,000</TD><TD STYLE="padding-bottom: 2.5pt; color: black; 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">The accompanying notes are an integral part
of these financial statements.</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"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Statement of Changes in Members&rsquo; Equity</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">August 9, 2012 (Inception) to December 31,
2012</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: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Members&rsquo; equity, at inception</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; color: black; text-align: left">Property and note payable contributed (net) from members</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; color: black; text-align: right">40,000</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Cash contribution from members</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">750,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Distributions to members</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">(57,029</TD><TD STYLE="color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Net loss</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">(142,006</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 2.5pt">Members&rsquo; equity, end of the year</TD><TD STYLE="color: black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right">590,965</TD><TD STYLE="padding-bottom: 2.5pt; color: black; 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">The accompanying notes are an integral part
of these financial statements.</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"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Statement of Cash Flows</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">August 9, 2012 (Inception) to December 31,
2012</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: rgb(204,255,204)">
    <TD STYLE="color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 87%; color: black; text-align: left; padding-left: 9pt">Net loss</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">$</TD><TD STYLE="width: 10%; color: black; text-align: right">(142,006</TD><TD STYLE="width: 1%; color: black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Adjustments to reconcile net loss to cash used in operations</TD><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="color: black; padding-left: 9pt">Depreciation</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,514</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-left: 9pt">Non-cash interest expense related to asset retirement obligation</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">58</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">&nbsp;Changes in assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-left: 27pt">Accounts receivable</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">(130</TD><TD STYLE="color: black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-left: 27pt">Prepaid expenses</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">(1,579</TD><TD STYLE="color: black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt; padding-left: 27pt">Accrued expenses</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">41,593</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Net cash used in operating activities</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">(94,550</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-left: 9pt">Advances to related party</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">(9,257</TD><TD STYLE="color: black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt; padding-left: 9pt">Investment in land, wells, buildings and equipment</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">(251,996</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Net cash used in investing activities</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">(261,253</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-left: 9pt">Proceeds from members</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">750,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left; padding-left: 9pt">Distributions to members</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">(57,029</TD><TD STYLE="color: black; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt; padding-left: 9pt">Repayment of note payable</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">(135,000</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Net cash provided by financing activities</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">557,971</TD><TD STYLE="padding-bottom: 1pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Net increase in cash and cash equivalents</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">202,168</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt">Cash and cash equivalents, at inception</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">&ndash;</TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 2.5pt">Cash and cash equivalents, end of year</TD><TD STYLE="color: black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right">202,168</TD><TD STYLE="padding-bottom: 2.5pt; color: black; 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Cash paid for interest</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">1,308</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Cash paid for income taxes</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">-</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-decoration: underline; text-align: left">Non-Cash Investing and Financing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Property contributed by members at inception</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">175,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Note payable on property contributed by members at inception</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">(135,000</TD><TD STYLE="color: black; text-align: left">)</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">The accompanying notes are an integral part
of these financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&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"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Notes to 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"><B>NOTE 1 -&nbsp;DESCRIPTION OF BUSINESS</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="color: black">Barstow </FONT>Production
Water Solutions, LLC <FONT STYLE="color: black">(the &ldquo;Company&rdquo;) is a Texas limited liability corporation which was
formed on August 9, 2012 and is based in Odessa, Texas. The Company's fiscal year end is December 31. </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="color: black">During August,
2012, certain members of the Company affiliated with Oil Raiders Logistics, Inc. (see Note 4) contributed approximately 173 acres
of land located in Ward County, Texas. </FONT>The Company has built and operates a full supervision &ldquo;fast fill&rdquo;
water production facility which provides oil and trucking companies access to cost effective water and reduced loading time in
filling their water trucks which supply water used in the process of oil production and disposal or remediation of used water.</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 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES</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>Basis of Presentation</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 accompanying financial statements have
been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States
of America (&ldquo;US GAAP&rdquo;) and have been prepared on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Development Stage Enterprise</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 been devoting most of its
efforts to raising capital and developing and implementing its business plan and, consequently, meets the definition of a Development
Stage Enterprise under the&nbsp;Accounting Standards Codification&nbsp;&ldquo;Accounting and Reporting for Development Stage Enterprises.&rdquo;
Certain additional financial information is required to be included in the financial statements for the period from inception of
the Company to the current balance sheet 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"><B>Use of Estimates</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 preparation of financial statements
in conformity with US GAAP 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 amount
of revenues and expenses during the reporting year. Actual results could differ from those estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Cash and Cash Equivalents</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 considers all highly liquid
investments with a maturity of three months or less at the time of purchase to be cash equivalents in addition to cash on hand.&nbsp;&nbsp;</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"><B>Property and Equipment</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">Property and equipment is stated at cost
less accumulated depreciated using the straight-line method over the assets&rsquo; estimated useful lives. Useful lives 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: 90%; border-collapse: collapse; margin-left: 0.5in">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 49%; text-align: justify"><FONT STYLE="color: black">Pad and road</FONT></TD>
    <TD STYLE="width: 51%; text-align: justify"><FONT STYLE="color: black">15 years</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: black">Buildings</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: black">20 years</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: black">Wells</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: black">20 years</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: black">Equipment</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: black">5 to 20 years</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">Normal maintenance and repairs for fixed
assets are charged to expense as incurred, while significant improvements are capitalized.</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: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Notes to Financial Statements</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>Impairment or Disposal of Long-Lived
Assets</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At each balance sheet date or whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, management of the Company
evaluates the recoverability of such assets. An impairment loss is recognized if the amount of undiscounted cash flows is less
than the carrying amount of the asset, in which case the asset is written down to fair value. The fair value of the asset is measured
by either quoted market prices or the present value of estimated expected future cash flows using a discount rate commensurate
with the risks involved.</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>Asset retirement obligation</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 provides for future asset retirement
obligations on its property and facilities based upon estimates established by current industry practices. The asset retirement
obligation is initially measured at fair value and capitalized as an asset retirement cost that is amortized over the estimated
useful life of the assets. The obligation is accreted through interest expense until it is settled. The fair value is estimated
by discounting expected cash outflows to settle the asset retirement obligations using a credit-adjusted risk-fee interest rate.
The Company recognizes revisions to either the timing or the amount of the original estimate of undiscounted cash outflows as increases
or decreases to the asset retirement obligation.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 significant assumptions used to develop
the expected liability during the period 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: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; color: black; text-align: justify">Average gross cost to remediate the individual well sites</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">$</TD><TD STYLE="width: 10%; color: black; text-align: right">1,535</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: justify">Average gross salvage value expected from individual well site remediated</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="color: black">None</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: justify">Expected inflation rate for service costs</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">4</TD><TD STYLE="color: black; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: justify">Credit adjusted risk-free interest rates</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">8</TD><TD STYLE="color: black; 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">Actual retirement costs will be recorded
against the obligation when incurred. Any difference between the recorded asset retirement obligations and the actual retirements
costs incurred is recorded as a gain or loss in the settlement period.</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: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: justify">Beginning balance at inception</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">-</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 87%; color: black; text-align: justify">Liabilities incurred</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; color: black; text-align: right">2,886</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: justify">Liabilities settled</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">-</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: justify; padding-bottom: 1pt">Accretion expense</TD><TD STYLE="color: black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right">58</TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: justify; padding-bottom: 2.5pt">Balance at December 31, 2012</TD><TD STYLE="color: black; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right">2,944</TD><TD STYLE="padding-bottom: 2.5pt; color: black; 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">Accretion expense is recorded as interest
expense in 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>Concentrations&nbsp;&nbsp;</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: black">The Company
is dependent upon</FONT><B> </B>Oil Raiders Logistics, Inc., its sole customer and a related party, (see Note 4) to sell its product
and provide management services. In 2012 essentially all of the Company&rsquo;s sales were made as a subcontractor to Oil Raiders
Logistics, Inc.</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>Revenue and accounts receivable</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 recognizes revenue from the
sale of water at the time title passes, which is generally upon the sealing of the trailer container, and upon reasonable assurance
of customer payment. The Company provides for a reserve against receivables for estimated losses that may result from a customer&rsquo;s
inability or unwillingness to pay. The allowance for doubtful accounts is estimated primarily based upon known problem accounts
and current economic conditions. Accounts are written off against the allowance for doubtful accounts when the Company determines
that amounts are not collectable. Recoveries of previously written-off accounts are recorded when collected. There was no allowance
deemed necessary or recorded at December 31, 2012.</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Notes to 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; text-align: justify"><B>Income Taxes</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 follows the guidance of FASC
740 Income Taxes, Accounting for Uncertainty in Income Taxes, which prescribes a comprehensive model for how a company should measure,
recognize, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take
on income tax returns.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 recognizes the tax benefits
from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions
are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As
of December 31, 2012, the Company has not taken any uncertain tax positions.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 taxed as a Partnership under
the provisions of the Internal Revenue Code. Consequently, the members of the Company are taxed as Partners under the provisions
of the Internal Revenue Code. Therefore, no provision or liability for federal income taxes has been included in 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">Based on this, the Company has not recorded
any current or deferred income taxes for the period ended December 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"><B>Fair Value</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 defined in the authoritative guidance,
fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date (&quot;exit price&quot;).</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To estimate fair value, the Company utilizes
market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk
and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or
generally unobservable.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 authoritative guidance establishes
a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (&quot;Level 1&quot; measurements) and the lowest priority
to unobservable inputs (&quot;Level 3&quot; measurements). The three levels of the fair value hierarchy are as follows:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Level 1 &ndash; Observable inputs such as quoted
prices in active markets at the measurement date for identical, unrestricted assets or liabilities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Level 2 &ndash; Other inputs that are observable,
directly or indirectly, such as quoted prices in markets that are not active, or inputs which are observable, either directly or
indirectly, for substantially the full term of the asset or liability.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Level 3 &ndash; Unobservable inputs for which
there is little or no market data and which the Company makes its own assumptions about how market participants would price the
assets and liabilities.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In instances in which multiple levels of
inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair
value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement
in its entirety requires judgment, and considers factors specific to the asset or liability.</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: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Fair Value</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Level 1</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Level 2</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Level 3</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <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: 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: 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: 10%; 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="text-align: left">Asset retirement obligation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,944</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,944</TD><TD STYLE="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; text-align: center"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Notes to 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>Pro Forma Financial Information</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As discussed in Note 1, the Company was
originally organized in the form of a Limited Liability Company. Upon closing of the Merger (see Note 7), its tax status changed
to that of a corporation. The change will result in the post-merger company becoming obligated for the tax liabilities for the
portion of income generated subsequent to the date of the merger, whereas the previous income and associated liability was passed
through to the Barstow Production Water Solutions, LLC members.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company will be considered a predecessor
entity of the entity purchasing it and pursuant to Securities and Exchange Commission Staff Accounting Bulletin Number 1B.2 &quot;Pro
Forma Financial Statements and Earnings per Share&quot; (&quot;SAB 1B.2&quot;), pro forma information on the face of the income
statement has been presented which reflects the pro forma impact as if the Company had changed its tax status and capital structure
at the commencement of operations on August 9, 2012 and was therefore subject to income taxes. This presentation reflects the Company
generating current deferred tax asset for losses during the period presented and having the preferred shares outstanding that were
given as consideration for the merger.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>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 June&nbsp;2011, the FASB issued ASU
2011-05, &ldquo;Presentation of Comprehensive Income,&rdquo; which amends current comprehensive income guidance. This accounting
update requires companies to report comprehensive income in either a single continuous statement of comprehensive income or in
two separate but consecutive statements and eliminates the option to present the components of other comprehensive income as part
of the statement of shareholders&rsquo; equity. ASU 2011-05 will be effective for the Company January 1, 2013. The adoption of
this ASU will not have an impact on the Company&rsquo;s financial position, results of operations or cash flows.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In July 2012, the FASB issued ASU 2012-2,
&quot;Intangibles - Goodwill and Other&quot; which allows an entity to first assess qualitative factors to determine whether it
is more likely than not that an indefinite-lived asset is impaired for determining whether it is necessary to perform the quantitative
impairment test. ASU 2012-2 is effective for annual and interim tests performed for fiscal years beginning after September 15,
2012. Early adoption is permitted. The adoption of this ASU will not have an impact on the Company's financial position, results
of operations or cash flows.</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 3 -&nbsp;PROPERTY AND EQUIPMENT</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">Property and equipment consists of the
following at December 31, 2012:</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: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%">Land</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">146,198</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Pad &amp; Road</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">136,669</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Buildings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">57,086</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Wells</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,517</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,526</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">Asset retirement cost</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,886</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">429,882</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less: accumulated depreciation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,514</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</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">422,368</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">In April 2012 Oil Raiders Logistics, Inc.
(&ldquo;Oil Raiders&rdquo;) entered into a purchase agreement with an outside third party to acquire approximately 173 acres of
land outside of Barstow, Texas. The purchase price of the land was $175,000, of which $20,000 was paid at closing and a promissory
note (the &ldquo;Note&rdquo;) and warranty deed was given to the seller in the amount of $160,000, payable in 8 monthly $20,000
installments, of which $5,000 was to be interest. In early August 2012, Oil Raiders made its first installment payment of $20,000
and then the owners of Oil Raiders contributed the land and remaining balance on the Note to the Company for their membership interests.</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: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Notes to 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">The prior owner of the property had intended
to farm the parcel and in anticipation of that, had drilled and completed three irrigation wells on the property. However, the
prior owner had failed to obtain the necessary ingress and egress permits and was never able to commence farming operations and
no amounts were pumped from the wells for sale to outside third parties. The Company has allocated approximately $30,000 of the
initial purchase price of the land towards the three wells acquired with the land. The Company paid the Note in full and the warranty
deed was released on August 20, 2012. In August, 2012 the Company drilled a shallow well with a 12&rdquo; casing on the property,
which when flow tested produced water at a rate of approximately 55,000 bbls per day and commenced construction of the road for
ingress and egress to the property and the pad to support the fast fill operation. Construction operations were completed in September,
2012 with the installation of two 400 bbl fresh water tanks and pumping equipment.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Depreciation expense for the period ended
December 31, 2012 was $7,514.</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 4 - RELATED PARTY TRANSACTIONS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On August 9, 2012, the Company entered
into a <I>Management, Accounting and Administrative Services Agreement</I> with Oil Raiders. Oil Raiders is controlled by two members
of the Company. The agreement provides that Oil Raiders will have the exclusive right to manage the day-to-day administration and
accounting of the Company, however, it specifically restricts the ability of Oil Raiders from making any strategic decisions for
the Company, including not permitting Oil Raiders to: hire any employees for the Company, enter into any purchase agreements for
fixed assets above a certain threshold amount, encumber or sign any agreement that would result in any assets becoming encumbered
or having liens placed upon them, enter into any agreement to acquire debt of any kind, or any agreement to sell, transfer or otherwise
assign any assets of the Company. The agreement is for a period of three years and may be terminated by either party with 30 days
notice.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 period from inception to December
31, 2012, the Company incurred management fees totaling $30,000 to Oil Raiders and paid approximately $55,000 for work performed
on the road and equipment (see Note 3) to companies controlled by two of the members. In addition, the Company reimbursed Oil Raiders
a total of approximately $213,000 for payments for construction and other expenses made on its behalf by Oil Raiders.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Also, included in the amounts above is
the cost of insurance furnished to the Company by Oil Raiders under its insurance policies.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 December 31, 2012, the Company was
owed $9,257 for advances made to Oil Raiders.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 5 - MEMBERS&rsquo; INTERESTS</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 three members, Bel-Phil
Investments, LLC (&ldquo;Bel-Phil&rdquo;) who contributed a total of $750,000, and two individuals who are also officers of the
Company, each contributed $20,000 in the form of the land and Note (see Note 3). The agreement provides that the sharing interests
are; 50% for Bel-Phil Investments, LLC and 25% for each individual member.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Members shall be entitled to one vote for
each sharing interest held by the Member. Under the agreement, Bel-Phil is entitled to a 10% Preferred Return on its contribution.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 agreement also provides for the monthly
distribution of available cash flow from operations, as defined, to be allocated 80% to Bel-Phil and 10% to both individuals. After
Bel-Phil has been returned its total capital contribution and preferred return in the form of monthly distributions, the monthly
distribution and membership interests will change to 45% to Bel-Phil, 22.5% to each existing individual member plus another individual,
who currently is a consultant to the Company, earns a 10% membership interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 made distributions totaling
$57,029 through December 31, 2012.</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: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: black"><B>BARSTOW </B></FONT><B>PRODUCTION
WATER SOLUTIONS, LLC</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Notes to Financial Statements</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 6 &ndash; COMMITTMENTS 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">In December, 2012, the Company entered
into an agreement effective January 11, 2013, for three years with Texas-New Mexico Power Company (&ldquo;TNMP&rdquo;) to supply
electricity to the Company&rsquo;s site. As a result of this agreement, the Company has agreed to purchase a specified minimum
amount of power over three years from TNMP. Failure of the Company to purchase the minimum power could result in the Company having
to pay to TNMP a portion of the costs incurred by TNMP to install power equipment at the Company location up to a maximum of $17,256.
To guarantee the payments due under this agreement the Company purchased an irrevocable Letter of Credit payable to TNMP in the
amount of $17, 256, and is obligated to pay a fee of $1,553 at the end of the three year period. In addition, two of the members
and Oil Raiders Logistics, Inc. are guarantors under the letter of credit.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 7 &ndash; SUBSEQUENT EVENTS</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 February 1, 2013, the Company entered
into a Membership Interest Purchase Agreement (&ldquo;MIPA&rdquo;) with Armada Water Assets, Inc. (&ldquo;Armada&rdquo;). Pursuant
to the MIPA, the members of the Company sold all of their membership interests to Armada in exchange for 3,000,000 shares of Armada
Series A preferred stock, promissory notes (the &ldquo;Notes&rdquo;) to the members totaling $1,000,000 and an earn-out such that
for the five years following the closing, when annual EBITDA exceeds $2,000,000, the members are entitled to a payment of 20% of
such excess. At closing, the Company became a wholly owned subsidiary of Armada and its status as a partnership terminated and
it became a corporation for income tax purposes. The Notes bear interest at the rate of 10% per annum, with interest payable quarterly
in cash, mature three years from the date of issuance. In addition to quarterly interest payments, the Notes require Armada to
make principal payments each quarter in an amount equal to one-third of the previous quarter&rsquo;s cash flow (as defined in the
agreement). In addition, should Armada be successful in raising additional debt or equity financing, any amounts raised over $1
million is required to be used to pay down principal of the Notes. The Notes restrict the ability of Armada to make any dividend
or distributions, or to sell, transfer or assign any of the Company&rsquo;s properties or assets, while any amount of principal
is outstanding under the Notes.</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"></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></B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(A Development Stage
Entity)</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>INDEX TO FINANCIAL STATEMENTS</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></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: 85%">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 13%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Page</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Balance Sheet (Unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">F-13</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Statement of Operations (Unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">F-14</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: black">Statement of Changes in Stockholders&rsquo; Equity</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">F-15</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Statement of Cash Flows (Unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">F-16</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Notes to Financial Statements (Unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">F-17</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-top: 0pt; margin-bottom: 0pt; text-align: center"><B>ARMADA WATER ASSETS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(A Development Stage Company)</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">December 31, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Unaudited)</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; 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></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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left; padding-bottom: 2.5pt">Total Assets</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 10%; text-align: right; border-bottom: Black 2.5pt double">0</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <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></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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total Liabilities</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">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Commitments and contingencies</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</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></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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Common stock, par value $0.0001, 100,000,000 shares authorized, none issued</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 27pt">Preferred stock, par value $0.0001, 50,000,000 shares authorized, none issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt; padding-bottom: 1pt">Retained earnings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 27pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total liabilities and stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">0</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>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(A Development Stage
Company)</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">October 23, 2012 (Inception) to December
31, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Unaudited)</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; background-color: rgb(204,255,204)">
    <TD>Revenues</TD><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">Water sales</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">  0</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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; padding-left: 27pt">Cost of sales</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total operating expenses</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">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Income from operations</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">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Interest expense</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">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net Income</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">0</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Basic and diluted weighted average common 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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt; padding-bottom: 2.5pt">Outstanding</TD><TD STYLE="padding-bottom: 2.5pt">&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">0</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>&nbsp;</TD><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">Basic and diluted weighted average earnings per share</TD><TD STYLE="padding-bottom: 2.5pt">&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">0</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>

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

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


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    <!-- Field: /Page -->

<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-top: 0pt; margin-bottom: 0pt; text-align: center"><B>ARMADA WATER ASSETS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(A Development Stage
Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Statement of Changes in Stockholders&rsquo;
Equity</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">October 23, 2012 (Inception) to December
31, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Unaudited)</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>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Common<BR>
 Stock <BR>
Shares</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Common<BR>
 stock <BR>
Amount</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Additional<BR>
 Paid-in<BR>
 Capital</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Retained <BR>
Earnings</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Total</TD><TD NOWRAP 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><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: 35%; text-align: left; padding-bottom: 1pt">Stockholders&rsquo; equity, at inception</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">-</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">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">0</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">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">0</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">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">0</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">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">0</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><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">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</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><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><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: 2.5pt">Stockholders&rsquo; equity, end of the year</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0</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">&nbsp;</P>

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

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(A Development Stage
Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Statement of Cash Flows</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">October 23, 2012 (Inception) to December
31, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Unaudited)</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; background-color: rgb(204,255,204)">
    <TD STYLE="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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 87%; text-align: left; padding-left: 9pt">Net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Adjustments to reconcile net loss to cash used in operations:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Changes in assets and liabilities:</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash used in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">No activity</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">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash used in investing activities</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">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">No activity</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">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash provided by financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net increase in cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0</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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Cash and cash equivalents, at inception</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">0</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="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="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">0</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&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></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Cash paid for interest</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></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cash paid for income taxes</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></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">The accompanying notes are an integral part
of these financial statements.</P>

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


<!-- Field: Page; Sequence: 60 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%"><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: center">&nbsp;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Notes to Financial Statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Unaudited)</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"><B>NOTE 1 -&nbsp;DESCRIPTION OF THE BUSINESS AND 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">Armada Water Assets, Inc. (the &ldquo;Company&rdquo;)
is a Nevada corporation which was formed on October 23, 2012 and is based in Fort Collins, Colorado. The Company's fiscal year
end is December 31.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 no
assets, liabilities or operations during 2012. In January 2013, the Company commenced operations by issuing founding shares, opening
a bank account and entered into an agreement to acquire 100% of the membership interests in Barstow Production Water Solutions,
LLC (see Note 3) and entered the water sales 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">As a result of the acquisition of Barstow
Production Water Solutions, LLC (see Note 3), the Company has incurred significant obligations that are in excess of the current
capacity of the Company or Barstow to satisfy under current operating conditions and current cash available. Management expects
that significant on-going operating and capital expenditures will be necessary to successfully implement the Company&rsquo;s business
plan and develop, manufacture and market its products. These circumstances raise substantial doubt about the Company&rsquo;s ability
to continue as a going concern. Implementation of the Company&rsquo;s plans and its ability to continue as a going concern depend
upon its securing substantial additional financing.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management&rsquo;s plans include efforts
to obtain additional capital, although no assurances can be given about the Company&rsquo;s ability to obtain such capital. If
the Company is unable to obtain adequate additional financing or generate profitable sales revenues, or negotiate a favorable settlement
plan with creditors, it will be unable to continue its product development and other activities and may be forced to cease operations.
The financial statements presented herein do not include any adjustments that might result from the outcome of this uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES</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>Basis of Presentation</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 accompanying financial statements have
been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States
of America (&ldquo;US GAAP&rdquo;) and have been prepared on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Development Stage Enterprise</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 is in the process of starting
operations and, consequently, meets the definition of a Development Stage Enterprise under the&nbsp;Accounting Standards Codification&nbsp;&ldquo;Accounting
and Reporting for Development Stage Enterprises.&rdquo; Certain additional financial information is required to be included in
the financial statements for the period from inception of the Company to the current balance sheet date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Use of Estimates</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 preparation of financial statements
in conformity with US GAAP 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 amount
of revenues and expenses during the reporting year. Actual results could differ from those estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Cash and Cash Equivalents</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 considers all highly liquid
investments with a maturity of three months or less at the time of purchase to be cash equivalents in addition to cash on hand.&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: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>ARMADA WATER ASSETS, INC.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Notes to Financial Statements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Unaudited)</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"><B>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 Company follows the guidance of the
FASB Accounting Standards Codification (&ldquo;FASC&rdquo;)740 Income Taxes, Accounting for Uncertainty in Income Taxes, which
prescribes a comprehensive model for how a company should measure, recognize, present, and disclose in its financial statements
uncertain tax positions that the company has taken or expects to take on income tax returns.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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 recognizes the tax benefits
from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions
are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As
of December 31, 2012, the Company has not taken any uncertain tax positions.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the tax
rate in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change
in tax rates on deferred tax assets and liabilities is recognized in income in the year of the enacted tax rate change. In addition,
a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not
that some portion of the deferred tax asset will not be realized. Based on this and lack of activity in 2012, the Company has not
recorded any current or deferred income taxes for the period ended December 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"><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; text-align: justify">In June&nbsp;2011, the FASB issued ASU
2011-05, &ldquo;Presentation of Comprehensive Income,&rdquo; which amends current comprehensive income guidance. This accounting
update requires companies to report comprehensive income in either a single continuous statement of comprehensive income or in
two separate but consecutive statements and eliminates the option to present the components of other comprehensive income as part
of the statement of shareholders&rsquo; equity. ASU 2011-05 will be effective for the Company January 1, 2013. The adoption of
this ASU will not have an impact on the Company&rsquo;s financial position, results of operations or cash flows.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In July 2012, the FASB issued ASU 2012-2,
&quot;Intangibles - Goodwill and Other&quot; which allows an entity to first assess qualitative factors to determine whether it
is more likely than not that an indefinite-lived asset is impaired for determining whether it is necessary to perform the quantitative
impairment test. ASU 2012-2 is effective for annual and interim tests performed for fiscal years beginning after September 15,
2012. Early adoption is permitted. The adoption of this ASU will not have an impact on the Company's 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"><B>NOTE 3 &ndash; SUBSEQUENT EVENTS</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 January 2013, the Company sold an aggregate
of 6,975,000 shares of common stock par value $0.0001 to fifteen founders at a price of $0.01 per share and raised gross proceeds
of $69,750.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Thereafter, in February 2013, the Company
commenced a private offering and sold 4,177,500 shares of common stock par to investors at a price of $0.10 per share and raised
gross proceeds of $417,750. The Company sold these shares of Common Stock under an exemption from registration provided by Section
4(2) 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">In January 2013, the Company entered into
a note with City National Bank, as Trustee of the Elanken Family Trust-S (&ldquo;Lender&rdquo;), dated April 24, 2002 with a face
amount of $500,000 payable on or before August 1, 2013. Commencing March 1, 2013, the Company shall pay to Lender monthly interest
payments at a rate of ten percent (10%) per annum. The note is convertible, at the option of the lender into shares of Company&rsquo;s
common stock at a conversion price of $1.00 per share. The note is secured by the pledge of certain third-party assets by a shareholder
of the Company. As an inducement to making the loan, the Company issued to the lender 100,000 shares of Company&rsquo;s common
Stock.</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: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>ARMADA WATER ASSETS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Notes to Financial Statements</P>

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

<P STYLE="font: 10pt Times New Roman, Times, 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 1, 2013, the Company entered
into a Membership Interest Purchase Agreement (&ldquo;MIPA&rdquo;) with Barstow Production Water Solutions, LLC (&ldquo;Barstow&rdquo;).
Pursuant to the MIPA, the members of Barstow sold all of their membership interests to the Company in exchange for 3,000,000 shares
of the Company&rsquo;s Series A preferred stock, promissory notes (the &ldquo;Notes&rdquo;) to the members totaling $1,000,000
and an earn-out such that for the five years following the closing, when annual EBITDA exceeds $2,000,000, the members are entitled
to a payment of 20% of such excess. At closing, Barstow became a wholly owned subsidiary of the Company. The Notes bear interest
at the rate of 10% per annum, with interest payable quarterly in cash, mature three years from the date of issuance. In addition
to quarterly interest payments, the Notes require the Company to make principal payments each quarter in an amount equal to one-third
of the previous quarter&rsquo;s cash flow (as defined in the agreement). In addition, should the Company be successful in raising
additional debt or equity financing, any amounts raised over $1 million is required to be used to pay down principal of the Notes.
The Notes restrict the ability of the Company to make any dividend or distributions, or to sell, transfer or assign any of the
Company&rsquo;s properties or assets, while any amount of principal is outstanding under the Notes.</P>

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


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></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">ARMADA WATER ASSETS, INC. AND SUBSIDIARY</P>

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

<P STYLE="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 unaudited pro forma condensed
consolidated balance sheet is based on the historical balance sheets of Armada Water Assets, Inc. (&quot;Armada&quot; or the &ldquo;Company&rdquo;)
and Barstow Production Water Solutions, LLC (&quot;Barstow&quot;) as of December 31, 2012. No pro forma statement of operations
for the period ending December 31, 2012 has been presented as no pro forma adjustments are being made and Armada Water Assets,
Inc. had no operations during 2012. The statement of operations of Barstow Production Water Solutions, Inc. from its inception
on August 9, 2012 through December 31, 2012 can be found in exhibit 99.__ within 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">The following unaudited pro forma
condensed earning per share is based on the historical statement of operations of Barstow for the period beginning at
inception, August 9, 2012, and ending December 31, 2012 as if the transactions below had taken place as of the beginning of
the period and with the equity structure of Armada.</P>

<P STYLE="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 February 1, 2013, the Company acquired
100% of the membership interests of Barstow pursuant to a Membership Interest Purchase Agreement (&ldquo;MIPA&rdquo;) between the
Company, Barstow and the members of Barstow for a total consideration comprising (a) 3,000,000 newly-issued shares of Company Series
A Preferred stock and (ii) promissory notes in the aggregate principal amount of $1,000,000 (&ldquo;Promissory Notes&rdquo;) (collectively,
the &ldquo;Initial Purchase Price&rdquo;). The Promissory Notes have a maturity date of January 31, 2016 and the Company is required
under the terms of the Promissory Notes to make quarterly payments of principal and interest (at a rate of ten percent per annum)
in amounts equal to one-third of the Company&rsquo;s cash flow (as defined in the Promissory Notes) during the prior fiscal quarter.
In addition, the Company must make mandatory prepayments on account of the Promissory Notes equal to the proceeds of any subsequent
debt or equity financings completed by the Company to the extent aggregate cumulative proceeds thereof exceed $1,000,000. The Company
shall also have the right to prepay the Promissory Notes, in whole or in part, at any time without penalty.</P>

<P STYLE="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 merger, Armada has an authorized capitalization consisting
of 50,000,000 shares of Preferred Stock and 100,000,000 shares of Common Stock, none of which were issued as of December 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">The pro forma balance sheet reflects preliminary estimates and
assumptions based on the information available at the time of preparation, including, but not limited to, the preliminary of the
fair value estimates of assets acquired and liabilities assumed.</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">ARMADA WATER ASSETS, INC. AND SUBSIDIARY</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">December 31, 2012</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&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: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="color: black; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Historical</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Armada
    Water Assets, Inc.</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Barstow
    Production <BR>
    Water Solutions, LLC</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Pro
    Forma <BR>
    Adjustements</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Armada
    Water Assets, Inc.<BR>
    Pro Forma Merger</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="color: black; text-align: center"><FONT STYLE="font-size: 8pt">(Unaudited)</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="color: black; text-align: center"><FONT STYLE="font-size: 8pt">(Audited)*</FONT></TD><TD NOWRAP STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="color: black; text-align: center"><FONT STYLE="font-size: 8pt">(Unaudited)</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="color: black; text-align: center"><FONT STYLE="font-size: 8pt">(Unaudited)</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <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 NOWRAP><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="color: black"><FONT STYLE="font-size: 8pt">ASSETS</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">Current assets:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="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="width: 48%; color: black; text-align: left; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Cash and cash equivalents</FONT></TD><TD STYLE="width: 1%; color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; color: black; text-align: right"><FONT STYLE="font-size: 8pt">202,168</FONT></TD><TD NOWRAP STYLE="width: 1%; color: black; 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: 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%; color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; color: black; text-align: right"><FONT STYLE="font-size: 8pt">202,168</FONT></TD><TD STYLE="width: 1%; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Accounts receivable</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">130</FONT></TD><TD NOWRAP STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">130</FONT></TD><TD STYLE="color: black; 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="color: black; text-align: left; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Prepaid expenses</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,579</FONT></TD><TD NOWRAP STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,579</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Due from
    related party</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">9,257</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; 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">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><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="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">9,257</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Total current assets</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">213,134</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; 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">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><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="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">213,134</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">Property and equipment</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">429,882</FONT></TD><TD NOWRAP STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">(a)</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,300,000</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,131,403</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">(b)</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">(598,479</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Less: Accumulated depreciation</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">(7,514</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">)(b)</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">7,514</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Net property and equipment</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">422,368</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">709,035</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,131,403</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Total assets</FONT></TD><TD STYLE="color: black; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right"><FONT STYLE="font-size: 8pt">635,502</FONT></TD><TD NOWRAP STYLE="padding-bottom: 2.5pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right"><FONT STYLE="font-size: 8pt">709,035</FONT></TD><TD STYLE="padding-bottom: 2.5pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,344,537</FONT></TD><TD STYLE="padding-bottom: 2.5pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">LIABILITIES AND STOCKHOLDERS' EQUITY</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="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="color: black; text-align: left"><FONT STYLE="font-size: 8pt">Current liabilities:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Accrued professional fees</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">41,500</FONT></TD><TD NOWRAP STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">41,500</FONT></TD><TD STYLE="color: black; 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="color: black; text-align: left; padding-bottom: 1pt; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Accrued
    real estate taxes</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">93</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; 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">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><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="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">93</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="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="color: black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Total current liabilities</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">41,593</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; 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">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><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="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">41,593</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="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="color: black; text-align: left"><FONT STYLE="font-size: 8pt">Notes payable - Barstow Sellers</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">(a)</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,000,000</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,000,000</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Asset retirement obligation</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">2,944</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; 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">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><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="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">2,944</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Total liabilities</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">44,537</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,000,000</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,044,537</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">Stockholders' Equity:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="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="color: black; text-align: left; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Common stock</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Preferred stock</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">(a)</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">300</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">300</FONT></TD><TD STYLE="color: black; 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="color: black; text-align: left; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Additional paid in capital</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">(a)</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">299,700</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">299,700</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Equity membership</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">732,971</FONT></TD><TD NOWRAP STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">(b)</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">(732,971</FONT></TD><TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="color: black"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="color: black; 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="color: black; text-align: left; padding-bottom: 1pt; padding-left: 0.125in"><FONT STYLE="font-size: 8pt">Deficit
    accumulated in the development stage</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">(142,006</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">)(b)</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">142,006</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="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="color: black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Total stockholders' Equity</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">590,965</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">(290,965</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="color: black; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; color: black; text-align: right"><FONT STYLE="font-size: 8pt">300,000</FONT></TD><TD STYLE="padding-bottom: 1pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="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="color: black; text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Total liabilities and stockholders'
    Equity</FONT></TD><TD STYLE="color: black; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right"><FONT STYLE="font-size: 8pt">635,502</FONT></TD><TD NOWRAP STYLE="padding-bottom: 2.5pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right"><FONT STYLE="font-size: 8pt">709,035</FONT></TD><TD STYLE="padding-bottom: 2.5pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="color: black; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; color: black; text-align: right"><FONT STYLE="font-size: 8pt">1,344,537</FONT></TD><TD STYLE="padding-bottom: 2.5pt; color: black; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">* Derived from audited information</P>

<P STYLE="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">See accompanying notes to unaudited pro
forma condensed consolidated financial information.</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">Armada Water Assets, Inc. and Subsidiary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Unaudited Notes to Unaudited Pro Forma Condensed</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 1. BASIS OF PRO FORMA PRESENTATION</P>

<P STYLE="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 unaudited pro forma condensed consolidated financial information
included herein has been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Historical financial information has been adjusted in the pro
forma balance sheet to give effect to pro forma events that are: (1)&nbsp;directly attributable to the Acquisition; (2)&nbsp;factually
supportable; and (3)&nbsp;expected to have a continuing impact on the Company&rsquo;s results of operations. The pro forma adjustments
presented in the pro forma balance sheet are described in Note 2&mdash;<I> Pro Forma Adjustments</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 pro forma balance sheet and pro forma earnings per share
(see Note 4) have been prepared using the acquisition method of accounting in accordance with the accounting guidance on business
combinations with Armada identified as the acquirer but Barstow as the predecessor business. In business combinations, purchase
price allocation is often subject to revisions as additional information becomes available and further analyses are performed.
The assets acquired and liabilities assumed in the acquisition were recorded at provisional amounts based on the preliminary purchase
price allocation. The Company is in the process of obtaining additional information to identify and measure all assets acquired
and liabilities assumed in the acquisition within the measurement period, which could be up to one year from the date of acquisition.
Such provisional amounts will be retrospectively adjusted to reflect any new information about facts and circumstances that existed
at the acquisition date that, if known, would have affected the measurement of these amounts. Additionally, key input assumptions
and their sensitivity to the valuation of assets acquired and liabilities assumed are currently being reviewed by management.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 2. PRO FORMA ADJUSTMENTS</P>

<P STYLE="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 February 1, 2013, Barstow entered into a Membership Interest
Purchase Agreement (&ldquo;MIPA&rdquo;) with Armada. Pursuant to the MIPA, the members of the Barstow sold all of their membership
interests to Armada in exchange for 3,000,000 shares of Armada Water Assets, Inc. Series A preferred stock, promissory notes (the
&ldquo;Notes&rdquo;) to the members of Barstow totaling $1,000,000 and an earn-out such that for the five years following the closing,
when annual EBITDA exceeds $2,000,000, the members of Barstow are entitled to a payment of 20% of such excess.</P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 18pt"></TD><TD STYLE="width: 24pt; text-align: left">(a)</TD><TD STYLE="text-align: justify">To record the issuance of 3,000,000 shares of series
A preferred stock and promissory notes totaling $1,000,000 for 100% of the assets and liabilities of Barstow.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 24pt; text-indent: 0.25in"></P>

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

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18pt"></TD><TD STYLE="width: 24pt">(b)</TD><TD>To record the adjustment to put the property and equipment acquired at management&rsquo;s estimate of fair value and the elimination
of Barstow&rsquo;s membership equity and deficit accumulated in the development stage.</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">NOTE 3. PRELIMINARY PURCHASE PRICE ALLOCATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 23.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The preliminary purchase price allocation of the fair value
of assets acquired and liabilities assumed has resulted in an increase in the costs allocated to property and equipment. The preliminary
allocation of the purchase price is given in the table below:</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: rgb(204,255,204)">
    <TD STYLE="text-decoration: underline; text-align: left">&nbsp;Acquisition of Barstow Production Water Solutions, LLC by Armada Water Assets, Inc.</TD><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: 87%; text-indent: -8.8pt; padding-left: 8.8pt">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">202,168</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: -8.8pt; padding-left: 8.8pt">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">130</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -8.8pt; padding-left: 8.8pt">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,579</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: -8.8pt; padding-left: 8.8pt">Advances receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,257</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: -8.8pt; padding-left: 8.8pt">Property and equipment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,131,403</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: 0 0 0 0.125in; text-indent: 0">Assets acquired</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,344,537</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -8.8pt; padding-left: 8.8pt">&nbsp;</TD><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: -8.8pt; padding-left: 8.8pt">Accrued professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -8.8pt; padding-left: 8.8pt">Accrued real estate taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">93</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: -8.8pt; padding-left: 8.8pt">Asset retirement obligation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,944</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: 0 0 0 0.125in; text-indent: 0">Liabilities assumed</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">44,537</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">NOTE 4. PRO FORMA EARNINGS PER SHARE</P>

<P STYLE="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 pro forma earnings per share
of Armada had it acquired Barstow on December 31, 2012:</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: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 82%; text-align: left; padding-bottom: 2.5pt">Net loss for the period from inception on August 9, 2012 through December 31, 2012</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 15%; border-bottom: Black 2.5pt double; text-align: right">(142,006</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Pro forma earnings per share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.01</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Weighted average pro forma shares outstanding at the time of the merger</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,042,500</TD><TD STYLE="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"></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 0pt 49.7pt; text-align: center; text-indent: -49.7pt"><B>CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.7pt; text-align: center; text-indent: -49.7pt"><FONT STYLE="font-size: 5pt">&nbsp;</FONT><B>ON
ACCOUNTING AND FINANCIAL DISCLOSURE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.7in; text-indent: -0.7in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.7in; text-indent: -0.7in"><FONT STYLE="font-weight: normal">None.
</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.7in; text-align: center; text-indent: -0.7in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.7in; text-align: center; text-indent: -0.7in">CONTROLS
AND PROCEDURES</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.7in; text-align: center; text-indent: -0.7in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Evaluation of Disclosure Controls
and Procedures</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&rsquo;s management is responsible
for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange
Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files
or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission&rsquo;s
rules and forms.&nbsp;&nbsp;Disclosure controls and procedure include, without limitations, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the issuer&rsquo;s management, including its principal executive officer or officers and principal
financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required
disclosure.</P>

<P STYLE="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 Exchange Act Rules
13a-15 and 15d-15, an evaluation was completed by the Company&rsquo;s Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of the Company&rsquo;s disclosure controls and procedures as of the end of the period
covered by this Annual Report.&nbsp;&nbsp;Based on that evaluation, as of [date] the Company&rsquo;s Chief Executive Officer and
Chief Financial Officer concluded that the Company&rsquo;s disclosure controls and procedures were not effective in providing
reasonable assurance that the information required to be disclosed in the Company&rsquo;s reports filed or submitted under the
Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the Commission&rsquo;s rules
and forms.</P>

<P STYLE="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>Management&rsquo;s Report on Internal
Control over Financial Reporting</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 management is responsible for establishing
and maintaining adequate internal control over financial reporting.&nbsp;&nbsp;Internal control over financial reporting is defined
in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision
of, the company&rsquo;s principal executive and principal financial officers and effected by the company&rsquo;s board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with accounting principles generally accepted in the United States
of America and includes those policies and procedures that:</P>

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

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Pertain to the maintenance
    of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the
    company;</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; width: 3%; font-family: Symbol">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 96%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Provide reasonable
    assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting
    principles generally accepted in the United States of America and that receipts and expenditures of the company are being
    made only in accordance with authorizations of management and directors of the company; and</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-family: Symbol">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Provide reasonable
    assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company&rsquo;s
    assets that could have a material effect on the financial statements.</FONT></TD>
    <TD>&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; text-align: justify">Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements.&nbsp;&nbsp;Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.&nbsp;&nbsp;All internal control systems, no matter how well designed,
have inherent limitations.&nbsp;&nbsp;Therefore, even those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation.&nbsp;&nbsp;Because of the inherent limitations of internal control,
there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial
reporting. However, these inherent limitations are known features of the financial reporting process.&nbsp;&nbsp;Therefore, it
is possible to design into the process safeguards to reduce, though not eliminate, this risk.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of [date], management assessed the
effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial
reporting established in Internal Control&mdash;Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (&quot;COSO&quot;) and SEC guidance on conducting such assessments.&nbsp;&nbsp;Based on that evaluation, they
concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules as more fully described below.&nbsp;&nbsp;This was due to deficiencies that existed
in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and
that may be considered to be material weaknesses.</P>

<P STYLE="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 matters involving internal controls
and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight
Board were: (1) lack of a functioning audit committee, resulting in ineffective oversight in the establishment and monitoring
of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3)
ineffective controls over period end financial disclosure and reporting processes.&nbsp;&nbsp;The aforementioned material weaknesses
were identified by our management in connection with the review of our financial statements for the period ended December 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; text-align: justify">Management believes that the material
weaknesses set forth in items (2) and (3) above did not have an effect on our financial results.&nbsp;&nbsp;However, management
believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors
results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could
result in a material misstatement in our financial statements in future periods.</P>

<P STYLE="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>Management&rsquo;s Remediation Initiatives</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">Given the financial resources available
to the Company, the Company is not in a position to institute any realistic remediation of the identified material weaknesses
and other deficiencies and enhance our internal controls. As such time as the Company commences operations and has the financial
resources to address and eliminate the identified weaknesses, we intend to create take action to do so. Unfortunately, until the
Company has such financial resources, the identified weaknesses will continue to exist.</P>

<P STYLE="font: 10pt Times New Roman, Times, 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>Changes in Internal Control over
Financial Reporting</I></B><I>. </I>During the period from inception (October 23, 2012) through December 31, 2012, there were
no changes in the Company's internal control over financial reporting during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.</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>Limitations on the Effectiveness
of Controls</I></B><I>. </I>A control system, no matter how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues, if any, within a company have been detected.&rdquo;</P>

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


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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">[Back Page of Prospectus]</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>PROSPECTUS</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>ARMADA WATER ASSETS, INC.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>3,000,000 Shares of Common Stock Offered
by</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Armada Water Assets, Inc.</B></P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>3,375,750 Shares of Common Stock offered
by the Selling Shareholders</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"></P>

<!-- Field: Rule-Page --><DIV ALIGN="CENTER" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 15%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<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; text-align: center"></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><I>Dealer Prospectus Delivery Obligation</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"><B><I>Until February 1, 2014, all dealers
that effect transactions in these securities whether or not participating in this offering, may be required to deliver a prospectus.&nbsp;&nbsp;This
is in addition to the dealers&rsquo; obligation to deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.</I></B></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: center"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART II</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>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"><B>Item 10.&nbsp;&nbsp;&nbsp;&nbsp; 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; text-align: justify">Pursuant to our Articles of Incorporation
and By-Laws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his
position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. In certain cases, we may
advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits
in any such proceeding as to which such person is to be indemnified, we must indemnify him against all expenses incurred, including
attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable, only by a court order. The prior discussion of indemnification
in this paragraph is intended to be to the fullest extent permitted by the laws of the State of Nevada.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted to directors or officers pursuant to the foregoing provisions.
However, we are informed that, in the opinion of the Commission, such indemnification is against public policy, as expressed in
the Act and is, therefore, unenforceable.</P>

<P STYLE="font: 10pt Times 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>Item 11.&nbsp;&nbsp;&nbsp;&nbsp; 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; text-align: justify">Although we will receive no proceeds from
the sale of shares pursuant to this prospectus, we have agreed to bear the costs and expenses of the registration of the shares.
Our expenses in connection with the issuance and distribution of the securities being registered are estimated as follows:</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="border-bottom: Black 1pt solid">Nature of expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Amount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left">SEC Registration fee</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">870</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounting fees and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">25,000</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">Legal fees and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Printing expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,000</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">Miscellaneous</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,130</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: right; padding-bottom: 2.5pt">TOTAL</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">55,000</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; text-align: justify">All amounts are estimates other than the
Securities and Exchange Commission&rsquo;s registration fee. We are paying all expenses of the offering listed above. No portion
of these expenses will be borne by the selling shareholders. The selling shareholders, however, will pay any other expenses incurred
in selling their common stock, including any brokerage commissions or costs of sale.</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"><B>Item 12. Recent Sales of Unregistered 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; text-align: justify; text-indent: 0.5in">Below is a list of
securities sold by us within the past three years which were not registered under the Securities Act.</P>

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


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

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="color: black; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; font-weight: bold; text-align: center">Amount of</TD><TD NOWRAP STYLE="color: black; font-weight: bold">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name of Purchaser</TD><TD NOWRAP STYLE="color: black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Date of
    Sale</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Title of Security</TD><TD NOWRAP STYLE="color: black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Securities<BR>
    Sold</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Consideration</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 36%; color: black; text-align: left">Burroughs and Family LLC</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                                     4, 2013</FONT></TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 15%; color: black; text-align: right">Common Stock</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; color: black; text-align: right">250,000</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: black; text-align: left">$</TD><TD STYLE="width: 12%; color: black; text-align: right">2,500</TD><TD STYLE="width: 1%; color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Capital Growth Investment Trust</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">800,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">8,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Wiltomo Redemption Foundation</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">300,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">RMS Advisors</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">300,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Pawnxchange LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">5,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">FEQ Realty LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">5,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Corporate Capital Group International</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">400,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">4,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Discretionary Investment Trust</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">800,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">8,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">KWL Exploration and Development LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">800,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">8,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Austin Coal, LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">5,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">SLA Declaration of Trust</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">100,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">1,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Moggle Investors, LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">5,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">J. John Combs III</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">250,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">2,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">FEQ Gas, LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">750,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">7,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Bel-Phil Investment Partners</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">January
                                                          4, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">225,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">2,250</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">City National Bank, Trustee</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">100,000</TD><TD STYLE="color: black; text-align: left"></TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">*</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Sherif Salib</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">50,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">5,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">William Belzberg Revocable Living Trust</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">75,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">7,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Michael Garnick</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">50,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Clair Calvert</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">350,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">35,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Janice Thoroski</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">350,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">35,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Moonlight Investments Limited</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">750,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">75,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">SLD Capital Corp</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">400,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">40,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Susan and Robert deRose Family Trust dated 11/18/86</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">70,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">7,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">SPH Investments, Inc. Profit Sharing Plan f/b/o Stephen P. Harrington</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">200,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">20,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Lockor Incorporated</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">120,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">12,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">John Cope</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">20,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">2,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Gerald Hannahs</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">60,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">6,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Kemp Skokos</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">50,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">5,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">David Bartlett</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">20,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">2,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Donald S. Jackson Non-Exempt Trust</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">1,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Fabrizio Balestri</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">1,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Mario Litman</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">7,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">750</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">William F. Miller III</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">250,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">25,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Excelsus Consulting, LLC</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">150,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">15,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Anthony Magana</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">75,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">7,500</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Markus Winkler</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">500,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">50,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Jason Batansky</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">1,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Richard Faieta</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">1,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Michael Bellino</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">1,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Bryan S. Dresner</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">1,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">David Roff</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">30,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Brice Scheschuk</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">30,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">3,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left">Bruce Ginsberg</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">10,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">1,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: black; text-align: left">Virginia Dadey</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: black">February
                                                          1, 2013</FONT></TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: right">Common Stock</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black; text-align: right">50,000</TD><TD STYLE="color: black; text-align: left">&nbsp;</TD><TD STYLE="color: black">&nbsp;</TD>
    <TD STYLE="color: black; text-align: left">$</TD><TD STYLE="color: black; text-align: right">5,000</TD><TD STYLE="color: black; 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">* Issued as inducement to enter into promissory note</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 securities issued in the abovementioned
transactions were either issued in connection with (a) transactions by an issuer not involving a public offering which were exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933 or (b) pursuant to a private placement exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as amended, pursuant to the terms of Rule 506 of Regulation
D. In this regard the offerings were to a total of 44 persons, all of whom were either &ldquo;accredited investors&rdquo; or sophisticated
non-accredited investors.</P>

<P STYLE="font: 10pt Times 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>Item 13. 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-align: justify">The undersigned registrant hereby undertakes:</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(1)&nbsp; 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">i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
include any prospectus required by section 10(a)(3) of the Securities Act of 1933;</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">ii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. 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 prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering
price set forth in the &quot;Calculation of Registration Fee&quot; table in the effective 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">iii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
include any material information with respect to the plan of distribution not previously disclosed in the 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">(2) That, for the purpose of determining
any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, 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">(3) To remove from registration by means
of a post-effective amendment any of the securities being registered 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">(4) Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.</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">(5) Each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement
as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document immediately prior to such date of first use.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(6) That, for the purpose of determining
liability of the registrant under the Securities Act of 1933 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">&nbsp;<FONT STYLE="font-size: 10pt">i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;</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">ii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned 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; text-align: justify">iii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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-align: justify">iv.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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; text-align: center">&nbsp;</P>

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

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The exhibits required by Item 601 of Regulation S-K, and an
index thereto, are attached.</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"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; border-bottom: windowtext 1pt solid; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Exhibit
    No.</FONT></TD>
    <TD STYLE="width: 2%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 86%; border-bottom: windowtext 1pt solid; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Description</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3(i)</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Articles of Incorporation of Armada Water Assets, Inc. (and amendment)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3(ii)</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Certificate of Designation Series A Preferred Stock of Armada Water
    Assets, Inc.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3(iii)</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Bylaws of Armada Water Assets, Inc.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">5.1</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Legal Opinion of Robert Diener, Esq. (included with Exhibit 5.1)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">10.1</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Member Interest Purchase Agreement dated as of February 1, 2013</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">10.2</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Form of Promissory Note</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">10.3</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Secured Promissory Note dated as of January 31, 2013 by and between
    Armada Water Assets, Inc. and City National Bank, as Trustee of the Elanken Family Trust-S dated April 24, 2002</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">23.1</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Legal Opinion of Robert Diener, Esq. (included with Exhibit 5.1)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">23.2</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Consent of Independent Auditors</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&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>SIGNATURES</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: justify">Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized on the 5<SUP>th</SUP> day of February, 2013.</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%">
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>ARMADA WATER ASSETS, INC.</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 46%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">By:</FONT></TD>
    <TD STYLE="font-style: italic"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><I>/s/ Mitch Burroughs</I></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Mitch Burroughs</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">President and Director: Principal Executive Officer&nbsp;and Principal
    Financial Officer</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">By:</FONT></TD>
    <TD STYLE="font-style: italic"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><I>/s/ Norman Manness</I></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-style: italic">&nbsp;</TD>
    <TD STYLE="font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-style: italic">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Norman Manness</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-style: italic">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Treasurer and Director; Principal Financial and Accounting Officer</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">By:</FONT></TD>
    <TD STYLE="font-style: italic"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><I>/s/ J. John Combs</I></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">J. John Combs</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Secretary and Director</FONT></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">In accordance with the requirements of the Securities Act of
1933, this registration statement was signed by the following person in the capacities and date stated.</P>

<P STYLE="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%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 46%; border-bottom: windowtext 1pt solid; font-style: italic"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><I>/s/
    Mitch Burroughs</I></FONT></TD>
    <TD STYLE="width: 50%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Mitch Burroughs</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">President and Director: Principal Executive Officer</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Dated: February 5, 2013</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">:</FONT></TD>
    <TD STYLE="border-bottom: windowtext 1pt solid; font-style: italic"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><I>/s/
    J. John Combs</I></FONT></TD>
    <TD STYLE="font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">J. John Combs]</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Secretary and Director</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Dated: February 5, 2013</FONT></TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 46%; border-bottom: windowtext 1pt solid; font-style: italic"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><I>/s/
    Norman Manness</I></FONT></TD>
    <TD STYLE="width: 50%; font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Norman Manness</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Treasurer and Director; Principal Financial Officer</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Dated: February 5, 2013</FONT></TD>
    <TD>&nbsp;</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXHIBIT LIST</B></P>

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

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%; border-bottom: windowtext 1pt solid; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Exhibit
    No.</FONT></TD>
    <TD STYLE="width: 2%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 86%; border-bottom: windowtext 1pt solid; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Description</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3(i)</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Articles of Incorporation of Armada Water Assets, Inc. (and amendment)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3(ii)</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Certificate of Designation Series A Preferred Stock of Armada Water
    Assets, Inc.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">3(iii)</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Bylaws of Armada Water Assets, Inc.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">5.1</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Legal Opinion of Robert Diener, Esq. (included with Exhibit 5.1)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">10.1</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Member Interest Purchase Agreement dated as of February 1, 2013</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">10.2</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Form of Promissory Note</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">10.3</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Secured Promissory Note dated as of January 31, 2013 by and between
    Armada Water Assets, Inc. and City National Bank, as Trustee of the Elanken Family Trust-S dated April 24, 2002</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">23.1</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Legal Opinion of Robert Diener, Esq. (included with Exhibit 5.1)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">23.2</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Consent of Independent Auditors</FONT></TD></TR>
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[{"type": "S-1", "sequence": "1", "filename": "v333756_s-1.htm", "description": "FORM S-1", "secsgml_size_bytes": 782606}]
{"company-data": {"conformed-name": "ARMADA WATER ASSETS INC", "cik": "0001568996", "irs-number": "461255999", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-186496", "film-number": "13581529"}, "business-address": {"street1": "1716 E. LINCOLN AVENUE", "city": "FORT COLLINS", "state": "CO", "zip": "80524", "phone": "9705671414"}, "mail-address": {"street1": "1716 E. LINCOLN AVENUE", "city": "FORT COLLINS", "state": "CO", "zip": "80524"}}
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
ARMADA
WATER ASSETS, INC.
(Exact name of registrant as specified
in its charter)
Nevada
(State or other jurisdiction of incorporation
or organization)
4941
(Primary Standard Industrial Classification
Code Number)
46-1255999
(I.R.S. Employer Identification Number)
1716 E. Lincoln Avenue
Fort Collins, CO 80524
970-567-1414
(Address, including zip code, and telephone
number, including area code, of registrant's principal executive offices)
Robert L. B. Diener, Esq.
Law Offices of Robert Diener
56 Laenani Street
Haiku, HI 96708
(310) 396-1691
From time to time following the effective
date of this registration statement
(Approximate date of commencement of proposed
sale to the public)
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 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, please
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.
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule
12b- 2 of the Exchange Act.
Large
accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer (Do not check if a smaller reporting company)
¨
Smaller reporting company
x
CALCULATION OF REGISTRATION FEE
Title of each
class of securities to
be registered
Amount to be
registered
Proposed maximum
offering price per
share
(2)
Proposed maximum
aggregate offering
price
Amount of
registration fee
Common Stock, $0.001 par value
3,000,000
$
1.00
$
3,000,000
$
409.20
Common Stock, $0.001 par value
3,375,750
(1)
$
1.00
$
3,375,750
$
460.45
TOTAL
6,375,750
$
1.00
$
6,375,750
$
869.65
______________
(1)
3,375,750 shares of common stock
                                                                 are being offered for sale by selling shareholders.
(2)
Estimated solely for the purpose
                                                                 of calculating the registration fee in accordance with Rule 457(a)
                                                                 under the Securities Act of 1933.
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 of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
The information in this Prospectus
is not complete and may be changed.  The shareholders may not sell these securities until the registration statement
filed with the Securities 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.
We are an "emerging growth company"
as defined in the Jumpstart Our Business Startups Act ("Jobs Act"), and will therefore be subject to reduced public
company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page
11.
2
ARMADA WATER ASSETS, INC.
3,000,000 Shares of Common Stock Offered
by
Armada Water Assets, Inc.
And
3,375,750 Shares of Common Stock offered
by the Selling Shareholders
Per Share
Total
Public Offering Price sold by the Company (1)
$
1.00
$
3,000,000
Underwriting discounts and Commissions
$
0.00
$
0.00
Proceeds to Armada Water Assets, Inc.
$
1.00
$
3,000,000
Net Proceeds to Armada Water Assets, Inc. (2)
$
0.982
2,945,000
(1)
This table assumes sale of the maximum
    amount of the offering and excludes shares to be sold by selling shareholders, the proceeds from which, will not be received
    by the Company.
(2)
Total reflects an estimate of expenses including: SEC Registration
    Fee $869; accounting and audit $25,000, legal $25,000, copy and printing $2,000, $1,000 for EDGAR services; $1,000 for transfer
    agent setup and initial certificate issuances.
We are offering to the public up to 3,000,000
shares of common stock (the "new shares"), at $1.00 per share for a total of $3,000,000, in a "direct public
offering" by the Company. The Company has set a minimum amount of $500,000 to be raised in this offering. Assuming we complete
the sale of the 3,000,000 shares, raising the full $3,000,000; after payment of offering expenses of an estimated $55,000
as disclosed in "Summary of the Offering" on page 3 of this prospectus, our net proceeds will be $2,945,000. This
offering terminates in 12 months after commencement of this offering, on February 1, 2014. We are also registering for our selling
stockholders a total of 3,375,750 shares of common stock.  We will not receive any of the proceeds from the sale of
our common stock by the selling stockholders.  The concurrent offering of 3,375,750 shares of our common stock by the
selling stockholders is separate from our offering of 3,000,000 new shares.
This is our initial public offering, and
no public market currently exists for our Shares. The securities being registered in this offering may not be liquid since they
are not listed on any exchange or quoted through an OTC market, and a market for these securities may not develop. The offering
price may not reflect the market price of our Shares after the offering. Because there is currently no active trading market,
selling stockholders will sell at the stated fixed price of $1.00 until securities are quoted through an OTC market. There is
a $500 minimum purchase requirement for prospective stockholders.  All funds will be placed into a separate corporate
account, not in an escrow or trust account, and as such, it may be subject to creditor's claims. At this time we do not
have any outstanding creditor claims.
The selling stockholders have advised
us that they will sell the shares of common stock from time to time in the open market, at the initial offering price of $1.00
per share until the shares are quoted on the OTC Bulletin Board or national securities exchange, at which point the selling securities
holders may sell the registered shares at market prices prevailing at the time of sale, at prices related to the prevailing
market prices, at negotiated prices, or otherwise as described under the section of this prospectus titled "Plan of Distribution."
Our common stock does not currently trade
in the public market.
Because we generated less than $1 billion
in total annual gross revenues during our most recently completed fiscal year, we qualify as an "emerging growth company"
under the Jumpstart Our Business Startups ("JOBS") Act.
3
You should rely only on the information
contained in this prospectus or any prospectus supplement or amendment. We have not authorized anyone to provide you with different
information.
Investing in these securities involves
significant risks.  See "Risk Factors" beginning on page 11.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of the securities or passed upon the adequacy or accuracy of this
prospectus.  Any representation to the contrary is a criminal offense.
There has been no market for our securities
and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded
on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus,
we hope to have a market maker file an application with the Financial Industry Regulatory Authority ("FINRA") for our
common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed
to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation
service or that any market for our stock will develop.
The information contained in this
prospectus is not complete and may be changed.  This prospectus is included in the registration statement that was filed
by Armada Water Assets, Inc. with the Securities and Exchange Commission.  The selling stockholders may not sell these
securities until the registration statement becomes 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.
Subject to Completion, dated February
5, 2013
4
TABLE OF CONTENTS
Page
SUMMARY
6
THE COMPANY
6
THE OFFERING
10
RISK FACTORS
11
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
23
CAPITALIZATION
24
USE OF PROCEEDS
24
DETERMINATION OF OFFERING PRICE
24
DILUTION
25
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
25
FINANCIAL INFORMATION; SELECTED FINANCIAL INFORMATION
27
MANAGEMENT'S DISCUSSION AND ANALYSIS
28
FINANCIAL STATEMENTS
34
PROPERTIES
34
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
34
DIRECTORS AND EXECUTIVE OFFICERS
36
EXECUTIVE COMPENSATION
36
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
    DIRECTOR
INDEPENDENCE
37
LEGAL PROCEEDINGS
37
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
    EQUITY
AND RELATED STOCKHOLDER MATTERS
37
RECENT SALES OF UNREGISTERED SECURITIES
37
DESCRIPTION OF SECURITIES
38
SELLING SECURITY HOLDERS
39
PLAN OF DISTRIBUTION
40
SHARES ELIGIBLE FOR FUTURE SALE
43
EXPERTS
43
WHERE YOU CAN FIND MORE INFORMATION
44
FINANCIAL STATEMENTS
44
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
45
CONTROLS AND PROCEDURES
45
PART II—INFORMATION NOT REQUIRED IN A PROSPECTUS
48
INDEMNIFICATION OF OFFICERS AND DIRECTORS
48
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
48
RECENT SALES OF UNREGISTERED SECURITIES
48
UNDERTAKINGS
50
EXHIBITS
51
SIGNATURES
52
5
SUMMARY
The following summary highlights selected
information contained in this prospectus.  This summary does not contain all the information you should consider before
investing in the securities.  Before making an investment decision, you should read the entire prospectus carefully,
including the "Risk Factors" section, the financial statements, and the notes to the financial statements.
For purposes of this prospectus, unless
otherwise indicated or the context otherwise requires, all references herein to "AWA," "we," "us,"
the "Company" and "our," refer to Armada Water Assets, Inc., a Nevada corporation.
The foregoing represents the Company's
best estimates as of the date of this Prospectus and may materially vary based upon actual experience.
The inability to obtain this funding either
in the near term and/or longer term will materially affect the ability of the Company to implement its business plan of operations
and jeopardize the viability of the Company. In that case, the Company may need to suspend its operations and reevaluate and revise
its plan of operations
THE COMPANY
Business Overview
From inception
(October 23, 2012),
Armada Water Assets, Inc. (the "Company") was organized as a vehicle to provide water fill
services that will provide a high volume of water to be used in connection with oil drilling operations in target markets. In
this connection and in order to commence operations, on February 1, 2013 the Company acquired 100% of the membership interests
of Barstow Production Water Solutions, LLC, which is currently engaged in water production for the oil production industry in
the Permian Shale field in Ward County, Texas.
The Company's goal is to develop
and operate a totally-supervised "fast fill" facility which will provide oil and trucking companies with a reduced
cost and increased efficiency in filling water vacuum trucks used in the process of oil production and disposal or remediation
of used water. The Company's Officers and consultants have experience in water production and distribution, particularly
in the Company's target market. (See
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS; Plan of Operation, below),
Any investment in the shares offered herein
involves a high degree of risk. You should only purchase shares if you can afford a loss of your investment. Our financial statements
include a statement expressing substantial doubt as to our ability to continue as a going concern.
Acquisition of Barstow Production Water
Solutions, LLC ("Barstow")
On February 1, 2013, the Company acquired
100% of the membership interests of Barstow Production Water Solutions, LLC ("Barstow") pursuant to a Membership Interest
Purchase Agreement ("MIPA") between the Company, Barstow and the members of Barstow for a total consideration comprising
(a) 3,000,000 newly-issued shares of Company Series A Preferred stock and (ii) promissory notes in the aggregate principal amount
of $1,000,000 ("Promissory Notes") (collectively, the "Initial Purchase Price"). The Promissory Notes
have a maturity date of February 1, 2016 and the Company is required under the terms of the Promissory Notes to make quarterly
payments of principal and interest (at a rate of ten percent per annum) in amounts equal to one-third of the Company's cash
flow (as defined in the Promissory Notes) during the prior fiscal quarter. In addition, the Company must make mandatory prepayments
on account of the Promissory Notes equal to the proceeds of any subsequent debt or equity financings completed by the Company
to the extent aggregate cumulative proceeds thereof exceed $1,000,000. The Company shall also have the right to prepay the Promissory
Notes, in whole or in part, at any time without penalty.
6
In addition to the Initial Purchase Price,
for a period of five (5) years following the closing of the transaction, if and when annual Barstow EBITDA (as defined in the
MIPA) exceeds $2,000,000 ("EBITDA Target"), then the Company will pay quarterly to the Barstow members an additional
purchase price ("Additional Purchase Price") equal to twenty percent (20%) of the amount by which the cumulative Barstow
EBITDA during the year in question exceeds the EBITDA Target.
Barstow owns land and a facility utilized
for water production located in Barstow, Texas (north of the Midland/Odessa area and in the Permian basin) comprising fee simple
title to approximately 175 acres on which there exist four wells that either currently or will generate freshwater for sale. One
of the wells is currently operating with an approximate capacity of 55,000 barrels of fresh water per day. This water is designated
for sale and/or mixing of treated water. In the future, the Company intends to commence the operation of three other wells subject
to availability and market demand. There are currently four "fast-load" stations constructed and operational on the
property for filling water trucks which will service the Company's customers.
Additionally, the Barstow facility has
bathrooms and showers on-site for drivers utilizing the property. The entire facility site has access to electrical power which
will permit the Company to expand operations if and when appropriate.
In addition, the Company intends to acquire
and construct a complete water treatment facility on the property to enable the treatment of contaminated water dropped off at
or delivered to the facility. The treated and clean water will either be marketed for resale as-is or mixed with freshwater and
sold as a mixed product.
General
Business Plan and Market
THE MARKET AND THE CLIENTS
The most significant demand for remediated
and reusable water supplies in the Company's market are conventional oil and gas producers. Fracturing in the shale oil
& gas and conventional oil & gas sectors requires significant water supplies and produce a significant amount of water
requiring disposal or remediation.
Applicable regulations and resistance
to the issuance of on-site or off-site disposal permits drives a demand among oil and gas producers for the Company's services.
Additionally, the Company believes that an industry-wide need to reduce the consumption of finite local water sources and increasing
transportation costs will drive the demand for the Company's strategically located, state-of-the-art water treatment facilities.
The Company's existing and/or targeted assets are geographically centered in oilfields and high traffic water transportation
corridors.
In the future, the Company intends to
focus its expansion beyond the area where it currently operates into areas where oilfields are located that have high producing
formations.
COMPANY OBJECTIVES
The Company's primary goal is to
achieve profitability by providing water produced at its facilities and water disposal and remediation services to the oil and
gas industry. The Company believes that its services will significantly reduce water transportation and disposal costs and enable
its customer base of oil and gas producers to comply with applicable regulations consistent with maintaining environmental responsibility.
COMPETITION IN THE MARKET
There are several competitors and potential
competitors that currently offer certain of the technologies involved in the water remediation process (for example, electro-coagulation,
reverse osmosis, or membrane filtration). Similarly, there are competitors which have facilities offering injection wells and/or
transportation of contaminated or clean water or offer fresh water for sale. It is the Company's intention to combine all
of the services, technologies and commodity components required by its customer base in order to offer the oil and gas industry
in its targeted markets a simple and convenient, yet essential "one-stop" solution.
7
The Company's management and its
advisors have well over 20 years of experience performing field services in and around the oil and gas industry. Additionally,
the Company has or intends to retain the services of senior oil and gas field engineers that have significant hands-on experience
in designing, constructing and operating water treatment facilities in and around the oil and gas industry. Following its research
and due diligence, the Company's management believes that there are no strategically-located facilities in the oil and gas
fields in its target markets offering an all-inclusive, collection, remediation, recycling/reuse water treatment technology to
the oil and gas industry. While Company management believes that there are other groups providing similar services, Company management
believes it can provide a water treatment and related support services that are superior to competitive offerings based on 1)
Company management's existing relationships with Oil and Gas field service providers with proven safety and performance
histories and 2) the Company's access through its existing engineering and technology partners to patented and/or proprietary
water treatment technologies that have been proven in terms of throughput, performance and reliability. Further, Company management
believes that its strategically located facilities which are either currently owned or targeted will result in a competitive advantage
in terms of convenience and reduction of transportation costs for its customers.
The Company intends to negotiate both
long and short-term contracts with its customers. Once contracts are secured, they will provide an advantage for the company in
terms of minimizing market variables by determining its revenues and costs in order to maintain predictably profitable operations.
The Company then intends to offer additional
ancillary services such as proprietary drilling mud treatment services, vapor and emission control capabilities, as well as freshwater
sales at several of its facilities.
OPERATIONAL PLAN
The overall goal of the Company is to
address the ongoing issue of water treatment and disposal through access to central disposal sites, reduction of transportation
costs and alleviating much of the present permitting, environmental and economic challenges currently faced by the oil and gas
industry. As set forth below, the Company currently owns, has under contract, or has targeted for near-term acquisition assets
that create the ability for the Company to achieve its goals.
CURRENT COMPANY ASSETS:
Barstow, Texas: Barstow Production Water
Services (Midland/Odessa Area – Permian Basin).
·
Approximately
                                                                                                               175 acres
·
4
                                                                                                               existing wells
                                                                                                               for fresh water
·
1
                                                                                                               well up and pumping
                                                                                                               (capacity of 55k
                                                                                                               bbls a day) (fresh
                                                                                                               water sale and
                                                                                                               /or mixing of treated
                                                                                                               water)
·
4
                                                                                                               fast load stations
                                                                                                               up and operational
·
Restrooms
                                                                                                               and showers on
                                                                                                               site for the drivers
·
Power
                                                                                                               on both ends of
                                                                                                               the property that
                                                                                                               allow for expansion.
Future plans in calendar year 2013 are
to add a proprietary/patented Armada Water Treatment systems to enable complete surface treatment of contaminated water at the
facility to allow for disposal of produced water and purchase of fresh water.
POTENTIAL ACQUISITIONS:
The Company intends to consider potential
acquisitions of synergistic companies and businesses. Details of these potential transactions are yet to be determined.
8
Initial Capital Formation
In January 2013, the Registrant sold an
aggregate of 6,975,000 shares of Common Stock par value $0.0001 to fifteen founders at a price of $0.01 per share. This offering
netted the Company an aggregate of $69,750. Thereafter, in February 2013, the Company sold an additional 4,177,500 shares of Common
Stock par value $0.0001 to 29 investors at a price of $0.10 per share. This offering netted the Company an aggregate of $417,750.
The Registrant sold these shares of Common Stock under an exemption from registration provided by Section 4(2) of the Securities
Act.
In January 2013, the Company entered into
a note with City National Bank, as Trustee of the Elanken Family Trust-S, dated April 24, 2002 with a face amount of $500,000
payable on or before August 1, 2013. Commencing on March 1, 2013, the Company shall pay to Payee monthly interest payments at
a rate of ten percent (10%) per annum. The note is convertible, at the option of the lender into shares of Company Common Stock
at a conversion price of $1.00 per share. The note is secured by the pledge of certain third-party assets by a shareholder of
the Company. As an inducement to making the loan, the Company issued to the lender 100,000 shares of Company Common Stock.
The Company is currently engaged in the
offering of up to 3,000,000 shares of Common Stock par value $0.0001 to investors at a price of $1.00 per share. The Company has
set a minimum offering size of 500,000 shares.
Emerging Growth Company Status Under
the Jumpstart Our Business Startups ("JOBS") Act
Because we generated less than $1 billion
in total annual gross revenues during our most recently completed fiscal year, we qualify as an "emerging growth company"
under the Jumpstart Our Business Startups ("JOBS") Act.
We will lose our emerging growth company
status on the earliest occurrence of any of the following events:
1. On the last day
of any fiscal year in which we earn at least $1 billion in total annual gross revenues, which amount is adjusted for inflation
every five years;
2. On the last day
of the fiscal year of the issuer following the fifth anniversary of the date of our first sale of common equity securities pursuant
to an effective registration statement;
3. On the date on
which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt; or
4. On the date on
which such issuer is deemed to be a "large accelerated filer", as defined in section 240.12b-2 of title 17, Code of
Federal Regulations, or any successor thereto. A "large accelerated filer" is an issuer that, at the end of its fiscal
year, meets the following conditions:
a. It has an aggregate worldwide
market value of the voting and non-voting common equity held by its non-affiliates of $700 million or more as of the last business
day of the issuer's most recently completed second fiscal quarter;
b. It has been subject to the
requirements of section 13(a) or 15(d) of the Act for a period of at least twelve calendar months; and
c. It has
filed at least one annual report pursuant to section 13(a) or 15(d) of the Act.
As an emerging growth company, exemptions
from the following provisions are available to us:
1. Section 404(b)
of the Sarbanes-Oxley Act of 2002, which requires auditor attestation of internal controls;
2. Section 14A(a)
and (b) of the Securities Exchange Act of 1934, which require companies to hold shareholder advisory votes on executive compensation
and golden parachute compensation;
9
3. Section 14(i) of
the Exchange Act (which has not yet been implemented), which requires companies to disclose the relationship between executive
compensation actually paid and the financial performance of the company;
4. Section 953(b)(1)
of the Dodd-Frank Act (which has not yet been implemented), which requires companies to disclose the ratio between the annual
total compensation of the CEO and the median of the annual total compensation of all employees of the companies; and
5. The requirement
to provide certain other executive compensation disclosure under Item 402 of Regulation S-K. Instead, an emerging growth company
must only comply with the more limited provisions of Item 402 applicable to smaller reporting companies, regardless of the issuer's
size.
Pursuant to Section 107 of the JOBS Act,
an emerging growth company may choose to forgo such exemption and instead comply with the requirements that apply to an issuer
that is not an emerging growth company. We have elected to maintain our status as an emerging growth company and take advantage
of the JOBS Act provisions.
This Prospectus
The shares issued or to be issued in connection
with the Company's most recent stock offering are not eligible for re-sale unless duly registered with the U.S. Securities
and Exchange Commission. The purpose of this registration statement is to register the shares sold or to be sold in that offering
and certain of the shares of selling shareholders of the Company.  We will not receive any proceeds from any sales of
these selling shareholder shares.
THE OFFERING
New Securities Offered
Up to 3,000,000 shares
    of common stock, $0.0001 par value per share.
Price Per Share (1)
$1.00
Minimum Purchase
$500/500 shares of common stock
Common Stock Outstanding before Offering
11,252,500 shares of common stock
Common Stock Outstanding after Offering
Minimum—12,752,500 shares
        of common stock
Maximum—14,252,500 shares
        of common stock
Estimated Total Proceeds
Minimum—$500,000
Maximum—$3,000,000
Offering Expenses (estimated)
$55,000
Net Proceeds after Offering Expenses
Minimum—$458,000
Maximum—$2,958,000
Use of Proceeds
Other than the expenses of the offering,
    the proceeds of the offering will be used for equipment, general corporate purposes and working capital.
Subscriptions
Subscriptions are to be made payable to "Armada Water Assets,
    Inc."
10
(1)
Currently there is no trading market for our
    stock.  We intend to apply for quotation on the OTC-QB and will require assistance of a market-maker to apply for
    quotation and there is no guarantee that a market- maker will agree to assist us. Selling stockholders will sell at $1.00
    per share until securities are quoted on the OTC-QB. Thereafter they may be sold at the prevailing market price or privately
    negotiated prices.
Selling Stockholders
Shares offered by the selling stockholders
3,375,750 shares of common
    stock, $0.0001 par value per share.
Offering price
Selling stockholders will sell at $1.00
    per share until securities are quoted on the OTC-QB. Thereafter they may be sold at the prevailing market price or privately
    negotiated prices.
Total proceeds raised by us from the disposition of the common
    stock by the selling stockholders or their transferees
We will not receive proceeds from the
    disposition of already outstanding shares of our common stock by selling stockholders or their transferees.
RISK FACTORS
Before you invest in our securities, you
should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other
information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties
develop into actual events, our business, financial condition or results of operations could be materially adversely affected.
We were formed in October 2012 and
have a limited operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our
business objectives.
We are a development stage company with
no operating results to date. Since we do not have an established operating history or regular sales yet, you will have no basis
upon which to evaluate our ability to achieve our business objectives.
The absence of any significant operating
history for us makes forecasting our revenue and expenses difficult, and we may be unable to adjust our spending in a timely manner
to compensate for unexpected revenue shortfalls or unexpected expenses.
As a result of the absence of any operating
history for us, it is difficult to accurately forecast our future revenue. In addition, we have limited meaningful historical
financial data upon which to base planned operating expenses. Current and future expense levels are based on our operating plans
and estimates of future revenue. Revenue and operating results are difficult to forecast because they generally depend on our
ability to promote and sell our services. As a result, we may be unable to adjust our spending in a timely manner to compensate
for any unexpected revenue shortfall, which would result in further substantial losses. We may also be unable to expand our operations
in a timely manner to adequately meet demand to the extent it exceeds expectations.
11
Our limited operating history does
not afford investors a sufficient history on which to base an investment decision.
We are currently in the early stages of
developing our business. There can be no assurance that at this time that we will operate profitably or that we will have adequate
working capital to meet our obligations as they become due.
Investors must consider the risks and
difficulties frequently encountered by early stage companies, particularly in rapidly evolving markets. Such risks include the
following:
·
Competition
·
ability
                                                                                                               to anticipate and
                                                                                                               adapt to a competitive
                                                                                                               market;
·
ability
                                                                                                               to effectively
                                                                                                               manage expanding
                                                                                                               operations; amount
                                                                                                               and timing of operating
                                                                                                               costs and capital
                                                                                                               expenditures relating
                                                                                                               to expansion of
                                                                                                               our business, operations,
                                                                                                               and infrastructure;
                                                                                                               and
·
dependence
                                                                                                               upon key personnel
                                                                                                               to market and sell
                                                                                                               our services and
                                                                                                               the loss of one
                                                                                                               of our key managers
                                                                                                               may adversely affect
                                                                                                               the marketing of
                                                                                                               our services.
We cannot be certain that our business
strategy will be successful or that we will successfully address these risks. In the event that we do not successfully address
these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected
and we may not have the resources to continue or expand our business operations.
We have no profitable operating
history and May Never Achieve Profitability
From inception
(October 23, 2012),
Armada Water Assets, Inc. was organized as a vehicle to provide water fill services that will provide
a high volume of water to be used in connection with oil drilling operations in target markets. In this connection and in order
to commence operations, on February 1, 2013 the Company acquired Barstow Production Water Solutions, LLC, which is engaged in
water production for the oil production industry in the Permian Shale field in Texas. As of the date of this prospectus, the Company
is an early development stage company. Through December 31, 2012, the Company had no activity, assets or liabilities.
Through
December 31, 2012, Barstow generated revenues of only $84,244 (all of which was derived from a third party who is no longer a
customer). The Company has operated with minimal overhead. We are an early stage company and have a limited history of operations.
We are faced with all of the risks associated with a company in the early stages of development. Our business is subject to numerous
risks associated with a relatively new, low-capitalized company engaged in our business sector. Such risks include, but are not
limited to, competition from well-established and well-capitalized companies, and unanticipated difficulties regarding the marketing
and sale of our services. There can be no assurance that we will ever generate significant commercial sales or achieve profitability.
Should this be the case, our common stock could become worthless and investors in our common stock or other securities could lose
their entire investment.
The Company will clearly require additional
funding for ongoing operations. There is no guarantee that we will be able to raise any additional capital and have no current
arrangements for any such financing.
The inability to obtain this funding either
in the near term and/or longer term will materially affect the ability of the Company to implement its business plan of operations
and jeopardize the viability of the Company. In that case, the Company may need to suspend its operations and reevaluate and revise
its plan of operations
Barstow Production Water Solutions,
LLC currently has no significant sources of additional revenues
During the period from inception through
December 31, 2012, Barstow Production Water Solutions, LLC generated revenues of approximately $84,244 from providing water to
Oil Raiders Logistics, Inc. (a company related through common ownership with certain members of Barstow Production Water Solutions,
LLC prior to its purchase by the Company) as a subcontractor for ultimate third party customers. Substantially all of the revenue
earned in 2012 by Barstow Production Water Solutions, LLC was earned from one such ultimate third party customer, who stopped
doing business with Oil Raiders Logistics, Inc. and thus the Company, in early October 2012, which resulted in Barstow Production
Water Solutions, LLC not having generated significant revenue after September 30, 2012. Unless Barstow Production Water Solutions,
LLC is able to develop customer contracts of its own or is able to generate revenues from the efforts of Oil Raider Logistics,
Inc., the Company will be unable generate significant revenues in future periods.
12
Barstow Production Water Solutions,
LLC currently has no employees and is reliant on third parties for its management and operational support
Barstow Production Water Solutions, LLC
currently does not have any employees. Because of this, the Company does not have the means to acquire and operate its business
independently, and is currently reliant on related third parties to acquire customers and to function on a day to day basis. Until
Barstow Water Solutions, LLC is operating under directly employed Company management, it could encounter operational, financial
or regulatory difficulties and the Company's operations could be negatively impacted as a result.
Dependence on our Management, without
whose services Company business operations could cease.
At this time, our management is wholly
responsible for the development and execution of our business plan. Our management is under no contractual obligation to remain
employed by us, although they have no present intent to leave. If our management should choose to leave us for any reason before
we have hired additional personnel our operations may fail. Even if we are able to find additional personnel, it is uncertain
whether we could find qualified management who could develop our business along the lines described herein or would be willing
to work for compensation the Company could afford. Without such management, the Company could be forced to cease operations and
investors in our common stock or other securities could lose their entire investment.
Our officers and directors currently
devote limited time to the Company's business and are engaged in other business activities.
At this time, none of our officers and
directors devote their full-time attention to the Company's business. Based upon the growth of the business, we intend to
employ additional management and staff. The limited time devoted to the Company's business could adversely affect the Company's
business operations and prospects for the future. Without full-time devoted management, the Company could be forced to cease operations
and investors in our common stock or other securities could lose their entire investment.
Concentrated control risks; shareholders
could be unable to control or influence key corporate actions or effect changes in the Company's board of directors or management.
Our founders
currently own 6,975,000
shares of our common stock, representing approximately 62% of the voting
control of the Company. Our founders therefore have the power to make all major decisions regarding our affairs, including decisions
regarding whether or not to issue stock and for what consideration, whether or not to sell all or substantially all of our assets
and for what consideration and whether or not to authorize more stock for issuance or otherwise amend our charter or bylaws.
Lack of additional working capital
may cause curtailment of any expansion plans while raising of capital through sale of equity securities would dilute existing
shareholders' percentage of ownership
Without taking into account the offering,
we will require additional capital to carry out our business plan and conduct ongoing operations. In addition, following this
offering, we will additionally incur public company reporting costs of approximately $100,000 per year or $25,000 per quarter.
There is no guarantee that we will be able to raise any additional capital and have no current arrangements for any such financing.
A shortage of capital would affect our ability to fund our working capital requirements. If we require additional capital, funds
may not be available on acceptable terms, if at all. In addition, if we raise additional capital through the sale of equity or
convertible debt securities, the issuance of these securities could dilute existing shareholders. If funds are not available,
we could be placed in the position of having to cease all operations.
13
We do not presently have a traditional
credit facility with a financial institution. This absence may adversely affect our operations
We do not presently have a traditional
credit facility with a financial institution. The absence of a traditional credit facility with a financial institution could
adversely impact our operations. If adequate funds are not otherwise available, we may be required to delay, scale back or eliminate
portions of our operations and product development efforts. Without such credit facilities, the Company could be forced to cease
operations and investors in our common stock or other securities could lose their entire investment.
Our inability to successfully achieve
a critical mass of revenues could adversely affect our financial condition
No assurance can be given that we will
be able to successfully achieve a critical mass of revenue in order to cover our operating expenses and achieve sustainable profitability.
Without such critical mass of revenues, the Company could be forced to cease operations.
Our success is substantially dependent
on general economic conditions and business trends in the oil and gas industry, a downturn of which could adversely affect our
operations
The success of our operations depends
to a significant extent upon a number of factors relating to the oil and gas industry. These factors include economic conditions,
activity in the financial markets, general business conditions, personnel cost, inflation, interest rates and taxation. Our business
is affected by the general condition and economic stability of our customer and their continued willingness to expend funds on
oil production which requires large quantities of water. An overall decline in the demand for water for oil production in our
target markets could cause a reduction in our sales and the Company could face a situation where we never achieve a critical mass
of revenues and thereby be forced to cease operations.
Changes in generally accepted accounting
principles could have an adverse effect on our business financial condition, cash flows, revenue and results of operations
We are subject to changes in and interpretations
of financial accounting matters that govern the measurement of our performance. Based on our reading and interpretations of relevant
guidance, principles or concepts issued by, among other authorities, the American Institute of Certified Public Accountants, the
Financial Accounting Standards Board, and the United States Securities and Exchange Commission, our management believes that our
current contract terms and business arrangements have been properly reported. However, there continue to be issued interpretations
and guidance for applying the relevant standards to a wide range of contract terms and business arrangements that are prevalent
in the industries in which we operate. Future interpretations or changes by the regulators of existing accounting standards or
changes in our business practices could result in future changes in our revenue recognition and/or other accounting policies and
practices that could have a material adverse effect on our business, financial condition, cash flows, revenue and results of operations.
We will need to increase the size
of our organization, and may experience difficulties in managing growth.
We are a small company with no current
full-time employees. We expect to experience a period of significant expansion in headcount, facilities, infrastructure and overhead
and anticipate that further expansion will be required to address potential growth and market opportunities. Future growth will
impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate
managers. Our future financial performance and its ability to compete effectively will depend, in part, on its ability to manage
any future growth effectively.
14
We are subject to compliance with
securities law, which exposes us to potential liabilities, including potential rescission rights.
We have offered and sold our common stock
to investors pursuant to certain exemptions from the registration requirements of the Securities Act of 1933, as well as those
of various state securities laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions
depends upon our conduct and that of those persons contacting prospective investors and making the offering. We have not received
a legal opinion to the effect that any of our prior offerings were exempt from registration under any federal or state law. Instead,
we have relied upon the operative facts as the basis for such exemptions, including information provided by investors themselves.
If any prior offering did not qualify
for such exemption, an investor would have the right to rescind its purchase of the securities if it so desired. It is possible
that if an investor should seek rescission, such investor would succeed. A similar situation prevails under state law in those
states where the securities may be offered without registration in reliance on the partial preemption from the registration or
qualification provisions of such state statutes under the National Securities Markets Improvement Act of 1996. If investors were
successful in seeking rescission, we would face severe financial demands that could adversely affect our business and operations.
Additionally, if we did not in fact qualify for the exemptions upon which it has relied, we may become subject to significant
fines and penalties imposed by the SEC and state securities agencies.
We incur costs associated with SEC
reporting compliance.
The Company made the decision to become
an SEC "reporting company" in order to comply with applicable laws and regulations. We incur certain costs of compliance
with applicable SEC reporting rules and regulations including, but not limited to attorneys fees, accounting and auditing fees,
other professional fees, financial printing costs and Sarbanes-Oxley compliance costs in an amount estimated at approximately
$100,000 per year. On balance, the Company determined that the incurrence of such costs and expenses was preferable to the Company
being in a position where it had very limited access to additional capital funding.
The availability of a large number
of authorized but unissued shares of common stock may, upon their issuance, lead to dilution of existing stockholders.
We are authorized to issue 100,000,000
shares of Common Stock, $0.0001 par value per share, of which, as of February 1, 2013, 11,252,500 shares of common stock were
issued and outstanding and 50,000,000 shares of Preferred Stock of which, as of February 4, 2013, 3,000,000 shares of Series A
Preferred Stock were issued and outstanding. Additional shares may be issued by our board of directors without further stockholder
approval. The issuance of large numbers of shares, possibly at below market prices, is likely to result in substantial dilution
to the interests of other stockholders. In addition, issuances of large numbers of shares may adversely affect the market price
of our common stock.
Our need for additional capital
that could dilute the ownership interest of investors.
We require substantial working capital
to fund our business. If we raise additional funds through the issuance of equity, equity-related or convertible debt securities,
these securities may have rights, preferences or privileges senior to those of the rights of holders of our common stock and they
may experience additional dilution. We cannot predict whether additional financing will be available to us on favorable terms
when required, or at all. Since our inception, we have experienced negative cash flow from operations and expect to experience
significant negative cash flow from operations in the future. The issuance of additional common stock by the Company may have
the effect of further diluting the proportionate equity interest and voting power of holders of our common stock.
15
We may not have adequate internal
accounting controls. While we have certain internal procedures in our budgeting, forecasting and in the management and allocation
of funds, our internal controls may not be adequate.
We are constantly striving to improve
our internal accounting controls. Our board of directors has not designated an Audit Committee and we do not have any outside
directors.  We do not have a dedicated full time Chief Financial Officer. We hope to develop an adequate internal accounting
control to budget, forecast, manage and allocate our funds and account for them. There is no guarantee that such improvements
will be adequate or successful or that such improvements will be carried out on a timely basis. If we do not have adequate internal
accounting controls, we may not be able to appropriately budget, forecast and manage our funds, we may also be unable to prepare
accurate accounts on a timely basis to meet our continuing financial reporting obligations and we may not be able to satisfy our
obligations under US securities laws.
We may not have adequate insurance
coverage
We currently have only general liability
insurance and umbrella coverage provided to Barstow Production Water Solutions, LLC through being listed as an additional insured
on the policies of a third party. As a result, we cannot assure you that we would not face liability upon the occurrence of any
uninsured event which could result in any loss or damages being assessed against the Company or its subsidiary.
We are subject to numerous laws
and regulations that can adversely affect the cost, manner or feasibility of doing business.
Our operations are subject to extensive
federal, state and local laws and regulations relating to the financial markets.  Future laws or regulations, any adverse
change in the interpretation of existing laws and regulations or our failure to comply with existing legal requirements may result
in substantial penalties and harm to our business, results of operations and financial condition. We may be required to make large
and unanticipated capital expenditures to comply with governmental regulations.  Our operations could be significantly delayed
or curtailed and our cost of operations could significantly increase as a result of regulatory requirements or restrictions. We
are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations.
We do not intend to pay cash dividends
in the foreseeable future
We currently intend to retain all future
earnings for use in the operation and expansion of our business. We do not intend to pay any cash dividends in the foreseeable
future but will review this policy as circumstances dictate.
There is currently no market for
our securities and there can be no assurance that any market will ever develop or that our common stock will be listed for trading.
There has not been any established trading
market for our common stock and there is currently no market for our securities. Even if we are ultimately approved for trading
on the OTC Bulletin Board ("OTCBB"), there can be no assurance as the prices at which our common stock will trade
if a trading market develops, of which there can be no assurance.  Until our common stock is fully distributed and an orderly
market develops, (if ever) in our common stock, the price at which it trades is likely to fluctuate significantly.
Prices for our common stock will be determined
in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common
stock, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor
perception of us and general economic and market conditions. No assurances can be given that an orderly or liquid market will
ever develop for the shares of our common stock. Due to the anticipated low price of the securities, many brokerage firms may
not be willing to effect transactions in the securities.
Our common stock is subject to the
Penny Stock Regulations
Our common stock will likely be subject
to the SEC's "penny stock" rules to the extent that the price remains less than $5.00. Those rules, which require
delivery of a schedule explaining the penny stock market and the associated risks before any sale, may further limit your ability
to sell your shares.
16
The SEC has adopted regulations which
generally define "penny stock" to be an equity security that has a market price of less than $5.00 per share. Our
common stock, when and if a trading market develops, may fall within the definition of penny stock and subject to rules that impose
additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers
and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 or $300,000,
together with their spouse).
For transactions covered by these rules,
the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's
prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny
stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Commission relating
to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must
disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing
recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently,
the `penny stock` rules may restrict the ability of broker-dealers to sell our common stock and may affect the ability of investors
to sell their common stock in the secondary market.
Our common stock is illiquid and
subject to price volatility unrelated to our operations
The market price of our common stock could
fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth,
quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions
in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market
is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities
issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.
Sales of substantial amounts of common stock, or the perception that such sales could occur, could adversely affect the market
price of our common stock and could impair our ability to raise capital through the sale of our equity securities.
We have not voluntarily implemented
various corporate governance measures, in the absence of which, shareholders may have more limited protections against interested
director transactions, conflicts of interest and similar matters.
Recent Federal legislation, including
the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal
requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as
the NYSE or the Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required
under the rules of national securities exchanges are those that address board of directors' independence, audit committee oversight,
and the adoption of a code of ethics.  We have not yet adopted any of these corporate governance measures and, since
our securities are not yet listed on a national securities exchange, we are not required to do so.  It is possible that
if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances
that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define
responsible conduct.  Prospective investors should bear in mind our current lack of corporate governance measures in
formulating their investment decisions.
17
We may be deemed to be a "shell
company"
Rule 405 promulgated
under the Securities Act of 1933 defines a "shell company" as
a registrant… that has: no or nominal
operations; and either (a) no or nominal assets; (b) assets consisting solely of cash and cash equivalents; or (c) assets consisting
of any amount of cash and cash equivalents and nominal other assets. While the Company does not believe that it is a "shell
company", designation as a "shell company" could result in the application of Rule 144(i), which would limit
the availability of the exemption from registration provided in Rule 144 for certain shares of Company common stock and could
result in certain persons affiliated with the Company being deemed "statutory underwriters under Rule 145(c).
For as long as we are an emerging
growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting
standards and disclosure about our executive compensation, that apply to other public companies.
In April 2012, President Obama signed
into law the Jumpstart Our Business Startups Act, or the JOBS Act. The JOBS Act contains provisions that, among other things,
relax certain reporting requirements for "emerging growth companies," including certain requirements relating to accounting
standards and compensation disclosure. We are classified as an emerging growth company. For as long as we are an emerging growth
company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things,
(1) provide an auditor's attestation report on management's assessment of the effectiveness of our system of
internal control over financial reporting pursuant to Section 404(b) of the Sarbanes Oxley Act of 2002, (2) comply with
any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation
or a supplement to the auditor's report in which the auditor would be required to provide additional information about the
audit and the financial statements of the issuer, (3) comply with any new audit rules adopted by the PCAOB after April 5,
2012 unless the SEC determines otherwise, (4) provide certain disclosure regarding executive compensation required of larger
public companies or (5) hold shareholder advisory votes on executive compensation.
Further, our independent registered public
accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting,
and will not be required to do so for as long as we are an "emerging growth company" pursuant to the provisions of
the JOBS Act.
Under the JOBS Act we have elected to use an extended
period for complying with new or revised accounting standards.
We have elected to use the extended transition
period for complying with new or revised accounting standards under Section 102(b)(1), which allows us to delay adoption of new
or revised accounting standards that have different effective dates for public and private until those standards apply to private
companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company
effective dates.
Risks
Related to Our Business and Industry
Our operations may be subject to
extensive environmental laws and regulations. Our operating costs may increase as a result of complying with environmental laws
and regulations. We also could incur substantial costs as a result of violations of or liabilities under such laws and regulations.
Our water operations are subject to extensive
United States Federal, state and local laws and regulations, that govern the protection of the environment, health and safety,
water allocation rights, and the manner in which we collect, treat, discharge and dispose of wastewater. These requirements include
the United States Clean Water Act of 1972, which we refer to as the Clean Water Act. We may also be required to obtain various
environmental permits from regulatory agencies for our operations. State regulatory agencies also set conditions and standards
for the water and wastewater services we deliver. If we deliver water or wastewater services to our customers that do not comply
with regulatory standards, or otherwise violate environmental laws, regulations or permits, or other health and safety and water
quality regulations, we could incur substantial fines, penalties or other sanctions or costs or damage to our reputation. In the
most serious cases, regulators could force us to discontinue operations. We will incur substantial operating and capital costs
on an ongoing basis to comply with environmental laws and regulations and other health and safety and water quality regulations.
These laws and regulations, and their enforcement, have tended to become more stringent over time, and new or stricter requirements
could increase our costs. Although we may seek to recover ongoing compliance costs in our pricing, there can be no guarantee that
such pricing may be sustained in the marketplace. We may also incur liabilities under environmental laws and regulations requiring
us to investigate and clean up environmental contamination at our properties or at off-site locations where we have disposed of
waste or caused adverse environmental impacts. The discovery of previously unknown conditions, or the imposition of cleanup obligations
in the future, could result in significant costs, and could adversely affect our financial condition, results of operations, cash
flow and liquidity. Such remediation losses may not be covered by our insurance policies and may make it difficult for us to secure
insurance in the future at acceptable rates.
18
Changes in laws and regulations
over which we have no control can significantly affect our business and results of operations.
Any governmental entity that regulates
our operations may enact new legislation or adopt new regulations or policies at any time, and new judicial decisions may change
the interpretation of existing legislation or regulations at any time. The individuals who serve as regulators are elected or
are political appointees. Therefore, elections which result in a change of political administration or new appointments may also
result in changes in the individuals who serve as regulators and the policies of the regulatory agencies that they serve. New
laws or regulations, new interpretations of existing laws or regulations, or changes in agency policy, including as a response
to shifts in public opinion, or conditions imposed during the regulatory hearing process may affect our business in a number of
ways.
Weather conditions, natural hazards,
availability of water supplies and competing uses may interfere with our sources of water, demand for water services and our ability
to supply water to customers.
Our ability to meet the existing and future
water demands of our customers depends on an adequate supply of water. As a general rule, sources of public water supply, including
rivers, lakes, streams and groundwater aquifers are held in the public trust and are not owned by private interests. As such,
we typically do not own the water that we use in our operations, and the availability of our water supply is established through
allocation rights and passing-flow requirements set by governmental entities. Passing-flow requirements set minimum volumes of
water that must pass through specified water sources, such as rivers and streams, in order to maintain environmental habitats
and meet water allocation rights of downstream users. Allocation rights are imposed to ensure sustainability of major water sources
and passing flow requirements are most often imposed on source waters from smaller rivers, lakes and streams. These requirements
can change from time to time and adversely impact our water supply. Drought, overuse of sources of water, the protection of threatened
species or habitats or other factors may limit the availability of ground and surface water.
Governmental restrictions on water use
may also result in decreased use of water services, even if our water supplies are sufficient to serve our customers, which may
adversely affect our financial condition and results of operations. Seasonal drought conditions that would impact our water services
are possible across all of our service areas, and drought conditions currently exist in several areas of the United States. However,
these conditions are more prevalent in the Northeast and West where supply capacity is limited and per capita water demand is
high. If a regional drought were to occur affecting our service areas and adjacent systems, governmental restrictions may be imposed
on all systems within a region independent of the supply adequacy of any individual system. Voluntary conservation efforts or
water use restrictions were implemented during certain periods in parts of New Jersey, New Mexico, New York and California. Following
drought conditions, water demand may not return to pre-drought levels even after restrictions are lifted. Cool and wet weather
may also reduce demand for water, thereby adversely affecting our financial condition, results of operations, cash flow and liquidity.
Service interruptions due to severe weather
events are possible across all our service areas. These include winter storms and freezing conditions in our colder climate service
areas, high wind conditions in our service areas known to experience tornados, earthquakes in our service areas known to experience
seismic activity, high water conditions for our facilities located in or near designated flood plains, hurricanes in our coastal
service areas and severe electrical storms which are possible across all of our service areas. These weather events may affect
the condition or operability of our facilities, limiting or preventing us from delivering water or wastewater services to our
customers, or requiring us to make substantial capital expenditures to repair any damage. Any interruption in our ability to supply
water or to collect, treat and properly dispose of wastewater, or any costs associated with restoring service, could adversely
affect our financial condition and results of operations. Furthermore, losses from business interruptions or damage to our facilities
might not be covered by our insurance policies and such losses may make it difficult for us to secure insurance in the future
at acceptable rates.
19
Declining customer water usage may
reduce our long-term revenues, financial condition and results of operations.
Fluctuation in demand for water by the
oil production industry may adversely affect our business. This fluctuation could be caused by a variety of factors including
reduced demand for oil production, reduced oil production in our target markets and general economic conditions. Such conditions
could adversely and materially affect our business, results of operations and financial condition.
Risks associated with the collection
and delivery of water may impose significant costs.
If water collection systems fail, overflow
or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams
and rivers, causing damage to persons or property, injury to aquatic life and economic damages, which may not be recoverable in
rates. This risk is most acute during periods of substantial rainfall or flooding, which are the main causes of sewer overflow
and system failure. Liabilities resulting from such damage could adversely and materially affect our business, results of operations
and financial condition. Moreover, in the event that we are deemed liable for any damage caused by overflow, our losses might
not be covered by insurance policies, and such losses may make it difficult for us to secure insurance in the future at acceptable
rates.
Constraints on the availability
of capital could prevent us from making necessary capital expenditures to maintain our infrastructure and expand our customer
base.
The water distribution industry can be
capital intensive. We expect the level of capital expenditures necessary to maintain the integrity of our systems to increase
in the future. We fund these projects from cash generated from operations, borrowings under a future revolving credit facility
and the issuance of long-term debt and equity securities. We can provide no assurances that we will be able to access the debt
and equity capital markets on favorable terms or at all. In order to fund capital expenditures, acquisitions and principal and
interest payments on our indebtedness, we expect that we will need additional financing. If we are unable to obtain sufficient
capital, we may fail to maintain our existing property, plant and equipment, realize our capital investment strategies, meet our
growth targets and successfully expand our customer base and revenues. Even if we have adequate resources to make required capital
expenditures, we face the additional risk that we will not complete our major capital expenditures on time, as a result of construction
delays or other obstacles. Each of these outcomes could adversely affect our financial condition and results of operations. We
also face the risk that after we make substantial capital expenditures, we may not be able to generate sufficient revenues to
allow us the opportunity to earn an appropriate rate of return on our invested capital and a return of our invested capital.
Any failure of our water sources
could result in losses and damages that may affect our financial condition and reputation.
We distribute water obtained from a number
of sources. A failure or disruption of these sources could adversely affect our ability to make deliveries to customers or increase
the cost of such deliveries. Such failures or disruptions may limit our ability to supply water in sufficient quantities to our
customers and to meet our customers' needs, and adversely affect our financial condition, results of operations, cash flow,
liquidity and reputation. Any business interruption or other losses might not be covered by insurance policies or be recoverable
in rates, and such losses may make it difficult for us to secure insurance in the future at acceptable rates.
20
Contamination of our sources of
water could result in service interruptions and human exposure to hazardous substances and subject our Company to civil or criminal
enforcement actions, private litigation and cleanup obligations.
Our water supplies are subject to contamination,
including contamination from naturally-occurring compounds, chemicals in groundwater systems, pollution resulting from man-made
sources, such as perchlorate and methyl tertiary butyl ether (MTBE), and possible terrorist attacks. In the event that our water
supply is contaminated, we may have to interrupt the use of that water supply until we are able to substitute the supply of water
from another water source, including, in some cases, through the purchase of water from a third-party supplier. In addition, we
may incur significant costs in order to treat the contaminated source through expansion of our current treatment facilities, or
development of new treatment methods. If we are unable to substitute water supply in a cost-effective manner, our financial condition,
results of operations, cash flow, liquidity and reputation may be adversely affected. We might not be able to recover costs associated
with treating or decontaminating water supplies through rates, or such recovery may not occur in a timely manner. Moreover, we
could be held liable for environmental damage as well as damages arising from toxic tort or other lawsuits or criminal enforcement
actions or other consequences arising out of human exposure to hazardous substances in our drinking water supplies.
Our liquidity and earnings could
be adversely affected by increases in our water extraction costs.
We incur significant production costs
in connection with the delivery of our water services. Our production costs are driven by various factors, most of which are not
within our control. These costs can and do increase unexpectedly and in substantial amounts. The inability to recover increased
higher costs can affect our financial condition, results of operations, cash flow and liquidity.
Our reliance on third-party suppliers
poses significant risks to our business and prospects.
From time-to-time, we contract with third
parties for goods and services that are essential to our operations, such as maintenance services, transportation, pipes, chemicals,
electricity, water, gasoline, diesel and other materials. We are subject to substantial risks because of our reliance on these
suppliers. As a result of any of these factors, we may be required to find alternative suppliers for the raw materials and services
on which we rely. Accordingly, we may experience delays in obtaining appropriate raw materials and services on a timely basis
and in sufficient quantities from such alternative suppliers at a reasonable price, which could interrupt services to our customers
and adversely affect our revenues, financial condition, results of operations, cash flow and liquidity.
Risks associated with potential
acquisitions or investments may adversely affect us.
We intend to seek to acquire or invest
in additional water delivery systems, including by acquiring systems in markets in the United States where we do not currently
operate. We intend to also seek to enter into partnerships and affiliation with other water providers. These transactions are
subject to all of the risks inherent in the businesses of any potential investments or acquisitions we may target.
Any debt we may incur could affect
our business adversely and limit our ability to plan for or respond to changes in our business, and we may be unable to generate
sufficient cash flow to satisfy our liquidity needs.
In order to meet our capital expenditure
needs, we may be required to make additional borrowings or be required to issue new debt securities in the capital markets. We
can provide no assurances that we will be able to access the debt capital markets or do so on favorable terms. If new debt is
added to our current debt levels, the related risks we now face could intensify, limiting our ability to refinance existing debt
on favorable terms. We will depend primarily on operations to fund our expenses and to pay the principal and interest on our outstanding
debt. Our ability to meet our expenses thus depends on our future performance, which will be affected by financial, business,
economic, competitive, legislative, regulatory and other factors beyond our control. If we do not have enough money to pay the
principal and interest on our outstanding debt, we may be required to refinance all or part of our existing debt, sell assets,
borrow additional funds or sell additional equity. If our business does not generate sufficient cash flow from operations or if
we are unable to incur indebtedness sufficient to enable us to fund our liquidity needs, we may be unable to plan for or respond
to changes in our business that would prevent us from maintaining or increasing our business and cause our operating results and
prospects to be affected adversely.
21
Our failure to comply with restrictive
covenants under any debt we may incur could trigger prepayment obligations.
Our failure to comply with the restrictive
covenants under any debt we may incur could result in an event of default, which, if not cured or waived, could result in us being
required to repay or refinance (on less favorable terms) these borrowings before their due date. If we are forced to repay or
refinance (on less favorable terms) these borrowings, our results of operations and financial condition could be adversely affected
by increased costs and rates.
Work stoppages and other labor relations
matters could adversely affect our results of operations.
Labor actions, work stoppages or the threat
of work stoppages and our failure to obtain favorable labor terms during may all adversely affect our financial condition, results
of operations, cash flow and liquidity.
We currently have material weaknesses
in internal control over financial reporting. If we fail to remedy our material weaknesses or otherwise maintain effective internal
control over financial reporting, we may not be able to report our financial results accurately or on a timely basis. Any inability
to report and file our financial results in an accurate and timely manner could harm our business and adversely impact the trading
price of our common stock.
As a public company, we are required to
comply with the Sarbanes-Oxley Act and other rules and regulations that govern public companies. In particular, we will be required
to periodically certify our compliance with Section 404 of the Sarbanes-Oxley Act, which will require us to perform system
and process evaluation and testing of our internal control over financial reporting to allow management and our registered public
accounting firm to report on the effectiveness of our internal control over financial reporting. Our management is responsible
for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements in accordance with generally accepted accounting principles. As a public reporting company, we are required,
among other things, to maintain a system of effective internal control over financial reporting suitable to prepare our publicly
reported financial statements in a timely and accurate manner, and also to evaluate and report on such system of internal control.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not
be prevented or detected on a timely basis. The matters involving internal controls and procedures that our management considered
to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning
audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;
(2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial
disclosure and reporting processes.  The aforementioned material weaknesses were identified by our management in connection
with the review of our financial statements for the period ended [date].
We have initiated a remediation plan with
respect to our material weaknesses, but there can be no assurances that our remediation plan will be effective. For further discussion,
see "Management's Discussion and Analysis of Financial Condition and Results of Operations. Each of these weaknesses
could result in a material misstatement of our annual or interim consolidated financial statements. Moreover, we cannot assure
you that we have identified all, or that we will not in the future have additional, material weaknesses, any of which may subject
us to additional regulatory scrutiny, and cause future delays in filing our financial statements and periodic reports with the
SEC. Any such delays in the filing of our financial statements and periodic reports may result in a loss of public confidence
in the reliability of our financial statements and sanctions imposed on us by the SEC. We believe that such misstatements or delays
could negatively impact our liquidity, access to capital markets, financial condition and the market value of our common stock.
About this Prospectus
You should only rely on the information
contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus.
We are offering to sell, and seeking offers to buy, shares of our common stock on a "direct public offering," "all
or nothing," basis only in jurisdictions where offers and sales are permitted. Offers and sales of our securities are only
permitted in those jurisdictions where statutes exist, "blue sky statutes" allowing for such offers and sales.
22
Available Information
We are not subject to the informational
requirements of the Securities Exchange Act of 1934, as amended. Once our securities are registered under the Securities Act of
1933, we will file reports and other information with the Securities and Exchange Commission. Once our registration statement
becomes effective we shall file supplementary and periodic information, documents and reports that are required under section
13(a) of the Exchange Act, as amended.
All of our reports will be able to be
reviewed through the SEC's Electronic Data Gathering Analysis and Retrieval System (EDGAR) which is publicly available through
the SEC's website (http://www.sec.gov).
We intend to furnish to our stockholders
annual reports containing financial statements audited by our independent certified public accountants and quarterly reports containing
reviewed unaudited interim financial statements for the first three-quarters of each fiscal year. You may contact the Securities
and Exchange Commission at 1-(800) SEC-0330 or you may read and copy any reports, statements or other information that Creative
App Solutions, Inc., files with the Securities and Exchange Commission at the Securities and Exchange Commission's public
reference room at the following location:
Public Reference Room
100 F. Street, N.E.
Washington, D.C. 20549-0405
Telephone 1(800)-SEC-0330
We have filed with the Commission a registration
statement on Form S-1 under the Securities Act of 1933, as amended with respect to the securities offered in this prospectus.
This prospectus does not contain all the information set forth in the registration statement, certain parts of which are omitted
in accordance with the rules and regulations of the SEC. For further information, with respect to us and the common stock offered
in this prospectus, reference is made to such registration statement, exhibits and schedules. A copy of the registration statement,
including the exhibits and schedules can be reviewed through EDGAR.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus contains forward-looking
statements. This prospectus includes statements regarding our plans, goals, strategies, intent, beliefs or current expectations.
These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these
expectations will be achieved or accomplished. These forward looking statements can be identified by the use of terms and phrases
such as "believe," "plan," "intend," "anticipate," "target," "estimate,"
"expect," and the like, and/or future-tense or conditional constructions "may," "could," "should,"
etc. Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and business
opportunities also constitute such forward-looking statements.
Although forward-looking statements in
this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and
unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from
those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect
any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation.
Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities
and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial
condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying
assumptions prove incorrect, our actual results may vary materially from those expected or projected.
23
CAPITALIZATION
The following table sets forth our capitalization
at December 31, 2012, after giving effect to and as adjusted to give effect to the sale of the 3,000,000 common shares offered
in this prospectus.
As of
December
31, 2012
AS
ADJUSTED
For the
Offering
Proceeds*
Total Liabilities:
$
-
$
-
Stockholders' Equity
Common Stock, $0.0001 par value; 100,000,000
    shares authorized; 11,252,500 shares issued and outstanding
-
1,125
14,252,500 shares issued and outstanding as adjusted
    following 3,000,000 shares issued in this offering
1,425
Additional paid-in capital
-
3,487,500
Offering Expenses
-
(55,000
)
Deficit accumulated during development stage
-
-
Stockholders' Equity
$
-
$
3,432,500
The foregoing capitalization table reflects only the operations
of Armada Water Assets, Inc.
*Includes 11,252,500 shares of Common Stock issued in January
and February 2013
USE OF PROCEEDS
The Company intends to utilize the proceeds
of the offering for working capital, purchase of equipment and general corporate purposes. The amounts and timing of expenditures
for each purpose may vary significantly depending on numerous factors, including, without limitation, the progress of the building
of our customer base. We anticipate, based on currently proposed plans and assumptions relating to our operations, that our available
cash of approximately $200,000 (which Barstow had in its bank account when the Company purchased it in February 2013), the funds
we raised in January and February 2013 ($487,500), the proceeds of a $500,000 loan from a third party and the net proceeds of
this offering (up to $2,945,000), if successful, and cash flow from operations, if any, will be adequate to satisfy our capital
needs for the remainder of fiscal year 2013. In the event that our offering is successful, the first $1,000,000 in proceeds received
after the first $1,000,000 in proceeds from this offering triggers the early prepayment clauses within the promissory notes we
issued as part of the purchase price for the membership interests acquired from the members of Barstow Production Water Solutions,
LLC.
DETERMINATION OF OFFERING PRICE
Since our shares are not listed or quoted
on any exchange or quotation system, the offering price of the shares of common stock was arbitrarily determined.
The offering price of the shares of our
common stock has been determined arbitrarily by us and does not necessarily bear any relationship to our book value, assets, past
operating results, financial condition or any other established criteria of value. The facts considered in determining the offering
price were our financial condition and prospects, our limited operating history and the general condition of the securities market.
Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the Over The Counter Bulletin
Board (OTCBB) concurrently with or shortly after the filing of this prospectus. In order to be quoted on the Bulletin Board, a
market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance
that a market maker will agree to file the necessary documents with the National Association of Securities Dealers, which operates
the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved.
24
In addition, there is no assurance that
our common stock will trade at market prices in excess of the initial public offering price as prices for the common stock in
any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the
depth and liquidity.
DILUTION
The difference between our initial public
offering price per share of common stock and the pro forma net tangible book value per share of common stock after this offering
constitutes the dilution to investors in this offering. Our net tangible book value per share is determined by dividing our net
tangible book value (total tangible assets less total liabilities) by the number of outstanding shares of common stock.
Our common stock had a net tangible book
value of $0.05 using the book values from December 31, 2012 including Barstow Production Water Solutions, LLC. After giving effect
to the
receipt of the net proceeds from the 3,000,000 shares offered in this prospectus at an assumed initial offering
price of $1.00 per share, our pro forma net tangible book value at December 31, 2012, would have been $3,549,000 or $0.25 per
share. This results in immediate dilution per share to investors of $2,250,000 or 75%. The following table illustrates dilution
to investors on a per share basis:
Offering price per share
$
1.00
Net tangible book value per share before offering
$
0.05
Increase per share attributable to investors
$
0.20
Pro forma net tangible book value per share after offering
$
3,548,000
Dilution per share to investors
$
0.75
The following tables summarize, as of
February 1, 2013, the difference between the number of shares of common stock purchased from us, the total cash consideration
paid and the average price per share paid by existing stockholders of common stock and by the new investors purchasing shares
in this offering.
The table below assumes the sale of the
3,000,000 shares offered in this prospectus at an assumed initial public offering price of $1.00 per share and before any deduction
of estimated offering expenses.
Shares Purchased
Total
Consideration
Average
Price
Amount
Percent
Amount
Percent
Per Share
Original Stockholders
11,252,500
79
%
$
487,500
14
%
$
0.04
Shares Sold in Offering
3,000,000
21
%
$
3,000,000
86
%
$
1.00
Total
14,252,500
100
%
$
3,487,500
100
%
$
0.25
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Holders
As of February 1, 2013, there were 45
record holders of our common stock and there were 11,252,500 shares of our common stock outstanding. No public market currently
exists for shares of our common stock. We intend to apply to have our common stock listed for quotation on the Over-the-Counter
Bulletin Board.
25
The Securities Enforcement and Penny
Stock Reform Act of 1990
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).
A purchaser is purchasing penny stock
which limits the ability to sell the stock. The shares offered by this prospectus constitute 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
prepared by the Commission, which:
·
contains
                                                                                                             a description of
                                                                                                             the nature and level
                                                                                                             of risk in the market
                                                                                                             for penny stocks
                                                                                                             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
                                                                                                             to 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" prices
                                                                                                             for penny stocks
                                                                                                             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; and
·
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;
                                                                                                             and
·
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, stockholders may have difficulty
selling their securities.
26
Equity Compensation Plan Information
We have no outstanding stock options or
other equity compensation plans.
Reports
We are subject to certain reporting requirements
and will furnish annual financial reports to our stockholders, certified by our independent accountants, and will furnish unaudited
quarterly financial reports in our quarterly reports filed electronically with the SEC. All reports and information filed by us
can be found at the SEC website, www.sec.gov.
Stock Transfer Agent
The stock transfer agent for our securities
is Island Stock Transfer, Inc.
Dividend Policy
We have not previously declared or paid
any dividends on our common stock and do not anticipate declaring any dividends in the foreseeable future. The payment of dividends
on our common stock is within the discretion of our board of directors. We intend to retain any earnings for use in our operations
and the expansion of our business. Payment of dividends in the future will depend on our future earnings, future capital needs
and our operating and financial condition, among other factors that our board of directors may deem relevant. We are not under
any contractual restriction as to our present or future ability to pay dividends.
Equity Compensation Plan Information
We have no outstanding stock options or
other equity compensation plans.
FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated statement
of operations data contains consolidated statement of operations data and consolidated balance sheet for the period from inception
(August 9, 2012) through December 31, 2012 from the operations of Barstow Production Water Solutions, LLC (which in effect is
our predecessor business which we purchased in February 2013). The Company had no operations during this period. There is no comparable
data for prior periods. The consolidated statement of operations data and balance sheet data were derived from the audited consolidated
financial statements. Such financial data should be read in conjunction with the consolidated financial statements and the notes
to the consolidated financial statements starting on page F-1 and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
As of
December
31, 2012
Balance Sheet Data:
Assets
$
635,502
Liabilities
$
44,537
Total Stockholders' Equity
$
590,695
Statement of Operations Data:
Revenue
$
84,244
Operating Expenses
$
224,942
Other Expenses
$
1,308
Net Loss
$
142,006
Basis and Diluted Loss Per Share
$
(0.03
)
Weighted Average Number of Shares Outstanding
3,000,000
27
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following
discussion of our financial condition and results of operation for the period from inception (August 9, 2012) to December 31,
2012 and should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere
in this report.
Our results of operations reflect the operations of Barstow Production Water Solutions, LLC (our predecessor
business which we purchased in February 2013). The Company had no operations during this period.
Our
discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our
plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated
in these forward-looking statements as a result of a number of factors, including those set forth under the "Risk Factors,"
"Cautionary Notice Regarding Forward-Looking Statements" and "Our Business" sections in this Form S-1.  We
use words such as "anticipate," "estimate," "plan," "project," "continuing,"
"ongoing," "expect," "believe," "intend," "may," "will,"
"should," "could," and similar expressions to identify forward-looking statements.
Business Overview
From inception
(October 23, 2012),
Armada Water Assets, Inc. (the "Company") was organized as a vehicle to provide water fill
services that will provide a high volume of water to be used in connection with oil drilling operations in target markets. In
this connection and in order to commence operations, on February 1, 2013 the Company acquired 100% of the membership interests
of Barstow Production Water Solutions, LLC, which is currently engaged in water production for the oil production industry in
the Permian Shale field in Texas.
The Company's goal is to develop
and operate a totally-supervised "fast fill" facility which will provide oil and trucking companies with a reduced
cost and increased efficiency in filling water vacuum trucks used in the process of oil production and disposal or remediation
of used water. The Company's Officers and consultants have experience in water production and distribution, particularly
in the Company's target market.
Acquisition of Barstow Production Water
Solutions, LLC ("Barstow")
On February 1, 2013, the Company acquired
100% of the membership interests of Barstow Production Water Solutions, LLC ("Barstow") pursuant to a Membership Interest
Purchase Agreement ("MIPA") between the Company, Barstow and the members of Barstow for a total consideration comprising
(a) 3,000,000 newly-issued shares of Company Series A Preferred stock and (ii) promissory notes in the aggregate principal amount
of $1,000,000 ("Promissory Notes") (collectively, the "Initial Purchase Price"). The Promissory Notes
have a maturity date of February 1, 2016 and the Company is required under the terms of the Promissory Notes to make quarterly
payments of principal and interest (at a rate of ten percent per annum) in amounts equal to one-third of the Company's cash
flow (as defined in the Promissory Notes) during the prior fiscal quarter. In addition, the Company must make mandatory prepayments
on account of the Promissory Notes equal to the proceeds of any subsequent debt or equity financings completed by the Company
to the extent aggregate cumulative proceeds thereof exceed $1,000,000. The Company shall also have the right to prepay the Promissory
Notes, in whole or in part, at any time without penalty.
In addition to the Initial Purchase Price,
for a period of five (5) years following the closing of the transaction, if and when annual Barstow EBITDA (as defined in the
MIPA) exceeds $2,000,000 ("EBITDA Target"), then the Company will pay quarterly to the Barstow members an additional
purchase price ("Additional Purchase Price") equal to twenty percent (20%) of the amount by which the cumulative Barstow
EBITDA during the year in question exceeds the EBITDA Target.
28
Barstow owns land and a facility utilized
for water production located in Barstow, Texas (north of the Midland/Odessa area and in the Permian basin) comprising fee simple
title to approximately 175 acres on which there exist four wells that either currently or will generate freshwater for sale. One
of the wells is currently operating with an approximate capacity of 55,000 barrels of fresh water per day. This water is designated
for sale and/or mixing of treated water. The Company intends to complete the permitting process and commence operation of the
three other wells subject to availability and market demand. There are currently four "fast-load" stations constructed
and operational on the property for filling water trucks which will service the Company's customers.
Additionally, the Barstow facility has
bathrooms and showers on-site for drivers utilizing the property. The entire facility site has access to electrical power which
will permit the Company to expand operations if and when appropriate.
In addition, the Company intends to acquire
and construct a complete water treatment facility on the property to enable the treatment of contaminated water dropped off at
or delivered to the facility. The treated and clean water will either be marketed for resale as-is or mixed with freshwater and
sold as a mixed product.
General
Business Plan and Market
THE MARKET AND THE CLIENTS
The most significant demand for remediated
and reusable water supplies in the Company's market are conventional oil and gas producers. Fracturing in the shale gas
and conventional gas sectors requires significant water supplies and produce a significant amount of water requiring disposal
or remediation.
Applicable regulations and resistance
to the issuance of on-site or off-site disposal permits drives a demand among oil and gas producers for the Company's services.
Additionally, the Company believes that an industry-wide need to reduce the consumption of finite local water sources and increasing
transportation costs will drive the demand for the Company's strategically located, state-of-the-art water treatment facilities.
The Company's existing and/or targeted assets are geographically centered in oilfields and high traffic water transportation
corridors.
In the future, the Company intends to
focus its expansion and potentially expand its operations into oilfields in high producing formations.
COMPANY OBJECTIVES
The Company's primary goal is to
achieve profitability by providing water produced at its facilities and water disposal and remediation services to the oil and
gas industry. The Company believes that its services will significantly reduce water transportation and disposal costs and enable
its customer base of oil and gas producers to comply with applicable regulations consistent with maintaining environmental responsibility.
COMPETITION IN THE MARKET
There are several competitors and potential
competitors that currently offer certain of the technologies involved in the water remediation process (for example, electro-coagulation,
reverse osmosis, or membrane filtration). Similarly, there are competitors which have facilities offering injection wells and/or
transportation of contaminated or clean water or offer fresh water for sale. It is the Company's intention combine all of
the services, technologies and commodity components required by its customer base in order to offer the oil and gas industry in
its targeted markets a simple and convenient, yet essential "one-stop" solution.
29
The Company's management and its
advisors have well over 20 years of experience performing field services in and around the oil and gas industry. Additionally,
the Company has or intends to retain the services of senior oil and gas field engineers that have significant hands-on experience
in designing, constructing and operating water treatment facilities in and around the oil and gas industry. Following its research
and due diligence, the Company's management believes that there are no strategically-located facilities in the oil and gas
fields in its target markets offering an all-inclusive, collection, remediation, recycling/reuse water treatment technology to
the oil and gas industry. While Company management believes that there are other groups providing similar services, Company management
believes it can provide a water treatment systems and related support services that are superior to competitive offerings based
on 1) Company management's existing relationships with Oil and Gas field service providers with proven safety and performance
histories and 2) the Company's access through its existing engineering and technology partners to patented and/or proprietary
water treatment technologies that have been proven in terms of throughput, performance and reliability. Further, Company management
believes that its strategically located facilities which are either currently owned or targeted will result in a competitive advantage
in terms of convenience and reduction of transportation costs for its customers.
The Company intends to negotiate both
long and short-term contracts with its customers. Once contracts are secured, they will provide an advantage for the company in
terms of minimizing market variables by determining its revenues and costs in order to maintain predictably profitable operations.
The Company then intends to offer additional
ancillary services such as proprietary drilling mud treatment services, vapor and emission control capabilities, as well as freshwater
sales at several of its facilities.
OPERATIONAL PLAN
The overall goal of the Company is to
provide water and then address the ongoing issue of water treatment and disposal through access to central disposal sites, reduction
of transportation costs and alleviating much of the present permitting, environmental and economic challenges currently faced
by the oil and gas industry. As set forth below, the Company currently owns, has under contract, or has targeted for near-term
acquisition assets that create the ability for the Company to achieve its goals.
CURRENT COMPANY ASSETS:
Barstow, Texas: Barstow Production Water
Services (Midland/Odessa Area – Permian Basin).
·
Approximately
                                                                                                               175 acres
·
4
                                                                                                               existing wells
                                                                                                               for fresh water
·
1
                                                                                                               well up and pumping
                                                                                                               (capacity of 55k
                                                                                                               bbls a day) (fresh
                                                                                                               water sale and
                                                                                                               /or mixing of treated
                                                                                                               water)
·
4
                                                                                                               fast load stations
                                                                                                               up and operational
·
Restrooms
                                                                                                               and showers on
                                                                                                               site for the drivers
·
Power
                                                                                                               on both ends of
                                                                                                               the property that
                                                                                                               allow for expansion.
Future plans in calendar year 2013 are
to add a proprietary/patented Armada Water Treatment train to enable complete surface treatment of contaminated water at the facility
to allow for disposal of produced water and purchase of fresh water.
POTENTIAL ACQUISITIONS:
The Company intends to consider potential
acquisitions of synergistic companies and businesses. Details of these potential transactions are yet to be determined.
Initial Capital Formation
In January 2013, the Registrant sold an
aggregate of 6,975,000 shares of Common Stock par value $0.0001 to fifteen founders at a price of $0.01 per share. This offering
netted the Company an aggregate of $69,750. Thereafter, in February 2013, the Company sold an additional 4,177,500 shares of Common
Stock par value $0.0001 to 29 investors at a price of $0.10 per share. This offering netted the Company an aggregate of $417,750.
The Registrant sold these shares of Common Stock under an exemption from registration provided by Section 4(2) of the Securities
Act.
30
In January 2013, the Company entered into
a note with City National Bank, as Trustee of the Elanken Family Trust-S, dated April 24, 2002 with a face amount of $500,000
payable on or before August 1, 2013. Commencing March 1, 2013, the Company shall pay to Payee monthly interest payments at a rate
of ten percent (10%) per annum. The note is convertible, at the option of the lender into shares of Company Common Stock at a
conversion price of $1.00 per share. The note is secured by the pledge of certain third-party assets by a shareholder of the Company.
As an inducement to making the loan, the Company issued to the lender 100,000 shares of Company Common Stock.
The Company is currently engaged in the
offering of up to 3,000,000 shares of Common Stock par value $0.0001 to investors at a price of $1.00 per share. The Company has
set a minimum offering size of 500,000 shares.
No principal of the Company has made any
formal or informal arrangement to advance funds to the Company.
WATER SERVICES INDUSTRY OVERVIEW
According to the U.S. Energy Information
Agency, in 2009 there were an estimated 1,090,000 oil and gas wells producing about 21 billion barrels (bbl) of contaminated water
annually in North America alone and for every barrel of oil and gas produced in the U.S. there is, on average, 7.6 barrels of
produced water. By 2025, the water to oil ratio is expected to reach, on average, 12 water bbl's to 1 oil bbl because of
the new fracking techniques. Last year alone in the United States, there were 21 billion bbl of produced water, all with regulatory
disposal issues. There are currently over 80 agencies in the domestic U.S. that are dealing with water contamination issues.
Produced water in the oil and gas industry
is the foremost short and long-term environmental contingent liability facing every oil company, majors and independents alike,
that uses fracturing techniques and transports flowback and produced water.
Historically, water generated or produced
in the process of drilling, was simply "spilled" on site and allowed to leech and evaporate. Eventually, the companies
gathered the water in "pits" (some were eventually lined to eliminate leeching). The water was then simply allowed
to evaporate into the atmosphere. Today, for the most part, contaminated water generated by the oil and gas industry is transported
by tanker trucks to "off-site" disposal facilities, where it is either evaporated in relatively sophisticated pits
or injected into down-hole disposal wells. In many instances, both may be harmful to the environment and many of the sites are
not EPA compliant. The transportation and treatment of the contaminated water are two major components of the cost of producing
oil and gas. Economically, dealing with this water is a key to oil and gas producers' profitability.
Transportation is the single largest cost
for the producers. Approximately 76% of transportation costs is attributed to produce and flow back waters. Overall, almost 26%
of oil production costs is attributed to the disposal of produced and flow back contaminated water. This does not include transportation
costs.
For the first time, the industry is now
accepting that the contaminated water can be successfully treated, recycled and reused in fracturing operations thereby maximizing
oil production and minimizing use of precious groundwater and underground water aquifers. The residual oils, concentrated brine
and "clean" water are all highly marketable commodities generated by the treatment process. Indeed, the management
of AWA has established that produced and flow back waters can be delivered to central locations and efficiently and profitably
separated into marketable derivatives; all to the benefit of the industry and the environment.
31
Results of Operations
Results of Operations for Barstow
Production Water Solutions, LLC, our predecessor business which we acquired on February 1, 2013, for the period from August 9,
2012 (Inception) through December 31, 2012
For the period from inception on August
9, 2012 through December 31, 2012, Barstow generated revenues of approximately $84,000. Substantially all of this revenue was
earned as a subcontractor for Oil Raiders Logistics, Inc. (a company with common ownership to certain members of Barstow Production
Water Solutions, LLC prior to our acquisition of their interests). As of early October 2012, the one ultimate outside third party
customer of Oil Raiders Logistics, Inc. who provided substantially all of the revenues during the period terminated the relationship
with Oil Raiders Logistics, Inc.
For the period from inception on August
9, 2012 through December 31, 2012, cost of sales for the revenues earned by Barstow amounted to approximately $13,000. We expect
these costs to increase in future periods as we hire employees and grow the Company.
For the period from inception on August
9, 2012 through December 31, 2012, Barstow paid its officers, who were also two of the three members of Barstow approximately
$87,000 in compensation for their services in overseeing the buildout and operations of Barstow.
For the period from inception on August
9, 2012 through December 31, 2012, Barstow incurred consulting expense and management fees of $30,000 each. Barstow was obligated
to pay a consultant $6,000 per month and an additional $6,000 per month as compensation for the services provided by Oil Raiders
Logistics, Inc. under the management and accounting service agreement.
For the period from inception on August
9, 2012 through December 31, 2012, depreciation expense amounted to approximately $8,000. We expect depreciation expense to increase
in 2013 as we continue to grow our operations.
For the period from inception on August
9, 2012 through December 31, 2012, Barstow incurred general and administrative expenses of approximately $57,000 which consisted
primarily of professional fees to complete the audit of its financial statements. These costs are expected to increase substantially
in 2013 due to the increased regulatory burdens required of a public company.
For the period from inception on August
9, 2012 through December 31, 2012, Barstow incurred interest expense of approximately $1,000, which was the result of the promissory
note assigned to the Company by Oil Raiders as part of the original equity contribution of two members of Barstow. The Company
expects that interest expense will increase in 2013 as part of the interest due on the seller notes from the membership interest
purchase agreement with the members of Barstow Production Water Solutions, LLC and from possibly incurring additional debt in
the future to meet capital requirements to expand the business.
Liquidity and Capital Resources
In January 2013, the Registrant sold an
aggregate of 6,975,000 shares of Common Stock par value $0.0001 to fifteen founders at a price of $0.01 per share. This offering
netted the Company an aggregate of $69,750. Thereafter, in February 2013, the Company sold an additional 4,177,500 shares of Common
Stock par value $0.0001 to 29 investors at a price of $0.10 per share. This offering netted the Company an aggregate of $417,750.
The Registrant sold these shares of Common Stock under an exemption from registration provided by Section 4(2) of the Securities
Act.
In January 2013, the Company entered into
a note with City National Bank, as Trustee of the Elanken Family Trust-S, dated April 24, 2002 with a face amount of $500,000
payable on or before August 1, 2013. Commencing March 1, 2013, the Company shall pay to Payee monthly interest payments at a rate
of ten percent (10%) per annum. The note is convertible, at the option of the lender into shares of Company Common Stock at a
conversion price of $1.00 per share. The note is secured by the pledge of certain third-party assets by a shareholder of the Company.
As an inducement to making the loan, the Company issued to the lender 100,000 shares of Company Common Stock.
32
The Company is currently engaged in the
offering of up to 3,000,000 shares of Common Stock par value $0.0001 to investors at a price of $1.00 per share. The Company has
set a minimum offering size of 500,000 shares. . The inability to successfully complete this offering will materially affect the
ability of the Company to implement its business plan of operations and jeopardize the viability of the Company. In that case,
the Company may need to suspend its operations and reevaluate and revise its plan of operations.
Critical Accounting Policies
See the footnotes to the Barstow Production
Water Solutions, LLC financial statements elsewhere in this document for our critical accounting policies.
JOBS Act
In April 2012, President Obama signed
into law the Jumpstart Our Business Startups Act, or the JOBS Act. The JOBS Act contains provisions that, among other things,
relax certain reporting requirements for "emerging growth companies," including certain requirements relating to accounting
standards and compensation disclosure. We are classified as an emerging growth company. For as long as we are an emerging growth
company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things,
(1) provide an auditor's attestation report on management's assessment of the effectiveness of our system of
internal control over financial reporting pursuant to Section 404(b) of the Sarbanes Oxley Act of 2002, (2) comply with
any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation
or a supplement to the auditor's report in which the auditor would be required to provide additional information about the
audit and the financial statements of the issuer, (3) comply with any new audit rules adopted by the PCAOB after April 5,
2012 unless the SEC determines otherwise, (4) provide certain disclosure regarding executive compensation required of larger
public companies or (5) hold shareholder advisory votes on executive compensation.
Further, our independent registered public
accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting,
and will not be required to do so for as long as we are an "emerging growth company" pursuant to the provisions of
the JOBS Act.
We have elected to use the extended transition
period for complying with new or revised accounting standards under Section 102(b)(1), which allows us to delay adoption of new
or revised accounting standards that have different effective dates for public and private until those standards apply to private
companies.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements
are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company's
accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance
for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact
will not be material to its financial position, results of operations, and cash flows when implemented.
Employees
We are a development stage company and
currently have no full-time employees. In addition to hiring employees, we plan to use consultants, attorneys, accountants, as
necessary.
33
REPORTS TO STOCKHOLDERS
We are not subject to the informational
requirements of the Securities Exchange Act of 1934, as amended. Once our registration statement is effective and our securities
are registered under the exchange act, we will file supplementary and periodic information, documents and reports that are required
under section 13 of the Securities Act of 1933, as amended, with the Securities and Exchange Commission. Such reports, proxy statements
and other information will be available through the Commission's Electronic Data Gathering Analysis and Retrieval System
which is publicly available through the Commission's website (http://www.sec.gov).
We intend to furnish annual reports to
stockholders, which will include audited financial statements reported on by our Certified Public Accountants. In addition, we
will issue unaudited quarterly or other interim reports to stockholders, as we deem appropriate or required by applicable securities
regulations.
FINANCIAL STATEMENTS
The accompanying financial statements
have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles applicable
in the United States. Under the accrual basis of accounting, revenues are recorded as earned and expenses are recorded at the
time liabilities are incurred. The Company has adopted a December 31 year-end. In the opinion of management, all adjustments for
a fair statement of the results and operations and financial position for the interim periods presented have been included.
PROPERTIES
The Company
maintains its corporate offices at
1716 E. Lincoln Avenue, Fort Collins, CO 80524 where it shares space with certain other
businesses controlled by Mr. Burroughs. In addition, the Company owns a parcel of approximately 175 acres in
Barstow, Texas
where is carries on water pumping, loading and treatment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain
information regarding beneficial ownership of the Company's Common Stock as of February 1, 2013, by: (I) each current director;
each nominee for director, and executive officer of the Company; (ii) all directors and executive officers as a group; and (iii)
each shareholder who owns more than five percent of the outstanding shares of the Company's Common Stock. Except as otherwise
indicated, the Company believes each of the persons listed below possesses sole voting and investment power with respect to the
shares indicated.
34
Name and Address
Number of Shares
Percentage Owned
Capacity
Mitch Burroughs
250,000
2.2
Officer/Director
6102 Keswick Ct.
Ft. Collins, CO 80524
J. John Combs
250,000
2.2
Officer/Director
7801 Brighton Road
Commerce City, CO 80022
Norman Manness
0
0
Director
45051 Macdonald Road
Domain, Manitoba
Canada ROGOMO
All officers and directors as a
Group (three (3) persons)
500,000
4.5
Capital Growth Investment Trust (3)
800,000
7.2
5%
                                                          holder
13 Pasho Street
Andover, MA 01810
Discretionary Investment Trust (4)
800,000
7.2
5%
                                                          holder
8 Bartlett Street
Marblehead, MA 19145
KWL Exploration and
Development LLC (5)
800,000
7.2
5%
                                                          holder
630 West Germantown Pike
Suite 180
Plymouth Meeting, PA 19462
FEQ Gas, LLC (6)
750,000
6.7
5%
                                                          holder
24224 Kanis Road
Little Rock, AR 72223
Moonlight Investments Limited (7)
750,000
6.7
5%
                                                          holder
One Cathedral
    Square, 5
th
Floor
Jules Koenig Street, Port Louis
Mauritius
(1) This table is based upon 11,252,500
shares issued and outstanding as of February 1, 2013.
(2) Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission and includes voting and investment power with respect to
the shares. Shares of Common Stock subject to options or warrants currently exercisable or exercisable within 60 days are deemed
outstanding for computing the percentage of the person holding such options or warrants, but are not deemed outstanding for computing
the percentage of any other person.
(3) The beneficial owner of Capital Growth
Investment Trust is Vicki Appel.
(4) The beneficial owner of Discretionary
Investment Trust is Dana Young.
(5) The beneficial owner of KWL Exploration
and Development LLC is Kyung Won Lee.
(6) The beneficial owner of FEQ Gas, LLC
is Ernest Bartlett.
(7) The beneficial owner of Moonlight
Investments Limited is Raffaele Ricci.
35
DIRECTORS AND EXECUTIVE OFFICERS
The following individuals currently serve as our executive
officers and directors:
Name
Age
Positions
Mitch Burroughs
49
President & Director
J. John Combs
54
Secretary & Director
Norman Manness
51
Treasurer & Director
Mitch Burroughs has been President and
a Director of the Company since December 2012. Since January, 2010, Mr. Burroughs has been the principal owner of New Water Financial,
LLC, a Colorado limited liability company which owns water disposal and remediation facilities. From April 2009 through November
2010, Mr. Burroughs was the Chief Executive Officer and owner of Majestic 360, and from September 1996 until April 2009, Mr. Burroughs
was an owner of NBS Enterprises, Inc., d/b/a/Majestic West, both are Colorado based companies which provide apparel decoration
services to some of the nation's leading marketing agencies. Mr. Burroughs graduated from Colorado State University in 1989
with a degree in Marketing.
J. John Combs III, Secretary and a Director
of the Company, served as the sole Officer and Director of the Company from inception (October 26, 2012) until December, 2012,
when Messrs. Burroughs and Manness were appointed as Directors and President and Treasurer, respectively. Mr. Combs is the founder,
chairman of the board of directors and Chief Executive Officer of Strategic Environmental Services, Inc. (SEER), a publicly traded
holding company that provides technology based industrial services to the environmental, energy and rail transportation services.
Mr. Combs has held these positions with SEER since 2004. Mr. Combs is Vice President of Resource Environmental Group Services,
Inc. (2004) and the founder and President of Tactical Cleaning Company (2005), which are subsidiaries of SEER. Mr. Combs, an attorney
in private practice specializes in corporate maintenance, international finance, and business litigation. He is a member of the
California and Colorado Bars. Mr. Combs is a graduate University of Colorado and received his J.D. from Duke University.
Norman Manness has been Treasurer and
Director since December 2012. From 2006 through the present, Mr. Manness has been the owner of Eyewitness Communications, a high
speed internet provider, cellular provider and a residential and commercial security company based in LaSalle, Manitoba, Canada.
Mr. Manness, since 1988 has been the owner of Avonlea Farm Sales, an Agricultural Equipment Retailer located in Domain, Manitoba,
Canada. Mr. Manness is a resident of Domain, Manitoba, Canada.
If a specific business opportunity becomes
available, such persons may face a conflict in selecting between the Company and their other business interest.  The Company
has not formulated a policy for the resolution of such conflicts.
There are no family relationships between
our officers and directors.  Each director is elected at our annual meeting of stockholders and holds office until the
next annual meeting of stockholders, or until his successor is elected and qualified.
EXECUTIVE COMPENSATION
The following table summarizes all compensation
recorded by us since inception (October 23, 2012). During this period, we had no other executive officer serving as such whose
annual compensation exceeded $100,000, and no other individuals for whom disclosure would have been made in this table but for
the fact that the individual was not serving as an executive officer of our Company at any time:
No executive compensation of any description
was paid by the Company during the subject period.
36
Outstanding Equity Awards at Fiscal
Year-End
The following table provides information
concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding
as of February 1, 2012:
None
Compensation of Directors
We have not established standard compensation
arrangements for our directors and the compensation, if any, payable to each individual for their service on our Board will be
determined from time to time by our Board of Directors based upon the amount of time expended by each of the directors on our
behalf.  None of our directors received any compensation for their services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Director Independence
The Company has one "independent"
director, Norm Maness, within the meaning of Nasdaq Marketplace Rule 4200.
LEGAL PROCEEDINGS
None
MARKET PRICE OF AND DIVIDENDS ON THE
REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Price of the Registrant's Common Equity
Our stock has yet to trade on any established market.
Dividend Policy
We have never paid cash dividends on our
common stock.  Under Nevada law, we may declare and pay dividends on our capital stock either out of our surplus, as
defined in the relevant Nevada statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year.  If, however, the capital of our company, computed in accordance
with the relevant Nevada statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise,
to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having
a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits any dividends
upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock
of all classes having a preference upon the distribution of assets shall have been repaired.
RECENT SALES OF UNREGISTERED SECURITIES
In January 2013, the Registrant sold an
aggregate of 6,975,000 shares of Common Stock par value $0.0001 to fifteen founders at a price of $0.01 per share. This offering
netted the Company an aggregate of $69,750. Thereafter, in February 2013, the Company sold an additional 4,177,500 shares of Common
Stock par value $0.0001 to 29 investors at a price of $0.10 per share. This offering netted the Company an aggregate of $417,750.
The Registrant sold these shares of Common Stock under an exemption from registration provided by Section 4(2) of the Securities
Act.
37
In January 2013, the Company entered into
a note with City National Bank, as Trustee of the Elanken Family Trust-S, dated April 24, 2002 with a face amount of $500,000
payable on or before August 1, 2013. Commencing March 1, 2013, the Company shall pay to Payee monthly interest payments at a rate
of ten percent (10%) per annum. The note is convertible, at the option of the lender into shares of Company Common Stock at a
conversion price of $1.00 per share. The note is secured by the pledge of certain third-party assets by a shareholder of the Company.
As an inducement to making the loan, the Company issued to the lender 100,000 shares of Company Common Stock.
The Company is currently engaged in the
offering of up to 3,000,000 shares of Common Stock par value $0.0001 to investors at a price of $1.00 per share. The Company has
set a minimum offering size of 500,000 shares.
On February 1, 2013, the Company issued
3,000,000 shares of its Series A Preferred Stock valued at $1.000 per share to three parties as part of the consideration for
the purchase of the membership interests of Barstow Production Water Solutions, LLC pursuant to a Member Interest Purchase Agreement
dated as of February 4, 2013.
DESCRIPTION OF SECURITIES
We are authorized to issue 150,000,000
shares of capital stock, 100,000,000 shares of which are designated Common Stock, $0.0001 par value per share, of which, as of
February 1, 2013, 11,252,500 shares of Common Stock were issued and outstanding and 50,000,000 shares of Preferred Stock of which,
as of February 1, 2013, 3,000,000 shares of Series A Preferred Stock were issued and outstanding. Additional shares may be issued
by our board of directors without further stockholder approval.
Common Stock
Holders of our common stock are entitled
to one vote for each share on all matters voted upon by our stockholders, including the election of directors, and do not have
cumulative voting rights.  Subject to the rights of holders of any then outstanding shares of our preferred stock, our
common stockholders are entitled to any dividends that may be declared by our board.  Holders of our common stock are
entitled to share ratably in our net assets upon our dissolution or liquidation after payment or provision for all liabilities
and any preferential liquidation rights of our preferred stock then outstanding.  Holders of our common stock have no
preemptive rights to purchase shares of our stock.  The shares of our common stock are not subject to any redemption
provisions and are not convertible into any other shares of our capital stock.  All outstanding shares of our common
stock are, and the shares of common stock to be issued in the offering will be, upon payment therefor, fully paid and nonassessable.
The rights, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of
our preferred stock we may issue in the future.
Preferred Stock
The Company has designated 4,000,000 shares
of its authorized preferred stock as Series A Preferred Stock. The Certificate of Designation for the Series A Preferred Stock
provides for the following rights and preferences:
1)
An Original Issue Price of $1.00
                                                                per share;
2)
Convertible at any time after
                                                                May 14, 2014 into Company Common Stock at a conversion price to
                                                                be determined by the Cumulative EBITDA generated by the Barstow
                                                                Water Productions Solutions, LLC assets during the applicable
                                                                Measurement Period and automatic conversion to Company Common
                                                                Stock at the then-effective Conversion Rate on May 14, 2017;
3)
An annual preferential dividend
                                                                at a rate of $0.05 per share (subject to adjustment);
4)
A Liquidation preference of $1.00
                                                                per share;
38
5)
Voting rights based on a Conversion
                                                                Price of $2.00 per share; and
6)
Board representation right to
                                                                appoint one director of five (5) total directors.
SELLING SECURITY
HOLDERS
The following table sets forth the shares
beneficially owned, as of the date of this prospectus, by the selling stockholders prior to the offering contemplated by this
prospectus, the number of shares each selling stockholder is offering by this prospectus and the number of shares which each selling
stockholder would own beneficially if all such offered shares are sold.  None of the selling stockholders is known to
us to be a registered broker-dealer or an affiliate of a registered broker-dealer.  Each of the selling stockholders
has acquired his, her or its shares solely for investment and not with a view to or for resale or distribution of such securities.  Beneficial
ownership is determined in accordance with SEC rules and includes voting or investment power with respect to the securities.
Name (1)
Shares of common
stock owned prior
to the offering
Shares of common
stock to be sold (2)
Shares of common
stock owned after the
offering
Percentage of
common stock
owned after this
offering
Burroughs and Family LLC
250,000
75,000
175,000
1.0
Capital Growth Investment Trust
800,000
240,000
560,000
4.0
Wiltomo Redemption Foundation
300,000
90,000
210,000
1.5
RMS Advisors
300,000
90,000
210,000
1.5
Pawnxchange LLC
500,000
150,000
350,000
2.5
FEQ Realty LLC
500,000
150,000
350,000
2.5
Corporate Capital Group International
400,000
120,000
280,000
2.0
Discretionary Investment Trust
800,000
240,000
560,000
4.0
KWL Exploration and Development LLC
800,000
240,000
560,000
4.0
Austin Coal, LLC
500,000
150,000
350,000
2.5
SLA Declaration of Trust
100,000
30,000
70,000
*
Moggle Investors, LLC
500,000
150,000
350,000
2.5
J. John Combs III
250,000
75,000
175,000
1.0
FEQ Gas, LLC
750,000
225,000
525,000
3.7
Bel-Phil Investment Partners
225,000
67,500
157,500
1.1
City National Bank, Trustee
100,000
30,000
70,000
*
Sherif Salib
50,000
15,000
35,000
*
William Belzberg Revocable Living Trust
75,000
22,500
52,500
*
Michael Garnick
500,000
150,000
350,000
2.5
Clair Calvert
350,000
105,000
245,000
2.2
Janice Thoroski
350,000
105,000
245,000
2.2
Moonlight Investments Limited
750,000
225,000
535,000
3.7
SLD Capital Corp
400,000
120,000
280,000
2.5
Susan and Robert deRose Family Trust dated 11/18/86
70,000
21,000
49,000
*
SPH Investments, Inc. Profit Sharing Plan f/b/o Stephen P. Harrington
200,000
60,000
140,000
1.2
Lockor Incorporated
120,000
36,000
84,000
*
John Cope
20,000
6,000
14,000
*
Gerald Hannahs
60,000
18,000
42,000
*
Kemp Skokos
50,000
15,000
35,000
*
David Bartlett
20,000
6,000
14,000
*
Donald S. Jackson Non-Exempt Trust
10,000
3,000
7,000
*
Fabrizio Balestri
10,000
3,000
7,000
*
Mario Litman
7,500
2,250
5,250
*
William F. Miller III
250,000
75,000
175,000
1.6
Excelsus Consulting, LLC
150,000
45,000
105,000
*
Anthony Magana
75,000
22,500
52,500
*
Markus Winkler
500,000
150,000
350,000
2.5
Jason Batansky
10,000
3,000
7,000
*
Richard Faieta
10,000
3,000
7,000
*
Michael Bellino
10,000
3,000
7,000
*
Bryan S. Dresner
10,000
3,000
7,000
*
David Roff
30,000
9,000
21,000
*
Brice Scheschuk
30,000
9,000
21,000
*
Bruce Ginsberg
10,000
3,000
7,000
*
Virginia Dadey
50,000
15,000
35,000
*
TOTALS
11,252,500
3,375,750
7,876,750
70.0
* Less than 1%
(1)
All
    shares are owned of record and beneficially unless otherwise indicated. Beneficial ownership information for the selling stockholders
    is provided as of February 1, 2013, based upon information provided by the selling stockholders or otherwise known to us.
(2)
Assumes the sale
    of all shares of common stock registered pursuant to this prospectus. The selling stockholders are under no obligation known
    to us to sell any shares of common stock at this time.
39
PLAN OF DISTRIBUTION
Shares Offered by the Company
We are offering to the public up to 3,000,000
shares of common stock, at $1.00 per share (a minimum of 500,000 shares), in a "direct public offering," This offering
terminates in 12 months after the date of effectiveness of this registration, on February 1, 2014 ("Termination Date").  There
will be no extension offered for this registration statement.
This is our initial public offering, and
no public market currently exists for our shares. The offering price may not reflect the market price of our shares after the
offering. There is a $500 minimum purchase requirement for prospective stockholders.  There is no arrangement to place
funds in an escrow, trust, or similar account.
We may continue to offer shares for a
period of twelve months after commencement of this offering or until we have sold all of the shares offered in this prospectus.
During the offering period, no subscriber will be entitled to any refund of any subscription.
We will sell the shares on a "direct
public offering" according to the following plan of distribution:
You may purchase shares by completing
and manually executing a subscription agreement and delivering it with your payment in full for all shares, which you wish to
purchase, to our offices. Your subscription shall not become effective until accepted by us and approved by our counsel. Acceptance
will be based upon confirmation that you have purchased the shares in a state providing for an exemption from registration. Our
subscription process is as follows:
·
a
                                                                                                               prospectus with
                                                                                                               subscription agreement,
                                                                                                               is delivered by
                                                                                                               the Company to
                                                                                                               each offeree;
·
the
                                                                                                               subscription is
                                                                                                               completed by the
                                                                                                               offeree, and submitted
                                                                                                               with a check to
                                                                                                               the Company;
·
each
                                                                                                               subscription will
                                                                                                               be reviewed by
                                                                                                               the Company and
                                                                                                               its counsel to
                                                                                                               confirm that the
                                                                                                               subscribing party
                                                                                                               completed the form
                                                                                                               and to confirm
                                                                                                               the state of acceptance;
·
once
                                                                                                               approved by counsel,
                                                                                                               the subscription
                                                                                                               is accepted by
                                                                                                               the Company and
                                                                                                               the funds are deposited
                                                                                                               into the Company's
                                                                                                               account within
                                                                                                               four (4) days following
                                                                                                               acceptance of the
                                                                                                               subscription;
40
·
subscriptions
                                                                                                               not accepted are
                                                                                                               returned with the
                                                                                                               check un-deposited
                                                                                                               within 24 hours
                                                                                                               of determination
                                                                                                               of non-acceptance.
Shares Offered by the Selling Shareholders
The selling stockholders have advised
us that they will sell the shares of common stock from time to time in the open market, at the initial offering price of $1.00
per share until the shares are quoted on the OTC Bulletin Board or national securities exchange, at which point the selling securities
holders may sell the registered shares at market prices prevailing at the time of sale, at prices related to the prevailing
market prices, at negotiated prices, or otherwise as described under the section of this prospectus titled "Plan of Distribution."
The selling stockholders may, from time to time, sell any or all of their shares of common stock on any stock exchange, market
or trading facility on which the shares are traded or in private transactions.  If the shares of common stock are sold
through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commission
or agent's commissions.  The selling stockholders may use any one or more of the following methods when selling
shares:
·
any national securities exchange or quotation
    service on which the securities may be listed or quoted at the time of sale;
·
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 resale by the broker-dealer
    for its account;
·
transactions otherwise than on these exchanges or systems or in
    the over-the-counter market;
·
through the writing of options, whether such options are listed
    on an options exchange or otherwise;
·
an exchange distribution in accordance with the rules of the applicable
    exchange;
·
privately negotiated transactions;
·
short sales;
·
broker-dealers may agree with the selling stockholders to sell
    a specified number of such shares at a stipulated price per share;
·
a combination of any such methods of sale; and
·
any other method permitted pursuant to applicable law.
The selling stockholders may also sell
shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
The selling stockholders may also engage
in short sales against the box, puts and calls and other transactions in our securities or derivatives of our securities and may
sell or deliver shares in connection with these trades.
41
Broker-dealers engaged by the selling
stockholders may arrange for other broker-dealers to participate in sales.  Broker-dealers may receive commissions or
discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser)
in amounts to be negotiated.  The selling stockholders do not expect these commissions and discounts to exceed what
is customary in the types of transactions involved.  Any profits on the resale of shares of common stock by a broker-dealer
acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act.  Discounts,
concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a selling stockholder.  The
selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales
of the shares if liabilities are imposed on that person under the Securities Act.
In connection with the sale of the shares
of common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of common stock in the course of hedging in positions they assume.
The selling stockholders may also sell
shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales.  The selling stockholders may also loan or pledge shares
of common stock to broker-dealers that in turn may sell such shares.  The selling stockholders may, from time to time,
pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance
of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time
under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of
the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.
Each selling stockholder has informed
us that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the common stock.  None
of the selling stockholders are affiliates of any broker-dealers.
We are paying all fees and expenses incident
to the registration of the shares of common stock.  Except as provided for indemnification of the selling stockholders,
we are not obligated to pay any of the expenses of any attorney or other advisor engaged by a selling stockholder.  We
have not agreed to indemnify any selling stockholders against losses, claims, damages and liabilities, including liabilities under
the Securities Act.
If we are notified by any selling stockholder
that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required,
we will file a supplement to this prospectus.  If the selling stockholders use this prospectus for any sale of the shares
of common stock, they will be subject to the prospectus delivery requirements of the Securities Act.
The anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of our common stock and activities of the selling stockholders, which may limit the
timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person.  Regulation
M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in passive market-making
activities with respect to the shares of common stock.  Passive market making involves transactions in which a market
maker acts as both our underwriter and as a purchaser of our common stock in the secondary market.  All of the foregoing
may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
Once sold under the registration statement,
of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our
affiliates.
The selling shareholders may be deemed
to be underwriters.
42
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been
no public market for our common stock. Future sales of substantial amounts of common stock in the public market could adversely
affect market prices prevailing from time to time. Furthermore, since only a limited number of shares will be available for sale
shortly after this offering because of certain restrictions on resale, sales of substantial amounts of our common stock in the
public market after the restrictions lapse could adversely affect the prevailing market price and our ability to raise equity
capital in the future.
Upon completion of this offering, we will
have outstanding an aggregate of 14,252,500 shares of Common Stock issued and outstanding (assuming sale of 3,000,000 newly-issued
shares). Of these shares, 6,375,750 shares will be freely tradable without restriction or further registration under the Securities
Act, unless such shares are purchased by individuals who become "affiliates" as that term is defined in Rule 144 under
the Securities Act, as the result of the securities they acquire in this offering which provide them, directly or indirectly,
with control or the capacity to control us. Restricted shares may be sold in the public market only if registered or if they qualify
for an exemption from registration under Rule 144. As a result of the provisions of Rules 144, additional shares will be available
for sale in the public market as follows:
·
no
                                                                                                               restricted shares
                                                                                                               will be eligible
                                                                                                               for immediate sale
                                                                                                               on the date of
                                                                                                               this prospectus;
·
the
                                                                                                               remainder of the
                                                                                                               restricted shares
                                                                                                               will be eligible
                                                                                                               for sale from time
                                                                                                               to time thereafter
                                                                                                               upon expiration
                                                                                                               of their respective
                                                                                                               Rule 144 holding
                                                                                                               periods, subject
                                                                                                               to restrictions
                                                                                                               on such sales by
                                                                                                               affiliates.
Sales pursuant to Rule 144 are subject
to certain requirements relating to the availability of current public information about us. A person (or persons whose shares
are aggregated) who is not deemed to have been an affiliate of Creative App Solutions at any time during the 90 days immediately
preceding the sale and who has beneficially owned restricted shares for at least six months is entitled to sell such shares under
Rule 144 without regard to the resale limitations.
The SEC has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are 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. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver to the prospective purchaser a standardized risk disclosure document prepared by the Securities and
Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules;
the broker-dealer must make a special written determination that the penny stock is a suitable investment for the prospective
purchaser and receive the purchaser's written agreement to the transaction. Furthermore, subsequent to a transaction in
a penny stock, the broker-dealer will be required to deliver monthly or quarterly statements containing specific information about
the penny stock. It is anticipated that our common stock will be traded on an OTC market at a price of less than $5.00. In this
event, broker-dealers would be required to comply with the disclosure requirements mandated by the penny stock rules.
These disclosure requirements will likely
make it more difficult for investors in this offering to sell their common stock in the secondary market.
EXPERTS
We had no activity, assets or liabilities
in 2012 and therefore have provided unaudited financial statements which reflect that. The financial statements of Barstow Production
Water Solutions, LLC, our predecessor business, as of December 31, 2012 and for the period from inception (August 9, 2012) through
December 31, 2012 along with the related consolidated statements of operations, members' equity and cash flows in this prospectus
have been audited by L J Soldinger Associates, LLC,  independent registered public accounting firm, to the extent
and for the periods set forth in their report, and are set forth in this prospectus in reliance upon such report given upon the
authority of them as experts in auditing and accounting.
43
WHERE YOU CAN FIND MORE INFORMATION
Our filings are available to the public
at the SEC's web site at http://www.sec.gov.  You may also read and copy any document with the SEC at the SEC's
Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.  Further information on the Public Reference Room
may be obtained by calling the SEC at 1-800-SEC-0330.
We have filed a registration statement
on Form S-1 with the SEC under the Securities Act for the common stock offered by this prospectus.  This prospectus
does not contain all of the information set forth in the registration statement, certain parts of which have been omitted in accordance
with the rules and regulations of the SEC.  For further information, reference is made to the registration statement
and its exhibits.  Whenever we make references in this prospectus to any of our contracts, agreements or other documents,
the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for the
copies of the actual contract, agreement or other document.
FINANCIAL STATEMENTS
The financial
statements commencing on page F-1 are included with this prospectus.  These financial statements have been prepared
on the basis of accounting principles generally accepted in the United States and are expressed in US dollars.
Page
a)
Barstow Production Water Solutions, LLC as of December 31, 2012 and for
the period from inception (August 9, 2012) to December 31, 2012 (audited);
F-1
b)
Armada Water Assets, Inc. as of December 31, 2012 and for the period
from inception (October 23, 2012) to December 31, 2012 (unaudited)
F-12
c)
Pro Forma Financial Information (unaudited)
P-1
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage
Entity)
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
F-1
Balance Sheet
F-2
Statement of Operations
F-3
Statement of Changes in Members' Equity
F-4
Statement of Cash Flows
F-5
Notes to Financial Statements
F-6
44
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members
Barstow Production Water Solutions, LLC
Odessa, Texas
We have
audited the accompanying balance sheet of Barstow Production Water Solutions, LLC as of December 31, 2012 and the related statements
of operations, members' equity, and cash flows from August 9, 2012 (inception) to December 31, 2012. Barstow Production Water
Solutions, LLC's management is responsible for these financial statements. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our 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 purpose of expressing an opinion on the effectiveness of the company's
internal control over financial reporting. Accordingly, we express no such opinion. An audit 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
audits provide a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Barstow
Production Water Solutions, LLC as of December 31, 2012 and the results of its operations and its cash flows from August 9, 2012
(inception) to December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.
/s/
        L J Soldinger Associates LLC
Deer Park, Illinois
February 4, 2013
F-
1
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage Company)
Balance Sheet
December 31, 2012
ASSETS
Current assets
Cash and cash equivalents
$
202,168
Accounts receivable
130
Prepaid expenses
1,579
Due from related party
9,257
Total current assets
213,134
Property and equipment
429,882
Less: Accumulated depreciation
(7,514
)
Net property and equipment
422,368
Total Assets
$
635,502
LIABILITIES AND MEMBERS' EQUITY
Current liabilities
Accrued professional fees
$
41,500
Accrued real estate taxes
93
Total current liabilities
41,593
Asset retirement obligation
2,944
Total Liabilities
44,537
Commitments and contingencies
–
Members' equity
Member contributions
732,971
Deficit accumulated in the development stage
(142,006
)
Total members' equity
590,965
Total liabilities and members' equity
$
635,502
The accompanying notes are an integral part
of these financial statements.
F-
2
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage
Company)
Statement of Operations
August 9, 2012 (Inception) to December 31,
2012
Revenues
Water sales
$
84,244
Operating expenses
Cost of sales
13,125
Consulting fees
30,000
Management fees – related party
30,000
Depreciation
7,514
Officer compensation
87,222
Other general and administrative
57,081
Total operating expenses
224,942
Loss from operations
(140,698
)
Interest expense
1,308
Net loss
$
(142,006
)
Pro forma information (unaudited)
Net loss
$
(142,006
)
Pro forma tax provision (benefit)
49,700
Pro forma net loss
$
(92,306
)
Pro forma basic and diluted earnings per share
$
(0.03
)
Pro forma basic and diluted weighted average preferred stock outstanding
3,000,000
The accompanying notes are an integral part
of these financial statements.
F-
3
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage
Company)
Statement of Changes in Members' Equity
August 9, 2012 (Inception) to December 31,
2012
Members' equity, at inception
$
-
Property and note payable contributed (net) from members
40,000
Cash contribution from members
750,000
Distributions to members
(57,029
)
Net loss
(142,006
)
Members' equity, end of the year
590,965
The accompanying notes are an integral part
of these financial statements.
F-
4
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage
Company)
Statement of Cash Flows
August 9, 2012 (Inception) to December 31,
2012
Cash flows from operating activities
Net loss
$
(142,006
)
Adjustments to reconcile net loss to cash used in operations
Depreciation
7,514
Non-cash interest expense related to asset retirement obligation
58
Changes in assets and liabilities:
Accounts receivable
(130
)
Prepaid expenses
(1,579
)
Accrued expenses
41,593
Net cash used in operating activities
$
(94,550
)
Cash flows from investing activities
Advances to related party
(9,257
)
Investment in land, wells, buildings and equipment
(251,996
)
Net cash used in investing activities
$
(261,253
)
Cash flows from financing activities
Proceeds from members
750,000
Distributions to members
(57,029
)
Repayment of note payable
(135,000
)
Net cash provided by financing activities
$
557,971
Net increase in cash and cash equivalents
$
202,168
Cash and cash equivalents, at inception
–
Cash and cash equivalents, end of year
$
202,168
Cash paid for interest
$
1,308
Cash paid for income taxes
-
Non-Cash Investing and Financing Activities
Property contributed by members at inception
$
175,000
Note payable on property contributed by members at inception
$
(135,000
)
The accompanying notes are an integral part
of these financial statements.
F-
5
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage Company)
Notes to Financial Statements
NOTE 1 - DESCRIPTION OF BUSINESS
Barstow
Production
Water Solutions, LLC
(the "Company") is a Texas limited liability corporation which was
formed on August 9, 2012 and is based in Odessa, Texas. The Company's fiscal year end is December 31.
During August,
2012, certain members of the Company affiliated with Oil Raiders Logistics, Inc. (see Note 4) contributed approximately 173 acres
of land located in Ward County, Texas.
The Company has built and operates a full supervision "fast fill"
water production facility which provides oil and trucking companies access to cost effective water and reduced loading time in
filling their water trucks which supply water used in the process of oil production and disposal or remediation of used water.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying financial statements have
been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States
of America ("US GAAP") and have been prepared on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business.
Development Stage Enterprise
The Company has been devoting most of its
efforts to raising capital and developing and implementing its business plan and, consequently, meets the definition of a Development
Stage Enterprise under the Accounting Standards Codification "Accounting and Reporting for Development Stage Enterprises."
Certain additional financial information is required to be included in the financial statements for the period from inception of
the Company to the current balance sheet date.
Use of Estimates
The preparation of financial statements
in conformity with US GAAP 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 amount
of revenues and expenses during the reporting year. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with a maturity of three months or less at the time of purchase to be cash equivalents in addition to cash on hand.
Property and Equipment
Property and equipment is stated at cost
less accumulated depreciated using the straight-line method over the assets' estimated useful lives. Useful lives are as
follows:
Pad and road
15 years
Buildings
20 years
Wells
20 years
Equipment
5 to 20 years
Normal maintenance and repairs for fixed
assets are charged to expense as incurred, while significant improvements are capitalized.
F-
6
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage
Company)
Notes to Financial Statements
Impairment or Disposal of Long-Lived
Assets
At each balance sheet date or whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, management of the Company
evaluates the recoverability of such assets. An impairment loss is recognized if the amount of undiscounted cash flows is less
than the carrying amount of the asset, in which case the asset is written down to fair value. The fair value of the asset is measured
by either quoted market prices or the present value of estimated expected future cash flows using a discount rate commensurate
with the risks involved.
Asset retirement obligation
The Company provides for future asset retirement
obligations on its property and facilities based upon estimates established by current industry practices. The asset retirement
obligation is initially measured at fair value and capitalized as an asset retirement cost that is amortized over the estimated
useful life of the assets. The obligation is accreted through interest expense until it is settled. The fair value is estimated
by discounting expected cash outflows to settle the asset retirement obligations using a credit-adjusted risk-fee interest rate.
The Company recognizes revisions to either the timing or the amount of the original estimate of undiscounted cash outflows as increases
or decreases to the asset retirement obligation.
The significant assumptions used to develop
the expected liability during the period are as follows:
Average gross cost to remediate the individual well sites
$
1,535
Average gross salvage value expected from individual well site remediated
None
Expected inflation rate for service costs
4
%
Credit adjusted risk-free interest rates
8
%
Actual retirement costs will be recorded
against the obligation when incurred. Any difference between the recorded asset retirement obligations and the actual retirements
costs incurred is recorded as a gain or loss in the settlement period.
Beginning balance at inception
$
-
Liabilities incurred
2,886
Liabilities settled
-
Accretion expense
58
Balance at December 31, 2012
$
2,944
Accretion expense is recorded as interest
expense in the financial statements.
Concentrations
The Company
is dependent upon
Oil Raiders Logistics, Inc., its sole customer and a related party, (see Note 4) to sell its product
and provide management services. In 2012 essentially all of the Company's sales were made as a subcontractor to Oil Raiders
Logistics, Inc.
Revenue and accounts receivable
The Company recognizes revenue from the
sale of water at the time title passes, which is generally upon the sealing of the trailer container, and upon reasonable assurance
of customer payment. The Company provides for a reserve against receivables for estimated losses that may result from a customer's
inability or unwillingness to pay. The allowance for doubtful accounts is estimated primarily based upon known problem accounts
and current economic conditions. Accounts are written off against the allowance for doubtful accounts when the Company determines
that amounts are not collectable. Recoveries of previously written-off accounts are recorded when collected. There was no allowance
deemed necessary or recorded at December 31, 2012.
F-
7
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage
Company)
Notes to Financial Statements
Income Taxes
The Company follows the guidance of FASC
740 Income Taxes, Accounting for Uncertainty in Income Taxes, which prescribes a comprehensive model for how a company should measure,
recognize, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take
on income tax returns.
The Company recognizes the tax benefits
from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions
are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As
of December 31, 2012, the Company has not taken any uncertain tax positions.
The Company is taxed as a Partnership under
the provisions of the Internal Revenue Code. Consequently, the members of the Company are taxed as Partners under the provisions
of the Internal Revenue Code. Therefore, no provision or liability for federal income taxes has been included in the financial
statements.
Based on this, the Company has not recorded
any current or deferred income taxes for the period ended December 31, 2012.
Fair Value
As defined in the authoritative guidance,
fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date ("exit price").
To estimate fair value, the Company utilizes
market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk
and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or
generally unobservable.
The authoritative guidance establishes
a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities ("Level 1" measurements) and the lowest priority
to unobservable inputs ("Level 3" measurements). The three levels of the fair value hierarchy are as follows:
Level 1 – Observable inputs such as quoted
prices in active markets at the measurement date for identical, unrestricted assets or liabilities.
Level 2 – Other inputs that are observable,
directly or indirectly, such as quoted prices in markets that are not active, or inputs which are observable, either directly or
indirectly, for substantially the full term of the asset or liability.
Level 3 – Unobservable inputs for which
there is little or no market data and which the Company makes its own assumptions about how market participants would price the
assets and liabilities.
In instances in which multiple levels of
inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair
value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement
in its entirety requires judgment, and considers factors specific to the asset or liability.
Fair Value
Level 1
Level 2
Level 3
Asset retirement obligation
$
2,944
$
2,944
F-
8
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage
Company)
Notes to Financial Statements
Pro Forma Financial Information
As discussed in Note 1, the Company was
originally organized in the form of a Limited Liability Company. Upon closing of the Merger (see Note 7), its tax status changed
to that of a corporation. The change will result in the post-merger company becoming obligated for the tax liabilities for the
portion of income generated subsequent to the date of the merger, whereas the previous income and associated liability was passed
through to the Barstow Production Water Solutions, LLC members.
The Company will be considered a predecessor
entity of the entity purchasing it and pursuant to Securities and Exchange Commission Staff Accounting Bulletin Number 1B.2 "Pro
Forma Financial Statements and Earnings per Share" ("SAB 1B.2"), pro forma information on the face of the income
statement has been presented which reflects the pro forma impact as if the Company had changed its tax status and capital structure
at the commencement of operations on August 9, 2012 and was therefore subject to income taxes. This presentation reflects the Company
generating current deferred tax asset for losses during the period presented and having the preferred shares outstanding that were
given as consideration for the merger.
Recent Accounting Pronouncements
In June 2011, the FASB issued ASU
2011-05, "Presentation of Comprehensive Income," which amends current comprehensive income guidance. This accounting
update requires companies to report comprehensive income in either a single continuous statement of comprehensive income or in
two separate but consecutive statements and eliminates the option to present the components of other comprehensive income as part
of the statement of shareholders' equity. ASU 2011-05 will be effective for the Company January 1, 2013. The adoption of
this ASU will not have an impact on the Company's financial position, results of operations or cash flows.
In July 2012, the FASB issued ASU 2012-2,
"Intangibles - Goodwill and Other" which allows an entity to first assess qualitative factors to determine whether it
is more likely than not that an indefinite-lived asset is impaired for determining whether it is necessary to perform the quantitative
impairment test. ASU 2012-2 is effective for annual and interim tests performed for fiscal years beginning after September 15,
2012. Early adoption is permitted. The adoption of this ASU will not have an impact on the Company's financial position, results
of operations or cash flows.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the
following at December 31, 2012:
Land
$
146,198
Pad & Road
136,669
Buildings
57,086
Wells
50,517
Equipment
36,526
Asset retirement cost
2,886
429,882
Less: accumulated depreciation
(7,514
)
$
422,368
In April 2012 Oil Raiders Logistics, Inc.
("Oil Raiders") entered into a purchase agreement with an outside third party to acquire approximately 173 acres of
land outside of Barstow, Texas. The purchase price of the land was $175,000, of which $20,000 was paid at closing and a promissory
note (the "Note") and warranty deed was given to the seller in the amount of $160,000, payable in 8 monthly $20,000
installments, of which $5,000 was to be interest. In early August 2012, Oil Raiders made its first installment payment of $20,000
and then the owners of Oil Raiders contributed the land and remaining balance on the Note to the Company for their membership interests.
F-
9
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage
Company)
Notes to Financial Statements
The prior owner of the property had intended
to farm the parcel and in anticipation of that, had drilled and completed three irrigation wells on the property. However, the
prior owner had failed to obtain the necessary ingress and egress permits and was never able to commence farming operations and
no amounts were pumped from the wells for sale to outside third parties. The Company has allocated approximately $30,000 of the
initial purchase price of the land towards the three wells acquired with the land. The Company paid the Note in full and the warranty
deed was released on August 20, 2012. In August, 2012 the Company drilled a shallow well with a 12" casing on the property,
which when flow tested produced water at a rate of approximately 55,000 bbls per day and commenced construction of the road for
ingress and egress to the property and the pad to support the fast fill operation. Construction operations were completed in September,
2012 with the installation of two 400 bbl fresh water tanks and pumping equipment.
Depreciation expense for the period ended
December 31, 2012 was $7,514.
NOTE 4 - RELATED PARTY TRANSACTIONS
On August 9, 2012, the Company entered
into a
Management, Accounting and Administrative Services Agreement
with Oil Raiders. Oil Raiders is controlled by two members
of the Company. The agreement provides that Oil Raiders will have the exclusive right to manage the day-to-day administration and
accounting of the Company, however, it specifically restricts the ability of Oil Raiders from making any strategic decisions for
the Company, including not permitting Oil Raiders to: hire any employees for the Company, enter into any purchase agreements for
fixed assets above a certain threshold amount, encumber or sign any agreement that would result in any assets becoming encumbered
or having liens placed upon them, enter into any agreement to acquire debt of any kind, or any agreement to sell, transfer or otherwise
assign any assets of the Company. The agreement is for a period of three years and may be terminated by either party with 30 days
notice.
For the period from inception to December
31, 2012, the Company incurred management fees totaling $30,000 to Oil Raiders and paid approximately $55,000 for work performed
on the road and equipment (see Note 3) to companies controlled by two of the members. In addition, the Company reimbursed Oil Raiders
a total of approximately $213,000 for payments for construction and other expenses made on its behalf by Oil Raiders.
Also, included in the amounts above is
the cost of insurance furnished to the Company by Oil Raiders under its insurance policies.
As of December 31, 2012, the Company was
owed $9,257 for advances made to Oil Raiders.
NOTE 5 - MEMBERS' INTERESTS
The Company has three members, Bel-Phil
Investments, LLC ("Bel-Phil") who contributed a total of $750,000, and two individuals who are also officers of the
Company, each contributed $20,000 in the form of the land and Note (see Note 3). The agreement provides that the sharing interests
are; 50% for Bel-Phil Investments, LLC and 25% for each individual member.
Members shall be entitled to one vote for
each sharing interest held by the Member. Under the agreement, Bel-Phil is entitled to a 10% Preferred Return on its contribution.
The agreement also provides for the monthly
distribution of available cash flow from operations, as defined, to be allocated 80% to Bel-Phil and 10% to both individuals. After
Bel-Phil has been returned its total capital contribution and preferred return in the form of monthly distributions, the monthly
distribution and membership interests will change to 45% to Bel-Phil, 22.5% to each existing individual member plus another individual,
who currently is a consultant to the Company, earns a 10% membership interest.
The Company has made distributions totaling
$57,029 through December 31, 2012.
F-
10
BARSTOW
PRODUCTION
WATER SOLUTIONS, LLC
(A Development Stage
Company)
Notes to Financial Statements
NOTE 6 – COMMITTMENTS AND CONTINGENCIES
In December, 2012, the Company entered
into an agreement effective January 11, 2013, for three years with Texas-New Mexico Power Company ("TNMP") to supply
electricity to the Company's site. As a result of this agreement, the Company has agreed to purchase a specified minimum
amount of power over three years from TNMP. Failure of the Company to purchase the minimum power could result in the Company having
to pay to TNMP a portion of the costs incurred by TNMP to install power equipment at the Company location up to a maximum of $17,256.
To guarantee the payments due under this agreement the Company purchased an irrevocable Letter of Credit payable to TNMP in the
amount of $17, 256, and is obligated to pay a fee of $1,553 at the end of the three year period. In addition, two of the members
and Oil Raiders Logistics, Inc. are guarantors under the letter of credit.
NOTE 7 – SUBSEQUENT EVENTS
On February 1, 2013, the Company entered
into a Membership Interest Purchase Agreement ("MIPA") with Armada Water Assets, Inc. ("Armada"). Pursuant
to the MIPA, the members of the Company sold all of their membership interests to Armada in exchange for 3,000,000 shares of Armada
Series A preferred stock, promissory notes (the "Notes") to the members totaling $1,000,000 and an earn-out such that
for the five years following the closing, when annual EBITDA exceeds $2,000,000, the members are entitled to a payment of 20% of
such excess. At closing, the Company became a wholly owned subsidiary of Armada and its status as a partnership terminated and
it became a corporation for income tax purposes. The Notes bear interest at the rate of 10% per annum, with interest payable quarterly
in cash, mature three years from the date of issuance. In addition to quarterly interest payments, the Notes require Armada to
make principal payments each quarter in an amount equal to one-third of the previous quarter's cash flow (as defined in the
agreement). In addition, should Armada be successful in raising additional debt or equity financing, any amounts raised over $1
million is required to be used to pay down principal of the Notes. The Notes restrict the ability of Armada to make any dividend
or distributions, or to sell, transfer or assign any of the Company's properties or assets, while any amount of principal
is outstanding under the Notes.
F-
11
ARMADA WATER ASSETS, INC.
(A Development Stage
Entity)
INDEX TO FINANCIAL STATEMENTS
Page
Balance Sheet (Unaudited)
F-13
Statement of Operations (Unaudited)
F-14
Statement of Changes in Stockholders' Equity
F-15
Statement of Cash Flows (Unaudited)
F-16
Notes to Financial Statements (Unaudited)
F-17
F-
12
ARMADA WATER ASSETS, INC.
(A Development Stage Company)
Balance Sheet
December 31, 2012
(Unaudited)
ASSETS
Total Assets
$
0
LIABILITIES AND STOCKHOLDERS' EQUITY
Total Liabilities
0
Commitments and contingencies
—
Stockholders' equity
Common stock, par value $0.0001, 100,000,000 shares authorized, none issued
0
Preferred stock, par value $0.0001, 50,000,000 shares authorized, none issued
0
Retained earnings
0
Total stockholders' equity
0
Total liabilities and stockholders' equity
$
0
The accompanying notes are an integral part
of these financial statements.
F-
13
ARMADA WATER ASSETS, INC.
(A Development Stage
Company)
Statement of Operations
October 23, 2012 (Inception) to December
31, 2012
(Unaudited)
Revenues
Water sales
$
0
Operating expenses
Cost of sales
0
Total operating expenses
0
Income from operations
0
Interest expense
0
Net Income
$
0
Basic and diluted weighted average common stock
Outstanding
0
Basic and diluted weighted average earnings per share
0
The accompanying notes are an integral part
of these financial statements.
F-
14
ARMADA WATER ASSETS, INC.
(A Development Stage
Company)
Statement of Changes in Stockholders'
Equity
October 23, 2012 (Inception) to December
31, 2012
(Unaudited)
Common
Stock
Shares
Common
stock
Amount
Additional
Paid-in
Capital
Retained
Earnings
Total
Stockholders' equity, at inception
-
0
0
0
0
Net loss
-
-
Stockholders' equity, end of the year
-
0
0
0
0
The accompanying notes are an integral part
of these financial statements
F-
15
ARMADA WATER ASSETS, INC.
(A Development Stage
Company)
Statement of Cash Flows
October 23, 2012 (Inception) to December
31, 2012
(Unaudited)
Cash flows from operating activities
Net income
$
0
Adjustments to reconcile net loss to cash used in operations:
Changes in assets and liabilities:
0
Net cash used in operating activities
$
0
Cash flows from investing activities
No activity
0
Net cash used in investing activities
0
Cash flows from financing activities
No activity
0
Net cash provided by financing activities
$
0
Net increase in cash and cash equivalents
$
0
Cash and cash equivalents, at inception
0
Cash and cash equivalents, end of year
$
0
Cash paid for interest
0
Cash paid for income taxes
0
The accompanying notes are an integral part
of these financial statements.
F-
16
ARMADA WATER ASSETS, INC.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
NOTE 1 - DESCRIPTION OF THE BUSINESS AND GOING CONCERN
Armada Water Assets, Inc. (the "Company")
is a Nevada corporation which was formed on October 23, 2012 and is based in Fort Collins, Colorado. The Company's fiscal year
end is December 31.
The Company had no
assets, liabilities or operations during 2012. In January 2013, the Company commenced operations by issuing founding shares, opening
a bank account and entered into an agreement to acquire 100% of the membership interests in Barstow Production Water Solutions,
LLC (see Note 3) and entered the water sales industry.
As a result of the acquisition of Barstow
Production Water Solutions, LLC (see Note 3), the Company has incurred significant obligations that are in excess of the current
capacity of the Company or Barstow to satisfy under current operating conditions and current cash available. Management expects
that significant on-going operating and capital expenditures will be necessary to successfully implement the Company's business
plan and develop, manufacture and market its products. These circumstances raise substantial doubt about the Company's ability
to continue as a going concern. Implementation of the Company's plans and its ability to continue as a going concern depend
upon its securing substantial additional financing.
Management's plans include efforts
to obtain additional capital, although no assurances can be given about the Company's ability to obtain such capital. If
the Company is unable to obtain adequate additional financing or generate profitable sales revenues, or negotiate a favorable settlement
plan with creditors, it will be unable to continue its product development and other activities and may be forced to cease operations.
The financial statements presented herein do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying financial statements have
been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States
of America ("US GAAP") and have been prepared on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business.
Development Stage Enterprise
The Company is in the process of starting
operations and, consequently, meets the definition of a Development Stage Enterprise under the Accounting Standards Codification "Accounting
and Reporting for Development Stage Enterprises." Certain additional financial information is required to be included in
the financial statements for the period from inception of the Company to the current balance sheet date.
Use of Estimates
The preparation of financial statements
in conformity with US GAAP 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 amount
of revenues and expenses during the reporting year. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with a maturity of three months or less at the time of purchase to be cash equivalents in addition to cash on hand.
F-
17
ARMADA WATER ASSETS, INC.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
Income Taxes
The Company follows the guidance of the
FASB Accounting Standards Codification ("FASC")740 Income Taxes, Accounting for Uncertainty in Income Taxes, which
prescribes a comprehensive model for how a company should measure, recognize, present, and disclose in its financial statements
uncertain tax positions that the company has taken or expects to take on income tax returns.
The Company recognizes the tax benefits
from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions
are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As
of December 31, 2012, the Company has not taken any uncertain tax positions.
Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the tax
rate in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change
in tax rates on deferred tax assets and liabilities is recognized in income in the year of the enacted tax rate change. In addition,
a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not
that some portion of the deferred tax asset will not be realized. Based on this and lack of activity in 2012, the Company has not
recorded any current or deferred income taxes for the period ended December 31, 2012.
Recent Accounting Pronouncements
In June 2011, the FASB issued ASU
2011-05, "Presentation of Comprehensive Income," which amends current comprehensive income guidance. This accounting
update requires companies to report comprehensive income in either a single continuous statement of comprehensive income or in
two separate but consecutive statements and eliminates the option to present the components of other comprehensive income as part
of the statement of shareholders' equity. ASU 2011-05 will be effective for the Company January 1, 2013. The adoption of
this ASU will not have an impact on the Company's financial position, results of operations or cash flows.
In July 2012, the FASB issued ASU 2012-2,
"Intangibles - Goodwill and Other" which allows an entity to first assess qualitative factors to determine whether it
is more likely than not that an indefinite-lived asset is impaired for determining whether it is necessary to perform the quantitative
impairment test. ASU 2012-2 is effective for annual and interim tests performed for fiscal years beginning after September 15,
2012. Early adoption is permitted. The adoption of this ASU will not have an impact on the Company's financial position, results
of operations or cash flows.
NOTE 3 – SUBSEQUENT EVENTS
In January 2013, the Company sold an aggregate
of 6,975,000 shares of common stock par value $0.0001 to fifteen founders at a price of $0.01 per share and raised gross proceeds
of $69,750.
Thereafter, in February 2013, the Company
commenced a private offering and sold 4,177,500 shares of common stock par to investors at a price of $0.10 per share and raised
gross proceeds of $417,750. The Company sold these shares of Common Stock under an exemption from registration provided by Section
4(2) of the Securities Act.
In January 2013, the Company entered into
a note with City National Bank, as Trustee of the Elanken Family Trust-S ("Lender"), dated April 24, 2002 with a face
amount of $500,000 payable on or before August 1, 2013. Commencing March 1, 2013, the Company shall pay to Lender monthly interest
payments at a rate of ten percent (10%) per annum. The note is convertible, at the option of the lender into shares of Company's
common stock at a conversion price of $1.00 per share. The note is secured by the pledge of certain third-party assets by a shareholder
of the Company. As an inducement to making the loan, the Company issued to the lender 100,000 shares of Company's common
Stock.
F-
18
ARMADA WATER ASSETS, INC.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
On February 1, 2013, the Company entered
into a Membership Interest Purchase Agreement ("MIPA") with Barstow Production Water Solutions, LLC ("Barstow").
Pursuant to the MIPA, the members of Barstow sold all of their membership interests to the Company in exchange for 3,000,000 shares
of the Company's Series A preferred stock, promissory notes (the "Notes") to the members totaling $1,000,000
and an earn-out such that for the five years following the closing, when annual EBITDA exceeds $2,000,000, the members are entitled
to a payment of 20% of such excess. At closing, Barstow became a wholly owned subsidiary of the Company. The Notes bear interest
at the rate of 10% per annum, with interest payable quarterly in cash, mature three years from the date of issuance. In addition
to quarterly interest payments, the Notes require the Company to make principal payments each quarter in an amount equal to one-third
of the previous quarter's cash flow (as defined in the agreement). In addition, should the Company be successful in raising
additional debt or equity financing, any amounts raised over $1 million is required to be used to pay down principal of the Notes.
The Notes restrict the ability of the Company to make any dividend or distributions, or to sell, transfer or assign any of the
Company's properties or assets, while any amount of principal is outstanding under the Notes.
F-
19
ARMADA WATER ASSETS, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
The following unaudited pro forma condensed
consolidated balance sheet is based on the historical balance sheets of Armada Water Assets, Inc. ("Armada" or the "Company")
and Barstow Production Water Solutions, LLC ("Barstow") as of December 31, 2012. No pro forma statement of operations
for the period ending December 31, 2012 has been presented as no pro forma adjustments are being made and Armada Water Assets,
Inc. had no operations during 2012. The statement of operations of Barstow Production Water Solutions, Inc. from its inception
on August 9, 2012 through December 31, 2012 can be found in exhibit 99.__ within this registration statement.
The following unaudited pro forma
condensed earning per share is based on the historical statement of operations of Barstow for the period beginning at
inception, August 9, 2012, and ending December 31, 2012 as if the transactions below had taken place as of the beginning of
the period and with the equity structure of Armada.
On February 1, 2013, the Company acquired
100% of the membership interests of Barstow pursuant to a Membership Interest Purchase Agreement ("MIPA") between the
Company, Barstow and the members of Barstow for a total consideration comprising (a) 3,000,000 newly-issued shares of Company Series
A Preferred stock and (ii) promissory notes in the aggregate principal amount of $1,000,000 ("Promissory Notes") (collectively,
the "Initial Purchase Price"). The Promissory Notes have a maturity date of January 31, 2016 and the Company is required
under the terms of the Promissory Notes to make quarterly payments of principal and interest (at a rate of ten percent per annum)
in amounts equal to one-third of the Company's cash flow (as defined in the Promissory Notes) during the prior fiscal quarter.
In addition, the Company must make mandatory prepayments on account of the Promissory Notes equal to the proceeds of any subsequent
debt or equity financings completed by the Company to the extent aggregate cumulative proceeds thereof exceed $1,000,000. The Company
shall also have the right to prepay the Promissory Notes, in whole or in part, at any time without penalty.
As of the merger, Armada has an authorized capitalization consisting
of 50,000,000 shares of Preferred Stock and 100,000,000 shares of Common Stock, none of which were issued as of December 31, 2012.
The pro forma balance sheet reflects preliminary estimates and
assumptions based on the information available at the time of preparation, including, but not limited to, the preliminary of the
fair value estimates of assets acquired and liabilities assumed.
P-
1
ARMADA WATER ASSETS, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2012
(Unaudited)
Historical
Armada
    Water Assets, Inc.
Barstow
    Production
Water Solutions, LLC
Pro
    Forma
Adjustements
Armada
    Water Assets, Inc.
Pro Forma Merger
(Unaudited)
(Audited)*
(Unaudited)
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
-
202,168
202,168
Accounts receivable
-
130
130
Prepaid expenses
-
1,579
1,579
Due from
    related party
-
9,257
9,257
Total current assets
-
213,134
213,134
Property and equipment
-
429,882
(a)
1,300,000
1,131,403
(b)
(598,479
)
Less: Accumulated depreciation
-
(7,514
)(b)
7,514
-
Net property and equipment
-
422,368
709,035
1,131,403
Total assets
-
635,502
709,035
1,344,537
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued professional fees
-
41,500
41,500
Accrued
    real estate taxes
-
93
93
Total current liabilities
-
41,593
41,593
Notes payable - Barstow Sellers
(a)
1,000,000
1,000,000
Asset retirement obligation
-
2,944
2,944
Total liabilities
-
44,537
1,000,000
1,044,537
Stockholders' Equity:
Common stock
-
-
Preferred stock
-
(a)
300
300
Additional paid in capital
-
(a)
299,700
299,700
Equity membership
-
732,971
(b)
(732,971
)
-
Deficit
    accumulated in the development stage
-
(142,006
)(b)
142,006
-
Total stockholders' Equity
-
590,965
(290,965
)
300,000
Total liabilities and stockholders'
    Equity
-
635,502
709,035
1,344,537
* Derived from audited information
See accompanying notes to unaudited pro
forma condensed consolidated financial information.
P-
2
Armada Water Assets, Inc. and Subsidiary
Unaudited Notes to Unaudited Pro Forma Condensed
Consolidated Financial Information
NOTE 1. BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma condensed consolidated financial information
included herein has been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission.
Historical financial information has been adjusted in the pro
forma balance sheet to give effect to pro forma events that are: (1) directly attributable to the Acquisition; (2) factually
supportable; and (3) expected to have a continuing impact on the Company's results of operations. The pro forma adjustments
presented in the pro forma balance sheet are described in Note 2—
Pro Forma Adjustments
.
The pro forma balance sheet and pro forma earnings per share
(see Note 4) have been prepared using the acquisition method of accounting in accordance with the accounting guidance on business
combinations with Armada identified as the acquirer but Barstow as the predecessor business. In business combinations, purchase
price allocation is often subject to revisions as additional information becomes available and further analyses are performed.
The assets acquired and liabilities assumed in the acquisition were recorded at provisional amounts based on the preliminary purchase
price allocation. The Company is in the process of obtaining additional information to identify and measure all assets acquired
and liabilities assumed in the acquisition within the measurement period, which could be up to one year from the date of acquisition.
Such provisional amounts will be retrospectively adjusted to reflect any new information about facts and circumstances that existed
at the acquisition date that, if known, would have affected the measurement of these amounts. Additionally, key input assumptions
and their sensitivity to the valuation of assets acquired and liabilities assumed are currently being reviewed by management.
NOTE 2. PRO FORMA ADJUSTMENTS
On February 1, 2013, Barstow entered into a Membership Interest
Purchase Agreement ("MIPA") with Armada. Pursuant to the MIPA, the members of the Barstow sold all of their membership
interests to Armada in exchange for 3,000,000 shares of Armada Water Assets, Inc. Series A preferred stock, promissory notes (the
"Notes") to the members of Barstow totaling $1,000,000 and an earn-out such that for the five years following the closing,
when annual EBITDA exceeds $2,000,000, the members of Barstow are entitled to a payment of 20% of such excess.
(a)
To record the issuance of 3,000,000 shares of series
A preferred stock and promissory notes totaling $1,000,000 for 100% of the assets and liabilities of Barstow.
(b)
To record the adjustment to put the property and equipment acquired at management's estimate of fair value and the elimination
of Barstow's membership equity and deficit accumulated in the development stage.
NOTE 3. PRELIMINARY PURCHASE PRICE ALLOCATION
The preliminary purchase price allocation of the fair value
of assets acquired and liabilities assumed has resulted in an increase in the costs allocated to property and equipment. The preliminary
allocation of the purchase price is given in the table below:
Acquisition of Barstow Production Water Solutions, LLC by Armada Water Assets, Inc.
Cash
$
202,168
Accounts receivable
130
Prepaid expenses
1,579
Advances receivable
9,257
Property and equipment
1,131,403
Assets acquired
1,344,537
Accrued professional fees
41,500
Accrued real estate taxes
93
Asset retirement obligation
2,944
Liabilities assumed
44,537
NOTE 4. PRO FORMA EARNINGS PER SHARE
The following table presents the pro forma earnings per share
of Armada had it acquired Barstow on December 31, 2012:
Net loss for the period from inception on August 9, 2012 through December 31, 2012
$
(142,006
)
Pro forma earnings per share
$
(0.01
)
Weighted average pro forma shares outstanding at the time of the merger
11,042,500
P-
3
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
CONTROLS
AND PROCEDURES
Evaluation of Disclosure Controls
and Procedures
The Company's management is responsible
for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange
Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files
or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's
rules and forms.  Disclosure controls and procedure include, without limitations, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal
financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required
disclosure.
In accordance with Exchange Act Rules
13a-15 and 15d-15, an evaluation was completed by the Company's Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period
covered by this Annual Report.  Based on that evaluation, as of [date] the Company's Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and procedures were not effective in providing
reasonable assurance that the information required to be disclosed in the Company's reports filed or submitted under the
Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the Commission's rules
and forms.
Management's Report on Internal
Control over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined
in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision
of, the company's principal executive and principal financial officers and effected by the company's board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with accounting principles generally accepted in the United States
of America and includes those policies and procedures that:
·
Pertain to the maintenance
    of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the
    company;
·
Provide reasonable
    assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting
    principles generally accepted in the United States of America and that receipts and expenditures of the company are being
    made only in accordance with authorizations of management and directors of the company; and
·
Provide reasonable
    assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's
    assets that could have a material effect on the financial statements.
45
Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.  All internal control systems, no matter how well designed,
have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation.  Because of the inherent limitations of internal control,
there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial
reporting. However, these inherent limitations are known features of the financial reporting process.  Therefore, it
is possible to design into the process safeguards to reduce, though not eliminate, this risk.
As of [date], management assessed the
effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial
reporting established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO") and SEC guidance on conducting such assessments.  Based on that evaluation, they
concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules as more fully described below.  This was due to deficiencies that existed
in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and
that may be considered to be material weaknesses.
The matters involving internal controls
and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight
Board were: (1) lack of a functioning audit committee, resulting in ineffective oversight in the establishment and monitoring
of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3)
ineffective controls over period end financial disclosure and reporting processes.  The aforementioned material weaknesses
were identified by our management in connection with the review of our financial statements for the period ended December 31,
2012.
Management believes that the material
weaknesses set forth in items (2) and (3) above did not have an effect on our financial results.  However, management
believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors
results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could
result in a material misstatement in our financial statements in future periods.
Management's Remediation Initiatives
Given the financial resources available
to the Company, the Company is not in a position to institute any realistic remediation of the identified material weaknesses
and other deficiencies and enhance our internal controls. As such time as the Company commences operations and has the financial
resources to address and eliminate the identified weaknesses, we intend to create take action to do so. Unfortunately, until the
Company has such financial resources, the identified weaknesses will continue to exist.
Changes in Internal Control over
Financial Reporting
.
During the period from inception (October 23, 2012) through December 31, 2012, there were
no changes in the Company's internal control over financial reporting during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Limitations on the Effectiveness
of Controls
.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues, if any, within a company have been detected."
46
[Back Page of Prospectus]
PROSPECTUS
ARMADA WATER ASSETS, INC.
3,000,000 Shares of Common Stock Offered
by
Armada Water Assets, Inc.
And
3,375,750 Shares of Common Stock offered
by the Selling Shareholders
Dealer Prospectus Delivery Obligation
Until February 1, 2014, all dealers
that effect transactions in these securities whether or not participating in this offering, may be required to deliver a prospectus.  This
is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
47
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 10.     Indemnification of Directors
and Officers
Pursuant to our Articles of Incorporation
and By-Laws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his
position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. In certain cases, we may
advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits
in any such proceeding as to which such person is to be indemnified, we must indemnify him against all expenses incurred, including
attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable, only by a court order. The prior discussion of indemnification
in this paragraph is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted to directors or officers pursuant to the foregoing provisions.
However, we are informed that, in the opinion of the Commission, such indemnification is against public policy, as expressed in
the Act and is, therefore, unenforceable.
Item 11.     Other Expenses of Issuance
and Distribution
Although we will receive no proceeds from
the sale of shares pursuant to this prospectus, we have agreed to bear the costs and expenses of the registration of the shares.
Our expenses in connection with the issuance and distribution of the securities being registered are estimated as follows:
Nature of expense
Amount
SEC Registration fee
$
870
Accounting fees and expenses
$
25,000
Legal fees and expenses
$
25,000
Printing expenses
$
2,000
Miscellaneous
$
1,130
TOTAL
$
55,000
All amounts are estimates other than the
Securities and Exchange Commission's registration fee. We are paying all expenses of the offering listed above. No portion
of these expenses will be borne by the selling shareholders. The selling shareholders, however, will pay any other expenses incurred
in selling their common stock, including any brokerage commissions or costs of sale.
Item 12. Recent Sales of Unregistered Securities
Below is a list of
securities sold by us within the past three years which were not registered under the Securities Act.
48
Amount of
Name of Purchaser
Date of
    Sale
Title of Security
Securities
Sold
Consideration
Burroughs and Family LLC
January
                                                                     4, 2013
Common Stock
250,000
$
2,500
Capital Growth Investment Trust
January
                                                          4, 2013
Common Stock
800,000
$
8,000
Wiltomo Redemption Foundation
January
                                                          4, 2013
Common Stock
300,000
$
3,000
RMS Advisors
January
                                                          4, 2013
Common Stock
300,000
$
3,000
Pawnxchange LLC
January
                                                          4, 2013
Common Stock
500,000
$
5,000
FEQ Realty LLC
January
                                                          4, 2013
Common Stock
500,000
$
5,000
Corporate Capital Group International
January
                                                          4, 2013
Common Stock
400,000
$
4,000
Discretionary Investment Trust
January
                                                          4, 2013
Common Stock
800,000
$
8,000
KWL Exploration and Development LLC
January
                                                          4, 2013
Common Stock
800,000
$
8,000
Austin Coal, LLC
January
                                                          4, 2013
Common Stock
500,000
$
5,000
SLA Declaration of Trust
January
                                                          4, 2013
Common Stock
100,000
$
1,000
Moggle Investors, LLC
January
                                                          4, 2013
Common Stock
500,000
$
5,000
J. John Combs III
January
                                                          4, 2013
Common Stock
250,000
$
2,500
FEQ Gas, LLC
January
                                                          4, 2013
Common Stock
750,000
$
7,500
Bel-Phil Investment Partners
January
                                                          4, 2013
Common Stock
225,000
$
2,250
City National Bank, Trustee
February
                                                          1, 2013
Common Stock
100,000
*
Sherif Salib
February
                                                          1, 2013
Common Stock
50,000
$
5,000
William Belzberg Revocable Living Trust
February
                                                          1, 2013
Common Stock
75,000
$
7,500
Michael Garnick
February
                                                          1, 2013
Common Stock
500,000
$
50,000
Clair Calvert
February
                                                          1, 2013
Common Stock
350,000
$
35,000
Janice Thoroski
February
                                                          1, 2013
Common Stock
350,000
$
35,000
Moonlight Investments Limited
February
                                                          1, 2013
Common Stock
750,000
$
75,000
SLD Capital Corp
February
                                                          1, 2013
Common Stock
400,000
$
40,000
Susan and Robert deRose Family Trust dated 11/18/86
February
                                                          1, 2013
Common Stock
70,000
$
7,000
SPH Investments, Inc. Profit Sharing Plan f/b/o Stephen P. Harrington
February
                                                          1, 2013
Common Stock
200,000
$
20,000
Lockor Incorporated
February
                                                          1, 2013
Common Stock
120,000
$
12,000
John Cope
February
                                                          1, 2013
Common Stock
20,000
$
2,000
Gerald Hannahs
February
                                                          1, 2013
Common Stock
60,000
$
6,000
Kemp Skokos
February
                                                          1, 2013
Common Stock
50,000
$
5,000
David Bartlett
February
                                                          1, 2013
Common Stock
20,000
$
2,000
Donald S. Jackson Non-Exempt Trust
February
                                                          1, 2013
Common Stock
10,000
$
1,000
Fabrizio Balestri
February
                                                          1, 2013
Common Stock
10,000
$
1,000
Mario Litman
February
                                                          1, 2013
Common Stock
7,500
$
750
William F. Miller III
February
                                                          1, 2013
Common Stock
250,000
$
25,000
Excelsus Consulting, LLC
February
                                                          1, 2013
Common Stock
150,000
$
15,000
Anthony Magana
February
                                                          1, 2013
Common Stock
75,000
$
7,500
Markus Winkler
February
                                                          1, 2013
Common Stock
500,000
$
50,000
Jason Batansky
February
                                                          1, 2013
Common Stock
10,000
$
1,000
Richard Faieta
February
                                                          1, 2013
Common Stock
10,000
$
1,000
Michael Bellino
February
                                                          1, 2013
Common Stock
10,000
$
1,000
Bryan S. Dresner
February
                                                          1, 2013
Common Stock
10,000
$
1,000
David Roff
February
                                                          1, 2013
Common Stock
30,000
$
3,000
Brice Scheschuk
February
                                                          1, 2013
Common Stock
30,000
$
3,000
Bruce Ginsberg
February
                                                          1, 2013
Common Stock
10,000
$
1,000
Virginia Dadey
February
                                                          1, 2013
Common Stock
50,000
$
5,000
* Issued as inducement to enter into promissory note
49
The securities issued in the abovementioned
transactions were either issued in connection with (a) transactions by an issuer not involving a public offering which were exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933 or (b) pursuant to a private placement exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as amended, pursuant to the terms of Rule 506 of Regulation
D. In this regard the offerings were to a total of 44 persons, all of whom were either "accredited investors" or sophisticated
non-accredited investors.
Item 13. 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:
i.             To
include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
ii.             To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. 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 prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective registration statement.
iii.             To
include any material information with respect to the plan of distribution not previously disclosed in the 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 of 1933, each such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, 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 which remain unsold at the termination of the offering.
(4) Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
50
(5) Each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement
as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document immediately prior to such date of first use.
(6) That, for the purpose of determining
liability of the registrant under the Securities Act of 1933 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:
i.             Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
ii.            Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;
iii.           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
iv.           Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
EXHIBITS
The exhibits required by Item 601 of Regulation S-K, and an
index thereto, are attached.
Exhibit
    No.
Description
3(i)
Articles of Incorporation of Armada Water Assets, Inc. (and amendment)
3(ii)
Certificate of Designation Series A Preferred Stock of Armada Water
    Assets, Inc.
3(iii)
Bylaws of Armada Water Assets, Inc.
5.1
Legal Opinion of Robert Diener, Esq. (included with Exhibit 5.1)
10.1
Member Interest Purchase Agreement dated as of February 1, 2013
10.2
Form of Promissory Note
10.3
Secured Promissory Note dated as of January 31, 2013 by and between
    Armada Water Assets, Inc. and City National Bank, as Trustee of the Elanken Family Trust-S dated April 24, 2002
23.1
Legal Opinion of Robert Diener, Esq. (included with Exhibit 5.1)
23.2
Consent of Independent Auditors
51
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized on the 5
th
day of February, 2013.
ARMADA WATER ASSETS, INC.
By:
/s/ Mitch Burroughs
Mitch Burroughs
President and Director: Principal Executive Officer and Principal
    Financial Officer
By:
/s/ Norman Manness
Norman Manness
Treasurer and Director; Principal Financial and Accounting Officer
By:
/s/ J. John Combs
J. John Combs
Secretary and Director
In accordance with the requirements of the Securities Act of
1933, this registration statement was signed by the following person in the capacities and date stated.
/s/
    Mitch Burroughs
Mitch Burroughs
President and Director: Principal Executive Officer
Dated: February 5, 2013
:
/s/
    J. John Combs
J. John Combs]
Secretary and Director
Dated: February 5, 2013
/s/
    Norman Manness
Norman Manness
Treasurer and Director; Principal Financial Officer
Dated: February 5, 2013
52
EXHIBIT LIST
Exhibit
    No.
Description
3(i)
Articles of Incorporation of Armada Water Assets, Inc. (and amendment)
3(ii)
Certificate of Designation Series A Preferred Stock of Armada Water
    Assets, Inc.
3(iii)
Bylaws of Armada Water Assets, Inc.
5.1
Legal Opinion of Robert Diener, Esq. (included with Exhibit 5.1)
10.1
Member Interest Purchase Agreement dated as of February 1, 2013
10.2
Form of Promissory Note
10.3
Secured Promissory Note dated as of January 31, 2013 by and between
    Armada Water Assets, Inc. and City National Bank, as Trustee of the Elanken Family Trust-S dated April 24, 2002
23.1
Legal Opinion of Robert Diener, Esq. (included with Exhibit 5.1)
23.2
Consent of Independent Auditors
53