<SEC-DOCUMENT>0001204459-12-001504.txt : 20120703
<SEC-HEADER>0001204459-12-001504.hdr.sgml : 20120703
<ACCEPTANCE-DATETIME>20120703142105
ACCESSION NUMBER:		0001204459-12-001504
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		6
FILED AS OF DATE:		20120703
DATE AS OF CHANGE:		20120703

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LEXARIA CORP.
		CENTRAL INDEX KEY:			0001348362
		STANDARD INDUSTRIAL CLASSIFICATION:	METAL MINING [1000]
		IRS NUMBER:				202000871
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		424B3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-180125
		FILM NUMBER:		12943904

	BUSINESS ADDRESS:	
		BUSINESS PHONE:		604-602-1675

	MAIL ADDRESS:	
		STREET 1:		SUITE 604 - 700 WEST PENDER STREET
		CITY:			VANCOUVER
		STATE:			A1
		ZIP:			V6C 1G8

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Lexaria Corp.
		DATE OF NAME CHANGE:	20051229
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>form424b3.htm
<DESCRIPTION>FORM 424B3
<TEXT>

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   <TITLE>Lexaria Corp.: Form 424(b)(3) - Filed by newsfilecorp.com</TITLE>
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<P align=center><font color="#FF0000"><B>The information in this prospectus is not complete and may
be changed. We and the selling shareholders may not sell these securities until
the registration statement filed with the Securities and Exchange Commission is
declared effective. This prospectus is not an offer to sell these securities and
it is not a solicitation of an offer to buy these securities in any state or
jurisdiction where the offer or sale is not permitted by the law of such state
or jurisdiction. </B></font></P>
<P align=right>July 3, 2012
<BR></P>
<P align=center><B><font size="4">PROSPECTUS </font> </B></P>
<P align=center><img border="0" src="lexaria.jpg" width="207" height="112"></P>
<P align=center><B><font size="5">LEXARIA CORP. </font> </B></P>
<P align=center><B>20,000,000 units of common stock at $0.15 per unit, </B></P>
<P align=center><B>And </B></P>
<P align=center><B>295,000 previously issued common shares and 200,000 shares of
common stock underlying previously issued warrants, </B></P>
<P align=justify>Lexaria Corp. (&#147;Lexaria&#148;, &#147;we&#148;, &#147;us&#148;, &#147;our&#148;) is offering
20,000,000 units of common stock at $0.15 per unit. Each unit consists of one
common share and one warrant to purchase another common share at $0.30 per share
for a period of one year. </P>
<P align=justify>The offering of the 20,000,000 units is a &#147;best efforts&#148;
offering, which means that our directors and officers as well as any agents we
engage will use their best efforts to sell the units offered in this Prospectus.
There is no minimum number of units required to be sold to close the offering.
However, each individual subscriber must purchase a minimum of 1,000 units. The
offering period will be open for 60 days and our management at their sole
discretion may terminate the offering at any time prior to the expiration of the
initial 60 days of the offering. Our management at their sole discretion may
extend the period for an additional 120 days of the offering if not all
20,000,000 units are sold at the end of the initial 60-day offering period.
Proceeds from the sale of the units will be used to fund acquisition and
development of oil and gas properties. This offering will end no later than 180
days from the offering date. The offering date is the date by which the
registration statement of which this Prospectus forms a part becomes effective.
This is a direct participation offering since we, and not an underwriter, are
offering the units. Christopher Bunka, our President and CEO, Bal Bhullar, our
CFO, and David DeMartini, our director will be responsible for selling our
direct primary offering to the public in the United States.</P>
<P align=justify>Certain Selling Shareholders are also offering 295,000
previously issued common shares and 200,000 shares of common stock underlying
previously issued warrants, which may be resold from time to time by the Selling
Shareholders. These shares and warrants were acquired by the Selling
Shareholders directly from us in private offerings that were exempt from
registration requirements of the Securities Act of 1933. We have been advised by
the Selling Shareholders that they may offer to sell all or a portion of their
shares of common stock being offered in this prospectus from time to time.
Please see &#147;Plan of Distribution&#148; at page 23 for a detailed explanation of how
the securities may be sold. The Selling Shareholders may sell all or a portion of their shares through public or private
transactions at prevailing market prices or at privately negotiated prices. We
will not receive any of the proceeds from the sale of shares by the Selling
Shareholders. None of the Selling Shareholders are affiliates of our company. </P>
<p align="center">1</p>
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<P align=justify>Our common stock is quoted in the United States on the OTCQB
and listed on the Canadian National Stock Exchange under the symbols &#147;LXRP&#148; and
&#147;LXX&#148;, respectively. On May 22, 2012, the closing prices of our common stock on
the OTCQB and Canadian National Stock Exchange were $0.105 and CDN$0.16,
respectively.</P>
<P align=justify>An investment in our securities is speculative. See the section
entitled "Risk Factors" beginning on Page 11 of this Prospectus. </P>
<P align=center><B>Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this Prospectus. Any representation to the
contrary is a criminal offense. </B></P>
<P align=center><B>You should rely only on the information contained in this
Prospectus. We have not authorized anyone to provide you with information
different from that contained in this Prospectus. The information contained in
this Prospectus is accurate only as of the date of this Prospectus, regardless
of the time of delivery of this prospectus or of any sale of our common
shares.</B></P>
<P align=center>The date of this prospectus is July 3, 2012.</P>
<p align="center">2</p>
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<P align=center><B><U>Table of Contents</U> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Prospectus Summary </TD>
    <TD align=right width="15%" bgColor=#eeeeee >4</TD></TR>
  <TR vAlign=top>
    <TD align=left>Risk Factors </TD>
    <TD align=right width="15%" >7</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Use of Proceeds </TD>
    <TD align=right width="15%" bgColor=#eeeeee >13</TD></TR>
  <TR vAlign=top>
    <TD align=left>Determination of Offering Price </TD>
    <TD align=right width="15%" >14</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Dilution </TD>
    <TD align=right width="15%" bgColor=#eeeeee >15</TD></TR>
  <TR vAlign=top>
    <TD align=left>Selling Security Holders </TD>
    <TD align=right width="15%" >16</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Plan of Distribution </TD>
    <TD align=right width="15%" bgColor=#eeeeee >19</TD></TR>
  <TR vAlign=top>
    <TD align=left>Description of Securities to be Registered </TD>
    <TD align=right width="15%" >23</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Legal Matters </TD>
    <TD align=right width="15%" bgColor=#eeeeee >25</TD></TR>
  <TR vAlign=top>
    <TD align=left>Interests of Named Experts and Counsel </TD>
    <TD align=right width="15%" >25</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Description of Business </TD>
    <TD align=right width="15%" bgColor=#eeeeee >26</TD></TR>
  <TR vAlign=top>
    <TD align=left>Description of Property </TD>
    <TD align=right width="15%" >33</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Legal Proceedings </TD>
    <TD align=right width="15%" bgColor=#eeeeee >41</TD></TR>
  <TR vAlign=top>
    <TD align=left>Market for Common Equity and Related Stockholder Matters
</TD>
    <TD align=right width="15%" >41</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Financial Statements </TD>
    <TD align=right width="15%" bgColor=#eeeeee >46</TD></TR>
  <TR vAlign=top>
    <TD align=left>Management&#146;s Discussion and Analysis of Financial Position
      and Results of Operations </TD>
    <TD align=right width="15%" >48</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Changes In and Disagreements with
      Accountants on Accounting and Financial Disclosure </TD>
    <TD align=right width="15%" bgColor=#eeeeee >52</TD></TR>
  <TR vAlign=top>
    <TD align=left>Directors and Executive Officers </TD>
    <TD align=right width="15%" >54</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Executive Compensation </TD>
    <TD align=right width="15%" bgColor=#eeeeee >59</TD></TR>
  <TR vAlign=top>
    <TD align=left>Security Ownership of Certain Beneficial Owners and
      Management </TD>
    <TD align=right width="15%" >63</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Certain Relationships and Related
      Transactions </TD>
    <TD align=right width="15%" bgColor=#eeeeee >64</TD></TR>
  <TR vAlign=top>
    <TD align=left>Disclosure of Commission Position on Indemnification of
      Securities Act Liabilities </TD>
    <TD align=right width="15%" >65</TD></TR></TABLE>
    <p align="center">3</p>
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<P align="center">
<B>Prospectus Summary </B></P>
<P align="justify">
This Prospectus, and any supplement to this Prospectus include &ldquo;forward-looking statements&rdquo;. To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business
plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as &ldquo;intends&rdquo;,
&ldquo;anticipates&rdquo;, &ldquo;believes&rdquo;, &ldquo;estimates&rdquo;, &ldquo;projects&rdquo;, &ldquo;forecasts&rdquo;, &ldquo;expects&rdquo;, &ldquo;plans&rdquo; and &ldquo;proposes&rdquo;. Although we believe that the expectations reflected
in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the
cautionary statements in the &ldquo;Risk Factors&rdquo; section beginning on page 8 of this Prospectus and the &ldquo;Management&#146;s Discussion and Analysis of Financial Position and Results of Operations&rdquo; section elsewhere in this Prospectus.
</P>
<P align="justify">
<B>Our Business </B></P>
<P align="justify">
We were incorporated in the State of Nevada on December 9, 2004. We are an exploration and development oil and gas company currently engaged in the exploration for and development of petroleum and natural gas in North America. We maintain our
registered agent&#146;s office and our U.S. business office at Nevada Agency and Transfer Company, 50 West Liberty, Suite 880, Reno, Nevada 89501. Our telephone number is (755) 322-0626.</P>
<P align="justify">
The address of our principal executive office is Suite 950, 1130 West Pender Street, Vancouver, British Columbia V6E 4A4. Our telephone number is (604) 602-1675. We have another office located in Kelowna. Our current locations provide adequate
office space for our purposes at this stage of our development. </P>
<P align="justify">
Our common stock is quoted on the OTCQB under the symbol "LXRP" and on the Canadian National Stock Exchange under the symbol &ldquo;LXX&rdquo;.</P>
<P align="justify">
We are currently generating revenues from our business operations in Mississippi. Our business plan is to focus on development of the Belmont Lake oil field, in which we have working interests, in order to maximize cash flow and use excess cash flow
to pay debt and conduct additional development well drilling. Eventually, if cash flows are strong enough, we anticipate that we will once again be able to explore for additional oil and gas by way of our existing 60% interest option to drill 38
exploratory wells (see &ldquo;Oil &amp; Gas Properties - Mississippi and Louisiana: Frio-Wilcox Project&rdquo;). To accomplish this, we intend to focus on development drilling first. Eventually we plan to seek a balance between exploration,
development and exploitation drilling. To achieve sustainable and profitable growth, we intend to control the timing and costs of its projects wherever possible. We are not currently the operator of any of our properties.</P>
<P align="justify">
<B>The Offering </B></P>
<P align="justify">
The 295,000 previously issued common shares and 200,000 shares of common stock underlying previously issued warrants offered by the Selling Shareholders represent approximately
3% of our issued and outstanding stock as of June 22, 2012, assuming
all of the 200,000 warrants are exercised.</P>
<P align="justify">
If we sell all 20,000,000 units in this offering, and the warrants attached to the units are not converted, they will account for approximately 54.49% of our issued and outstanding common shares after the close of the offering. If the warrants are
converted, the units will account for 70.88% of our issued and outstanding common shares, assuming no other shares are issued during this time.</P>

<p align="center">4</p>

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</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left nowrap>
      <P align=justify style="margin-right: 5pt"><B>Securities Offered:</B> </P></TD>
    <TD align=left width="70%">
      <P align=justify>20,000,000 units of common stock at $0.15 per unit via
      public offering. Each unit consists of one common share and one warrant to
      purchase another common share at $0.30 per share for a period of one year.
      </P></TD></TR>
  <TR vAlign=bottom>
    <TD align=center colSpan=2 valign="top" nowrap>
      <P align=justify style="margin-right: 5pt">&nbsp;</P></TD></TR>
  <TR>
    <TD valign="top" nowrap>
    <p style="margin-right: 5pt"></TD>
    <TD width="70%" valign="top">
      <P align=justify>250,000 previously issued common shares and 200,000
      shares of common stock underlying previously issued warrants offered by
      the Selling Shareholders. </P></TD></TR>
  <TR>
    <TD valign="top" nowrap>
      <P align=justify style="margin-right: 5pt"></P></TD>
    <TD width="70%" valign="top">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap>
      <P align=justify style="margin-right: 5pt"><B>Initial Offering Price:</B> </P></TD>
    <TD align=left width="70%">
      <P align=justify>We are offering 20,000,000 units at a price of $0.15 per
      unit. </P></TD></TR>
  <TR>
    <TD valign="top" nowrap>
      <P align=justify style="margin-right: 5pt"></P></TD>
    <TD width="70%" valign="top">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap>
    <p style="margin-right: 5pt"></TD>
    <TD align=left width="70%">
      <P align=justify>The Selling Shareholders may sell all or a portion of
      their shares through public or private transactions at prevailing market
      prices or at privately negotiated prices. </P></TD></TR>
  <TR>
    <TD valign="top" nowrap>
      <P align=justify style="margin-right: 5pt"></P></TD>
    <TD width="70%" valign="top">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap>
      <P align=justify style="margin-right: 5pt"><B>Minimum Number of</B> <B>Securities to be Sold</B>
      <B>in this Offering:</B> </P></TD>
    <TD align=left width="70%">
      <P align=justify>No minimum in the United States. The Selling Shareholders
      may sell up to 250,000 previously issued common shares and 200,000 shares
      of common stock underlying previously issued warrants. </P></TD></TR>
  <TR>
    <TD valign="top" nowrap>
      <P align=justify style="margin-right: 5pt"></P></TD>
    <TD width="70%" valign="top">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap>
      <P align=justify style="margin-right: 5pt"><B>Securities Issued and</B> <B>to be Issued:</B> </P></TD>
    <TD align=left width="70%">
      <P align=justify>As of June 22, 2012 we had 16,431,452 shares of our common
      stock, options to acquire 1,740,000 shares of our common stock and
      warrants to acquire 2,542,857 shares of our common issued and outstanding.
      </P></TD></TR>
  <TR>
    <TD valign="top" nowrap>
      <P align=justify style="margin-right: 5pt"></P></TD>
    <TD width="70%" valign="top">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap>
    <p style="margin-right: 5pt"></TD>
    <TD align=left width="70%">
      <P align=justify>We are offering a maximum of 20,000,000 units of common
      stock at $0.15 per unit via public offering. Each unit consists of one
      common share and one warrant to purchase another common share at $0.30 per
      share for a period of one year. We will not receive any proceeds from the
      sale of our common stock by the selling security holders. </P></TD></TR>
  <TR>
    <TD valign="top" nowrap>
      <P align=justify style="margin-right: 5pt"></P></TD>
    <TD width="70%" valign="top">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap>
      <P align=justify style="margin-right: 5pt"><STRONG>Proceeds:</STRONG> </P></TD>
    <TD align=left width="70%">
      <P align=justify>If we sell all of the 20,000,000 units we are offering in
      the United States, we will receive proceeds of $3,000,000 minus any
      offering expenses. </P></TD></TR>
  <TR>
    <TD valign="top" nowrap>
      <P align=justify style="margin-right: 5pt"></P></TD>
    <TD width="70%" valign="top">
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left nowrap>
      <P align=justify style="margin-right: 5pt"><B>Terms of Offering:</B> </P></TD>
    <TD align=left width="70%">
      <P align=justify>This is a BEST EFFORTS OFFERING. This is a no minimum
      offering. Accordingly, as units are sold we will use the money raised for
      our business. Each individual subscriber must purchase a minimum of 1,000
      units. We cannot be certain that we will be able to sell enough units to
      sufficiently fund our operations. </P></TD></TR>
  <tr>
    <TD align=left valign="top" nowrap >
      <p style="margin-right: 5pt">&nbsp;</TD>
    <TD align=left width="70%" valign="top">&nbsp;
      </TD>
  </tr>
  <tr>
    <TD align=left valign="top" nowrap >
      <P align=justify style="margin-right: 5pt"><B>Plan of Distribution:</B> </P></TD>
    <TD align=left width="70%" valign="top">
      <P align=justify>This is a public offering, with no commitment by anyone
      to purchase any units. The units in this offering will be offered and sold
      by Christopher Bunka, our President and CEO, Bal Bhullar, our CFO, and
      David DeMartini, our director. </P></TD>
  </tr>
</TABLE>
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<p align="center">5<BR>
</p>
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<P align=justify>Financial Summary Information<B> </B></P>
<P align=justify>All references to currency in this Prospectus are to U.S.
Dollars, unless otherwise noted. </P>
<P align=justify>The following table sets forth selected financial information,
which should be read in conjunction with the information set forth in the
"Management&#146;s Discussion and Analysis of Financial Position and Results of
Operations" section and the accompanying financial statements and related notes
included elsewhere in this Prospectus.</P>
<P align=justify><I><U>Consolidated Statement of Expenses Data</U> </I></P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>

  <TR vAlign=top>
    <TD align=left bgcolor="#EEEEEE"></TD>
    <TD align=center width="25%" bgcolor="#EEEEEE"><B>Year Ended <BR>October
      31,</B> <B>2010</B> <BR><B>($)</B> </TD>
    <TD align=center width="25%" bgcolor="#EEEEEE"><B>Year Ended <BR>October
      31,</B> <B>2011</B> <BR><B>($)</B> </TD>
    <TD align=center width="25%" bgcolor="#EEEEEE"><b>Six Months Ended</b>
      <BR><B>April 30, 2012</B> <BR><B>($)</B> <BR><B>(unaudited)</B> </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=center>Revenues </TD>
    <TD vAlign=bottom align=center width="25%">362,471 </TD>
    <TD vAlign=bottom align=center width="25%">1,133,766 </TD>
    <TD vAlign=bottom align=center width="25%">394,243</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=center>Total Expenses </TD>
    <TD vAlign=bottom align=center width="25%">914,933 </TD>
    <TD vAlign=bottom align=center width="25%">1,671,992 </TD>
    <TD vAlign=bottom align=center width="25%">456,933</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=center>Net Loss </TD>
    <TD vAlign=bottom align=center width="25%">552,462 </TD>
    <TD vAlign=bottom align=center width="25%">538,226 </TD>
    <TD vAlign=bottom align=center width="25%">351,040</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=center>Net Loss per share </TD>
    <TD vAlign=bottom align=center width="25%">0.04 </TD>
    <TD vAlign=bottom align=center width="25%">0.04 </TD>
    <TD vAlign=bottom align=center width="25%">0.01 </TD></TR></TABLE></DIV>
<P align=justify><I><U>Consolidated Balance Sheet Data</U> </I></P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>

  <TR vAlign=top>
    <TD align=left bgcolor="#EEEEEE"></TD>
    <TD align=center width="25%" bgcolor="#EEEEEE"><B>As at October 31, 2010</B>
      <BR><B>($)</B> </TD>
    <TD align=center width="25%" bgcolor="#EEEEEE"><B>As at October 31, 2011</B>
      <BR><B>($)</B> </TD>
    <TD align=center width="25%" bgcolor="#EEEEEE"><B>As at April 30, 2012</B>
      <BR><B>($)</B> <BR><B>(unaudited)</B> </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Working Capital<br>
    (Deficiency) </TD>
    <TD vAlign=bottom align=center width="25%">(909,441) </TD>
    <TD vAlign=bottom align=center width="25%">(814,355) </TD>
    <TD vAlign=bottom align=center width="25%">(1,546,721) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Total Assets </TD>
    <TD vAlign=bottom align=center width="25%">3,278,300 </TD>
    <TD vAlign=bottom align=center width="25%">4,339,369 </TD>
    <TD vAlign=bottom align=center width="25%">4,131,120</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Total Liabilities </TD>
    <TD vAlign=bottom align=center width="25%">1,124,647 </TD>
    <TD vAlign=bottom align=center width="25%">1,678,021 </TD>
    <TD vAlign=bottom align=center width="25%">1,811,223</TD></TR></TABLE></DIV>
<p align="center">6<BR>
</p>
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<P align="center">
<B>Risk Factors </B></P>
<P align="justify">
<B>Please consider the following risk factors before deciding to invest in our common stock. </B></P>
<P align="justify">
Any investment in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, and all other information contained in this prospectus, before you decide whether to purchase our common
stock. The occurrence of any of the following risks could harm our business. You may lose part or all of your investment due to any of these risks or uncertainties. </P>
<P align="justify">
This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks
we face as described below and elsewhere in this Prospectus. </P>
<P align="justify">
<B>Risks Related to Our Business</B> </P>
<P align="justify">
<I>We have a limited operating history and as a result there is no assurance we can operate on a profitable basis.</I></P>
<P align="justify">
We have a limited operating history. Our company&#146;s operations will be subject to all the uncertainties arising from the absence of a significant operating history. Potential investors should be aware of the difficulties normally encountered by
resource exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration
of the properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be made
by us in the exploration of our properties may not result in the discovery of reserves. Problems such as unusual or unexpected formations of rock or land and other conditions are involved in resource exploration and often result in unsuccessful
exploration efforts. If the results of our exploration do not reveal viable commercial reserves, we may decide to abandon our claims and acquire new claims for new exploration or cease operations. The acquisition of additional claims will be
dependent upon us possessing capital resources at the time in order to purchase such claims. If no funding is available, we may be forced to abandon our operations. There can be no assurance that we will be able to operate on a profitable basis.
</P>
<P align="justify">
<I>If we do not obtain additional financing, our business will fail and our investors could lose their investment.</I></P>
<P align="justify">
We had cash in the amount of &#36;120,561 and working capital deficiency of &#36;1,546,721 as of
April 30, 2012. We currently do not generate significant revenues from our operations. Any direct acquisition of a claim under lease or option is
subject to our ability to obtain the financing necessary for us to fund and carry out exploration programs on potential properties. The requirements are substantial. Obtaining additional financing would be subject to a number of factors, including
market prices for resources, investor acceptance of our properties and investor sentiment. These factors may negatively affect the timing, amount, terms or conditions of any additional financing available to us. The most likely source of future
funds presently available to us is through the sale of equity capital and loans. Any sale of share capital will result in dilution to existing shareholders. </P>

<P align="center">
7</P>

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<P align="justify">
<I>Because there is no assurance that we will generate material revenues, we face a high risk of business failure.</I></P>
<P align="justify">
For the fiscal year 2011, we have earned revenues of &#36;1,133,766. We currently have only modest oil or gas reserves that are deemed proved, probable or possible pursuant to American standards of disclosure for oil and gas activities. All of our
existing wells are in Mississippi, USA.</P>
<P align="justify">
There can be no assurance that our current or future drilling activities will be successful, and we cannot be sure that our overall drilling success rate or our production operations within a particular area will ever come to fruition, and if they
do, will not decline over time. We may not recover all or any portion of our capital investment in the wells or the underlying leaseholds. Unsuccessful drilling activities would have a material adverse effect upon our results of operations and
financial condition. The cost of drilling, completing and operating wells is often uncertain, and a number of factors can delay or prevent drilling operations, including: (i) unexpected drilling conditions; (ii) pressure or irregularities in
geological formation; (iii) equipment failures or accidents; (iv) adverse weather conditions; and (v) shortages or delays in the availability of drilling rigs and the delivery of equipment.</P>
<P align="justify">
In addition, our exploration and development plans may be curtailed, delayed or cancelled as a result of lack of adequate capital and other factors, such as weather, compliance with governmental regulations, current and forecasted prices for oil and
changes in the estimates of costs to complete the projects. We will continue to gather information about our exploration projects, and it is possible that additional information may cause our company to alter our schedule or determine that a project
should not be pursued at all. You should understand that our plans regarding our projects are subject to change.</P>
<P align="justify">
We recognize that if we are unable to generate significant revenues from our activities, we will not be able to earn profits or continue operations. We cannot guarantee that we will be successful in raising capital to fund these operating losses or
generate revenues in the future. We can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail and
our investors could lose their investment. </P>
<P align="justify">
<I>The oil and natural gas industry is highly competitive and there is no assurance that we will be successful in acquiring leases.</I></P>
<P align="justify">
The oil and natural gas industry is intensely competitive. Although we do not compete with other oil and gas companies for the sale of any oil and gas that we may produce, as there is sufficient demand in the world market for these products, we
compete with numerous individuals and companies, including many major oil and natural gas companies which have substantially greater technical, financial and operational resources and staff. Accordingly, there is a high degree of competition for
desirable oil and natural gas leases, suitable properties for drilling operations and necessary drilling equipment, as well as for access to funds. We cannot predict if the necessary funds can be raised or that any projected work will be
completed.</P>
<P align="justify">
<I>There can be no assurance that we will discover oil or natural gas in any commercial quantity on our properties.</I></P>
<P align="justify">
Exploration for economic reserves of oil and natural gas is subject to a number of risks. There is competition for the acquisition of available oil and natural gas properties. Few properties that are explored are ultimately developed into producing
oil and/or natural gas wells. If we cannot discover oil or natural gas in any commercial quantity thereon, our business will fail.</P>

<P align="center">
8</P>

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<P align="justify">
<I>Even if we acquire an oil and natural gas exploration property and establish that it contains oil or natural gas in commercially exploitable quantities, the potential profitability of oil and natural gas ventures depends upon factors beyond the
control of our company.</I></P>
<P align="justify">
The potential profitability of oil and natural gas properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil and natural gas are unpredictable, highly volatile, potentially subject to governmental
fixing, pegging, controls or any combination of these and other factors, and respond to changes in domestic, international, political, social and economic environments. Additionally, due to worldwide economic uncertainty, the availability and cost
of funds for production and other expenses have become increasingly difficult, if not impossible, to project. In addition, adverse weather conditions can hinder drilling operations. These changes and events may materially affect our future financial
performance. These factors cannot be accurately predicted and the combination of these factors may result in our company not receiving an adequate return on invested capital.</P>
<P align="justify">
In addition, a productive well may become uneconomic in the event water or other deleterious substances are encountered which impair or prevent the production of oil and/or natural gas from the well. Production from any well may be unmarketable if
it is impregnated with water or other deleterious substances. Also, the marketability of oil and natural gas which may be acquired or discovered will be affected by numerous related factors, including the proximity and capacity of oil and natural
gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection, all of which could result in greater expenses than revenue generated by the well.</P>
<P align="justify">
<I>The marketability of natural resources will be affected by numerous factors beyond our control which may result in us not receiving an adequate return on invested capital to be profitable or viable. </I> </P>
<P align="justify">
The marketability of natural resources which may be acquired or discovered by us will be affected by numerous factors beyond our control. These factors include market fluctuations in oil and natural gas pricing and demand, the proximity and capacity
of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of oil and natural gas and environmental protection regulations. The exact effect of these
factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable. </P>
<P align="justify">
<I>Oil and natural gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company. </I> </P>
<P align="justify">
Oil and natural gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment.
Oil and natural gas operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government
bodies are required for drilling operations to be conducted; no assurance can be given that standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities.
Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental
damages. To date, we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in the future and this may affect our ability to expand or maintain our operations. </P>

<P align="center">
9</P>

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<P align="justify">
<I>Exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuation of our operations. </I> </P>
<P align="justify">
In general, our exploration and production activities are subject to certain federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and
may prevent or delay the commencement or continuation of a given operation. Specifically, we may be subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition,
legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of
compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry.</P>
<P align="justify">
<I>Exploratory drilling involves many risks and we may become liable for pollution or other liabilities which may have an adverse effect on our financial position. </I> </P>
<P align="justify">
Drilling operations generally involve a high degree of risk. Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour natural gas leakage, fire, inability to obtain suitable or adequate
machinery, equipment or labor, and other risks are involved. We may become subject to liability for pollution or hazards against which it cannot adequately insure or which it may elect not to insure. Incurring any such liability may have a material
adverse effect on our financial position and operations. </P>
<P align="justify">
<I>Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.</I></P>
<P align="justify">
The business of oil and natural gas exploration and development is subject to substantial regulation under various countries laws relating to the exploration for, and the development, upgrading, marketing, pricing, taxation, and transportation of
oil and natural gas and related products and other matters. Amendments to current laws and regulations governing operations and activities of oil and natural gas exploration and development operations could have a material adverse impact on our
business. In addition, there can be no assurance that income tax laws, royalty regulations and government incentive programs related to the properties subject to our farm-out agreements and the oil and natural gas industry generally will not be
changed in a manner which may adversely affect our progress and cause delays, inability to explore and develop or abandonment of these interests. </P>
<P align="justify">
Permits, leases, licenses, and approvals are required from a variety of regulatory authorities at various stages of exploration and development. There can be no assurance that the various government permits, leases, licenses and approvals sought
will be granted in respect of our activities or, if granted, will not be cancelled or will be renewed upon expiry. There is no assurance that such permits, leases, licenses, and approvals will not contain terms and provisions which may adversely
affect our exploration and development activities. </P>
<P align="justify">
<I>If we are unable to hire and retain key personnel, we may not be able to implement our business plan.</I></P>
<P align="justify">
Our success is largely dependent on our ability to hire highly qualified personnel. This is particularly true in highly technical businesses such as resource exploration. These individuals are in high demand and we may not be able to attract the
personnel we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired. Failure to hire key personnel when needed, or on acceptable terms, would have a
significant negative effect on our business.</P>

<P align="center">
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<P align="justify">
<I>We are not the "operator" of any of our oil and gas exploration interests, and so we are exposed to the risks of our third-party operators.</I> </P>
<P align="justify">
We rely on the expertise of our contracted third-party oil and gas exploration and development operators and third-party consultants for their judgment, experience and advice. We can give no assurance that these third party operators or consultants
will always act in our best interests, and we are exposed as a third party to their operations and actions and advice in those properties and activities in which we are contractually bound.</P>
<P align="justify">
<I>Our management has limited experience and training in the oil and gas industry and could make uninformed decisions that negatively impact our oil and gas operations.</I></P>
<P align="justify">
Because our management has limited experience and training in the oil and gas industry, we may not have sufficient expertise to make informed best practices decisions regarding oil and gas operations. We do not have a petroleum engineer on staff to
provide internal oversight. It is possible that, due to our limited knowledge, we might elect to complete a well and incur financial burdens that a more experienced petroleum team might elect not to complete. Our ability to internally evaluate oil
and gas operations and opportunities could be less thorough than that of a more highly trained management team. </P>
<P align="justify">
<I>Our independent certified public accounting firm, in the notes to the audited financial statements for the year ended October 31, 2011 states that there is a substantial doubt that we will be able to continue as a going concern.</I></P>
<P align="justify">
As at October 31, 2011, we have experienced significant losses since inception. Failure to arrange adequate financing on acceptable terms and to achieve profitability would have an adverse effect on our financial position, results of operations,
cash flows and prospects. Accordingly, there is substantial doubt that we will be able to continue as a going concern. </P>
<P align="justify">
<B>Risks Associated with Our Common Stock</B> </P>
<P align="justify">
<I>Trading on the OTCQB may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares. </I> </P>
<P align="justify">
Our common stock is quoted on the OTCQB service of the Financial Industry Regulatory Authority. Trading in stock quoted on the OTCQB is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to
do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTCQB is not a stock exchange, and trading of securities on the OTCQB is
often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like Amex. Accordingly, shareholders may have difficulty reselling any of the shares. </P>
<P align="justify">
<I>Penny stock rules will limit the ability of our stockholders to sell their stock.</I></P>
<P align="justify">
The Securities and Exchange Commission has adopted regulations which generally define &ldquo;penny stock&rdquo; to be any equity security that has a market price (as defined) less than &#36;5.00 per share or an exercise price of less than &#36;5.00
per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and &ldquo;accredited
investors&rdquo;. The term &ldquo;accredited investor&rdquo; refers generally to institutions with assets in excess of &#36;5,000,000 or individuals with a net worth in excess of &#36;1,000,000 or annual income exceeding &#36;200,000 or &#36;300,000
jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for
the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer&rsquo;s account. The bid and offer quotations, and the
broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer&rsquo;s confirmation. In addition,
the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive
the purchaser&rsquo;s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.</P>

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<P align="justify">
<I>The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a shareholder&#146;s ability to buy and sell our stock.</I></P>
<P align="justify">
In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer&#146;s financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for
broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for its shares.</P>
<P align="justify">
<I>We do not intend to pay dividends and there will thus be fewer ways in which you are able to make a gain on your investment. </I></P>
<P align="justify">
We have never paid dividends and do not intend to pay any dividends for the foreseeable future. To the extent that we may require additional funding currently not provided for in our financing plan, our funding sources may prohibit the declaration
of dividends. Because we do not intend to pay dividends, any gain on your investment will need to result from an appreciation in the price of our common stock. There will therefore be fewer ways in which you are able to make a gain on your
investment. </P>
<P align="justify">
<I>Because the SEC imposes additional sales practice requirements on brokers who deal in shares of penny stocks, some brokers may be unwilling to trade our securities. This means that you may have difficulty reselling your shares, which may cause
the value of your investment to decline. </I></P>
<P align="justify">
Our shares are classified as penny stocks and are covered by Section 15(g) of the Securities Exchange Act of 1934 (the &ldquo;Exchange Act&rdquo;) which imposes additional sales practice requirements on brokers-dealers who sell our securities in
this offering or in the aftermarket. For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement prior from you to making a sale on your behalf. Because of the imposition of the foregoing
additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock. This could prevent you from reselling your shares and may cause the value of your investment to decline. </P>
<P align="justify">
<I>Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls will be time-consuming, difficult, and costly.</I></P>
<P align="justify">
Under Section 404 of the Sarbanes-Oxley Act and current SEC regulations, we will be required to furnish a report by our management on our internal control over financial reporting beginning with our Annual Report on Form 10-K for our fiscal year
ending October 31, 2011. We will soon begin the process of documenting and testing our internal control procedures in order to satisfy these requirements, which is likely to result in increased general and administrative
expenses and may shift management&#146;s time and attention from revenue-generating
activities to compliance activities. While we expect to expend significant
resources to complete this important project, we may not be able to achieve our
objective on a timely basis. It will be time-consuming, difficult and costly for
us to develop and implement the internal controls, processes and reporting
procedures required by the Sarbanes-Oxley Act. We may need to hire additional
personnel to do so, and if we are unable to comply with the requirements of the
legislation we may not be able to assess our internal controls over financial
reporting to be effective in compliance with the Sarbanes-Oxley Act.</P>

<P align="center">
12</P>

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<P align=justify><B>Other Risks</B> </P>
<P align=justify><I>Because majority of our officers and directors are located
in non-U.S. jurisdictions, you may have no effective recourse against them for
misconduct and you may not be able to enforce judgment and civil liabilities
against our officers, directors, experts and agents. </I></P>
<P align=justify>All of our directors and officers except for one are nationals
and/or residents of countries other than the United States and all or a
substantial portion of their assets are located in the United States. As a
result, it may be difficult for investors to enforce within the United States
any judgments obtained against our officers or directors, including judgments
predicated upon the civil liability provisions of the securities laws of the
United States or any state thereof. </P>
<P align=justify><I>Trends, Risks and Uncertainties</I> </P>
<P align=justify>We have sought to identify what we believe to be the most
significant risks to our business, but we cannot predict whether, or to what
extent, any of such risks may be realized nor can we guarantee that we have
identified all possible risks that might arise. Investors should carefully
consider all of such risk factors before making an investment decision with
respect to our common stock. </P>
<P align=center><B>Use of Proceeds </B></P>
<P align=justify>We will not receive any proceeds from the resale of the
securities offered through this Prospectus by the selling security holders.</P>
<P align=justify>The net proceeds to us from the sale of up to 20,000,000 units
offered at a public offering price of $0.15 per unit will vary depending upon
the total number of shares sold. Regardless of the number of units sold, we
expect to incur offering expenses estimated at approximately $50,000, $45,000
for legal and accounting (incurred), $5,000 for other costs in connection with
this offering (estimated transfer agent fees, filing fee, etc.). The table below
shows the intended net proceeds from this offering we expect to receive for
scenarios where we sell various amounts of units. Since we are making this
offering without any minimum requirement, there is no guarantee that we will be
successful at selling any of the securities being offered in this prospectus.
Accordingly, the actual amount of proceeds we will raise in this offering, if
any, may differ. </P>
<P align=justify><B>Percent of Net Proceeds Received </B></P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>

  <TR vAlign=top>
    <TD vAlign=bottom align=left>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%"><B>10%</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>25%</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>50%</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>75%</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>100%</B> </TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#e6efff align="justify">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=justify>Units Sold </TD>
    <TD vAlign=bottom align=center width="16%">2,000,000 </TD>
    <TD vAlign=bottom align=center width="16%">5,000,000 </TD>
    <TD vAlign=bottom align=center width="16%">10,000,000 </TD>
    <TD vAlign=bottom align=center width="16%">15,000,000 </TD>
    <TD vAlign=bottom align=center width="16%">20,000,000 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=justify bgColor=#e6efff>Gross Proceeds </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$300,000 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$750,000 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$1,500,000 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$2,250,000 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$3,000,000
  </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=justify>Less Offering Expenses </TD>
    <TD vAlign=bottom align=center width="16%">$50,000 </TD>
    <TD vAlign=bottom align=center width="16%">$50,000 </TD>
    <TD vAlign=bottom align=center width="16%">$50,000 </TD>
    <TD vAlign=bottom align=center width="16%">$50,000 </TD>
    <TD vAlign=bottom align=center width="16%">$50,000 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=justify bgColor=#e6efff>Net Offering Proceeds </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff><B>$250,000</B>
    </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff><B>$700,000</B>
    </TD>
    <TD vAlign=bottom align=center width="16%"
      bgColor=#e6efff><B>$1,450,000</B> </TD>
    <TD vAlign=bottom align=center width="16%"
      bgColor=#e6efff><B>$2,200,000</B> </TD>
    <TD vAlign=bottom align=center width="16%"
      bgColor=#e6efff><B>$2,950,000</B> </TD></TR></TABLE></DIV>
<P align=justify>The Use of Proceeds set forth below demonstrates how we intend
to use the funds under the various percentages of amounts of the related
offering. All amounts listed below are estimates. </P>
<P align=center>13</P>
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</p>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>

  <TR vAlign=top>
    <TD vAlign=bottom align=justify>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%"><B>10%</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>25%</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>50%</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>75%</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>100%</B> </TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#e6efff align="left">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Development: Belmont Lake Field -drill and
      complete new 12-7 development well. </TD>
    <TD vAlign=bottom align=center width="16%">$0 </TD>
    <TD vAlign=bottom align=center width="16%">$273,000 </TD>
    <TD vAlign=bottom align=center width="16%">$273,000 </TD>
    <TD vAlign=bottom align=center width="16%">$273,000 </TD>
    <TD vAlign=bottom align=center width="16%">$273,000 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Development: Belmont Lake
      Field &#150; completion of up to three new development wells (12-6 and 12-8 and
      12-9) </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$0 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$0 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$546,000 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$819,000 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$819,000 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Well services: plug and abandonment costs </TD>
    <TD vAlign=bottom align=center width="16%">$0 </TD>
    <TD vAlign=bottom align=center width="16%">$175,000 </TD>
    <TD vAlign=bottom align=center width="16%">$175,000 </TD>
    <TD vAlign=bottom align=center width="16%">$175,000 </TD>
    <TD vAlign=bottom align=center width="16%">$175,000 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Exploration well drilling </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$0 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$0 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$0 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$0 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$650,000 </TD></TR>
  <TR>
    <TD vAlign=bottom align="left">Unallocated Working Capital </TD>
    <TD vAlign=bottom align=center width="16%">$250,000 </TD>
    <TD vAlign=bottom align=center width="16%">$252,000 </TD>
    <TD vAlign=bottom align=center width="16%">$167,000 </TD>
    <TD vAlign=bottom align=center width="16%">$373,000 </TD>
    <TD vAlign=bottom align=center width="16%">$473,000 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff>Re-pay arm&#146;s-length existing
      corporate debt </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$0 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$0 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$289,000 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$560,000 </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff>$560,000 </TD></TR>
  <TR>
    <TD vAlign=bottom align="left">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff><B>Total</B> </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff><B>$250,000</B>
    </TD>
    <TD vAlign=bottom align=center width="16%" bgColor=#e6efff><B>$700,000</B>
    </TD>
    <TD vAlign=bottom align=center width="16%"
      bgColor=#e6efff><B>$1,450,000</B> </TD>
    <TD vAlign=bottom align=center width="16%"
      bgColor=#e6efff><B>$2,200,000</B> </TD>
    <TD vAlign=bottom align=center width="16%"
      bgColor=#e6efff><B>$2,950,000</B> </TD></TR></TABLE></DIV>
<P align=justify>Our offering expenses are comprised of legal and accounting
expenses and transfer agent fees. Our officers and Directors will not receive
any compensation for their efforts in selling our shares. </P>
<P align=justify>We intend to use the proceeds of this offering in the manner
and in order of priority set forth above. We do not intend to use the proceeds
to acquire assets or finance the acquisition of other businesses. At present, no
material changes are contemplated. Should there be any material changes in the
projected use of proceeds in connection with this offering, we will issue an
amended prospectus reflecting the new uses. </P>
<P align=justify>In all instances, after the effectiveness of this registration
statement, we will need some amount of working capital to maintain our general
existence and comply with our public reporting obligations. In addition to
changing allocations because of the amount of proceeds received, we may change
the use of proceeds because of required changes in our business plan. Investors
should understand that we have wide discretion over the use of proceeds.
Therefore, management decisions may not be in line with the initial objectives
of investors who will have little ability to influence these decisions. </P>
<P align=justify>There is no commitment by any person to purchase any or all of
the shares of common stock offered by this prospectus and, therefore, there can
be no assurance that the offering will be totally subscribed for the sale of the
maximum 20,000,000 units of common stock being offered. </P>
<P align=center><B>Determination of Offering Price </B></P>
<P align=justify>The Selling Shareholders will sell their shares at prevailing
market prices or privately negotiated prices. The number of securities that may
be actually sold by a Selling Shareholder will be determined by each Selling
Shareholder. The Selling Shareholders are under no obligation to sell all or any
portion of the securities offered, nor are the Selling Shareholders obligated to
sell such shares immediately under this Prospectus. A security holder may sell
securities at any price depending on privately negotiated factors such as a
shareholders&#146; own cash requirements, or objective criteria of value such as the
market value of our assets. </P>
<P align=justify>The offering price of the units was determined by market
conditions. </P>
<P align=center>14</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_19></A>
<P align=center><B>Dilution </B></P>
<P align=justify>Dilution represents the difference between the offering price
and the net tangible book value per share immediately after completion of this
offering. Net tangible book value is the amount that results from subtracting
total liabilities and intangible assets from total assets. Dilution of the value
of the shares you purchase is a result of the lower book value of the shares
held by our existing stockholders. </P>
<P align=justify>As at October 31, 2011, our last financial statement date, our
total net tangible book value was $2,661,348, or approximately $0.162 per share
based on 16,431,452 shares issued and outstanding as of that date. The proceeds
from the sale of the new units being offered (up to a maximum of 20,000,000)
will vary depending on the total number of shares actually sold in the offering.
If all 20,000,000 units offered hereunder are sold, there would be a total of
36,431,452 common shares issued and outstanding (using the October 31, 2011
figure), assuming none of the warrants were exercised. If all of the warrants
were exercised, we would have 56,431,452 shares issued and outstanding.</P>
<P align=justify>The following table sets forth as of October 31, 2011, the
number of shares of common stock purchased from us and the total consideration
paid by our existing stockholders and by new investors in this offering if new
investors purchase 10%, 25%, 50%, 75% or 100% of the offering, before deducting
offering expenses payable by us, assuming that none of the warrants included in
the units are exercised. </P>
<P align=justify><B><U>Non-Diluted Offering</U> </B></P>
<TABLE
style="FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse"
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom
      align=left bordercolor="#000000"><B>Percent of Shares Sold</B> </TD>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom align=center
    width="11%" nowrap bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt"><B>10%</B> </TD>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom align=center
    width="11%" nowrap bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt"><B>25%</B> </TD>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom align=center
    width="11%" nowrap bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt"><B>50%</B> </TD>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom align=center
    width="11%" nowrap bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt"><B>75%</B> </TD>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom align=center
    width="11%" nowrap bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt"><B>100%</B> </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Number of units sold </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">2,000,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">5,000,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">10,000,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">15,000,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">20,000,000
  </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Anticipated net offering proceeds </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$250,000 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$700,000 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$1,450,000 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$2,200,000 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$2,950,000 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Total shares issued and
      outstanding post offering </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">18,431,452 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">21,431,452 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">26,431,452 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">31,431,452 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">36,431,452
  </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Offering price per unit </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.15 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.15 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.15 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.15 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.15 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Pre-offering net tangible
      book value/share </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.162 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.162 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.162 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.162 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.162 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Post offering net tangible book value </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$2,911,348 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$3,361,348 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$4,111,348 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$4,861,348 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$5,611,348 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Post offering net tangible
      book value/share </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.158 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.157 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.156 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.155 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.154 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Increase (Decrease) in net tangible book
      value per share after offering </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">($0.004) </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">($0.005) </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">($0.006) </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">($0.007) </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">($0.008) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Dilution per share to new
      shareholders </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">($0.008) </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">($0.007) </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">($0.006) </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">($0.005) </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">($0.004) </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">New shareholders percentage of ownership
      after offering </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">10.9% </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">23.3% </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">37.8% </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">47.7% </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">54.9% </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Existing stockholders
      percentage of ownership after offering </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">89.1% </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">76.7% </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">62.2% </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">52.3% </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">45.1%
  </TD></TR></TABLE>
<P align=justify>The following table sets forth as of October 31, 2011, the
number of shares of common stock purchased from us and the total consideration
paid by our existing stockholders and by new investors in this offering if new
investors purchase 10%, 25%, 50%, 75% or 100% of the offering, before deducting
offering expenses payable by us, assuming that all of the warrants included in
the purchased units are exercised at $0.30 per warrant share. </P>
<P align=justify><B><U>Fully Diluted Offering</U> </B></P>
<TABLE
style="FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse"
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom
      align=left bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt"><B>Percent of Shares Sold</B> </TD>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom align=center
    width="11%" nowrap bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt"><B>10%</B> </TD>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom align=center
    width="11%" nowrap bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt"><B>25%</B> </TD>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom align=center
    width="11%" nowrap bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt"><B>50%</B> </TD>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom align=center
    width="11%" nowrap bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt"><B>75%</B> </TD>
    <TD style="border-top:1px solid #000000; border-bottom:1px solid #000000; border-left-color:#000000; border-right-color:#000000" vAlign=bottom align=center
    width="11%" nowrap bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt"><B>100%</B> </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Number of units sold,
      including warrants exercised </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">4,000,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">10,000,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">20,000,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">30,000,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">40,000,000
  </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Anticipated net offering proceeds from unit
      sale </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$250,000 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$700,000 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$1,450,000 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$2,200,000 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$2,950,000 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Anticipated gross offering
      proceeds from warrant exercise </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$600,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$1,500,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$3,000,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$4,500,000 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$6,000,000
  </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Total shares issued and outstanding post
      offering </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">20,431,452 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">26,431,452 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">36,431,452 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">46,431,452 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">56,431,452 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#e6efff style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Offering price of $0.225
      ($0.15 per unit, $0.30 per warrant share) </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.225 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.225 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.225 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.225 </TD>
    <TD vAlign=bottom align=center width="11%" bgColor=#e6efff nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.225
  </TD></TR>
  <tr>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Pre-offering net tangible book value/share
</TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.162 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.162 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.162 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.162 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.162 </TD>
  </tr>
  <tr>
    <TD vAlign=bottom align=left bgcolor="#E6EFFF" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Post offering net tangible book value </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$3,571,348 </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$4,861,348 </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$7,111,348 </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$9,361,348 </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$11,611,348 </TD>
  </tr>
  <tr>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Post offering net tangible book value/share
    </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.175 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.184 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.195 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.202 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.206 </TD>
  </tr>
  <tr>
    <TD vAlign=bottom align=left bgcolor="#E6EFFF" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Increase (Decrease) in net tangible book
      value per share after offering </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.013 </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.022 </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.033 </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.040 </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.044 </TD>
  </tr>
  <tr>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Dilution per share to new shareholders
      assuming combined $0.225 cost. </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.050 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.041 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.030 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.023 </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">$0.019 </TD>
  </tr>
  <tr>
    <TD vAlign=bottom align=left bgcolor="#E6EFFF" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">New shareholders percentage of ownership
      after offering </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">19.6% </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">37.8% </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">54.9% </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">64.6% </TD>
    <TD vAlign=bottom align=center width="11%" bgcolor="#E6EFFF" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">70.9% </TD>
  </tr>
  <tr>
    <TD vAlign=bottom align=left style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="text-indent: -15pt; margin-left: 15pt">Existing stockholders percentage of ownership
      after offering </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">80.4% </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">62.2% </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">45.1% </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">35.4% </TD>
    <TD vAlign=bottom align=center width="11%" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    <p style="margin-left: 3pt; margin-right: 3pt">29.1% </TD>
  </tr>
</TABLE>
<p align="center">15<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<p align="center"><B>Selling Security Holders </B></p>
<P align=justify>The selling security holders may sell securities at prevailing
market prices or privately negotiated prices. This Prospectus includes
registration of the following 495,000 shares: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-bottom: 12pt">295,000 common shares; and
  <LI>
  <p style="margin-bottom: 12pt">200,000 common shares underlying warrants. </LI></UL>
<P align=justify>The 4 selling security holders are offering for sale 295,000
shares of our issued and outstanding common stock which they obtained as part of
the following issuances: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-bottom: 12pt">95,000 shares issued to two selling shareholders through an exercise of a
  warrant at $0.20 per share on July 13, 2011; and
  <LI>
  <p style="margin-bottom: 12pt">200,000 shares issued to two selling shareholders as part of a financing
  for units of our common stock at $0.35 per share on July 13, 2011. The units
  included a share of our common stock and a warrant to acquire an additional
  share of our common stock at $0.50 per share for a period of 24 months.
</LI></UL>
<P align=justify>The selling security holders have the option to sell their
shares at prevailing market prices or privately negotiated prices. The following
table provides information as of June 22, 2012 regarding the beneficial ownership
of our common stock by each of the selling security holders, including:</P>
<ul>
  <li>
<P align=justify style="margin-bottom: 12pt">the number of shares owned by each prior to this offering;
</P>
  </li>
  <li>
<P align=justify style="margin-bottom: 12pt">the number of shares being offered by each; </P>
  </li>
  <li>
<P align=justify style="margin-bottom: 12pt">the number of shares that will be owned by each upon
completion of the offering, assuming that all the shares being offered are sold;
</P>
  </li>
  <li>
<P align=justify style="margin-bottom: 12pt">the percentage of shares owned by each; and </P>
  </li>
  <li>
<P align=justify style="margin-bottom: 12pt">the identity of the beneficial holder of any entity that owns
the shares being offered.
  </li>
</ul>
<P align=center style="margin-bottom: 12pt">16<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<p></p>
<!--$$/page=-->
<p><A name=page_21></A><BR>
</p>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>

  <TR vAlign=top>
    <TD vAlign=bottom align=center bgcolor="#EEEEEE"><B>Name of Selling</B> <BR><B>Security
      Holder</B> </TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE"><B>Shares</B> <BR><B>Owned
      Prior</B> <BR><B>to this</B> <B>Offering</B> <BR><B>(1)</B> </TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE"><B>Percent</B> <B>%</B>
      <BR><B>(2)</B> </TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE"><B>Maximum</B> <BR><B>Numbers
      of</B> <BR><B>Shares</B> <B>Being</B> <BR><B>Offered</B> </TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE"><B>Beneficial</B>
      <BR><B>Ownership</B> <BR><B>After</B> <BR><B>Offering</B> </TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE"><B>Percentage</B>
      <BR><B>Owned</B> <B>upon</B> <BR><B>Completion</B> <BR><B>of the</B>
      <BR><B>Offering</B> <BR><B>(2)</B> </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Starber Enterprises Inc. (4) </TD>
    <TD vAlign=bottom align=center width="16%">75,000 </TD>
    <TD vAlign=bottom align=center width="16%">(3) </TD>
    <TD vAlign=bottom align=center width="16%">75,000 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD></TR>
  <TR>
    <TD vAlign=bottom>Susan Herunter </TD>
    <TD vAlign=bottom align=center width="16%">40,000 </TD>
    <TD vAlign=bottom align=center width="16%">(3) </TD>
    <TD vAlign=bottom align=center width="16%">20,000 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Matthew Ihrke (5) </TD>
    <TD vAlign=bottom align=center width="16%">285,714 (6) </TD>
    <TD vAlign=bottom align=center width="16%">1.7 </TD>
    <TD vAlign=bottom align=center width="16%">142,857 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD></TR>
  <TR>
    <TD vAlign=bottom>Brooks Brown </TD>
    <TD vAlign=bottom align=center width="16%">114,286 (7) </TD>
    <TD vAlign=bottom align=center width="16%">(3) </TD>
    <TD vAlign=bottom align=center width="16%">57,143 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD></TR>
  <TR>
    <TD vAlign=bottom bgcolor="#EEEEEE">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Total</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>515,000</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>3.1%</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>295,000</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>0</B> </TD>
    <TD vAlign=bottom align=center width="16%"><B>0</B>
</TD></TR></TABLE></DIV>
<p><BR>
</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD>
      <P align=justify>The number and percentage of shares beneficially owned is
      determined to the best of our knowledge in accordance with the Rules of
      the SEC and. the information is not necessarily indicative of beneficial
      ownership for any other purpose. Under such rules, beneficial ownership
      includes any shares as to which the selling security holder has sole or
      shared voting or investment power and also any shares which the selling
      security holder has the right to acquire within 60 days of the date of
      this Prospectus.</P></TD></TR>
  <TR>
    <TD width="5%">(2) </TD>
    <TD>
      <P align=justify>The percentages are based on 16,431,452 shares of our
      common stock issued and outstanding and as at June 22, 2012.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(3) </TD>
    <TD>
      <P align=justify>Less than 1%.</P></TD></TR>
  <TR>
    <TD width="5%">(4) </TD>
    <TD>
      <P align=justify>Darren Sontowski has voting and dispositive control over
      shares owned by Starber Enterprises Inc.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(5) </TD>
    <TD>
      <P align=justify>Matthew Ihrke is the brother of Tom Ihrke, our VP of
      Business Development.</P></TD></TR>
  <TR>
    <TD width="5%">(6) </TD>
    <TD>
      <P align=justify>Includes 142,857 shares and warrants to acquire an
      additional 142,857 shares at $0.50 per share for a period of 24 months.
      The shares underlying the warrants are also being offered in this
      Prospectus, but are described below.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(7) </TD>
    <TD>
      <P align=justify>Includes 57,143 shares and warrants to acquire an
      additional 57,143 shares at $0.50 per share for a period of 24 months. The
      shares underlying the warrants are also being offered in this Prospectus,
      but are described below.</P></TD></TR></TABLE>
<P align=justify>Three selling security holders are offering for sale up to
200,000 shares underlying previously issued warrants which they obtained as part
of the following issuances: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-bottom: 12pt">warrants to acquire a total 200,000 shares issued on July 13, 2011 as part
  of a financing for units of our common stock at $0.35 per share to two selling
  shareholders. The units included a share of our common stock and a warrant to
  acquire an additional share of our common stock at $0.50 per share for a
  period of 24 months; and
  </UL>
<P align=justify>More information regarding the holders of the 200,000 common
shares underlying warrants is included the following table. </P>
<P align=center>17</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<p>
<A name=page_22></A><BR>
</p>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>

  <TR vAlign=top>
    <TD vAlign=bottom align=center bgcolor="#EEEEEE"><B>Name of Selling </B><BR><B>Security
      Holder </B></TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE"><B>Shares Owned
      </B><BR><B>Prior to this </B><BR><B>Offering </B><BR><B>(1) </B></TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE"><B>Percent % </B><BR><B>(2) </B></TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE"><B>Maximum </B><BR><B>Numbers of <BR>Shares
      </B><BR><B>Underlying </B><BR><B>Warrants
      </B><BR><B>Being </B><BR><B>Offered </B></TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE"><B>Beneficial
      </B><BR><B>Ownership </B><BR><B>After </B><BR><B>Offering </B></TD>
    <TD vAlign=bottom align=center width="16%" bgcolor="#EEEEEE"><B>Percentage </B><BR><B>Owned
      </B><BR><B>upon </B><BR><B>Completion </B><BR><B>of the
      </B><BR><B>Offering </B><BR><B>(2) </B></TD></TR>
  <TR>
    <TD vAlign=bottom>Matthew Ihrke (4) </TD>
    <TD vAlign=bottom align=center width="16%">285,714 (5) </TD>
    <TD vAlign=bottom align=center width="16%">1.7 </TD>
    <TD vAlign=bottom align=center width="16%">142,857 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>Brooks Brown </TD>
    <TD vAlign=bottom align=center width="16%">
      <P>114,286 (6) </P></TD>
    <TD vAlign=bottom align=center width="16%">(3) </TD>
    <TD vAlign=bottom align=center width="16%">57,143 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD>
    <TD vAlign=bottom align=center width="16%">0 </TD></TR>
  <TR>
    <TD vAlign=bottom>&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="16%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left><B>Total </B></TD>
    <TD vAlign=bottom align=center width="16%"><b>400,000</b></TD>
    <TD vAlign=bottom align=center width="16%"><b>2.4</b></TD>
    <TD vAlign=bottom align=center width="16%"><b>200,000</b></TD>
    <TD vAlign=bottom align=center width="16%"><B>0 </B></TD>
    <TD vAlign=bottom align=center width="16%"><B>0
</B></TD></TR></TABLE></DIV>
<p><BR>
</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD valign="top">
      <P align=justify>The number and percentage of shares beneficially owned is
      determined to the best of our knowledge in accordance with the Rules of
      the SEC and. the information is not necessarily indicative of beneficial
      ownership for any other purpose. Under such rules, beneficial ownership
      includes any shares as to which the selling security holder has sole or
      shared voting or investment power and also any shares which the selling
      security holder has the right to acquire within 60 days of the date of
      this Prospectus.</P></TD></TR>
  <TR>
    <TD width="5%" valign="top">(2) </TD>
    <TD valign="top">
      <P align=justify>The percentages are based on 16,431,452 shares of our
      common stock issued and outstanding and as at June 22, 2012.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(3) </TD>
    <TD valign="top">
      <P align=justify>Less than 1%.</P></TD></TR>
  <TR>
    <TD width="5%" valign="top">(4) </TD>
    <TD valign="top">
      <P align=justify>Matthew Ihrke is the brother of Tom Ihrke, our VP of
      Business Development.</P></TD></TR>

  <TR>
    <TD width="5%" valign="top">(5) </TD>
    <TD valign="top">
      <P align=justify>Includes 142,857 shares and warrants to acquire an
      additional 142,857 shares at $0.50 per share for a period of 24 months.
      The shares underlying the warrants are also being offered in this
      Prospectus, but are described below.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(6) </TD>
    <TD valign="top">
      <P align=justify>Includes 57,143 shares and warrants to acquire an
      additional 57,143 shares at $0.50 per share for a period of 24 months. The
      shares underlying the warrants are also being offered in this Prospectus,
      but are described below.</P></TD></TR>
  </TABLE>
<P align=justify>Except as otherwise noted in the above lists, the named party
beneficially owns and has sole voting and investment power over all the shares
or rights to the shares. The numbers in these table assume that none of the
selling security holders will sell shares not being offered in this Prospectus
or will purchase additional shares, and assumes that all the shares being
registered will be sold. </P>
<P align=justify>Other than as described above, none of the selling security
holders or their beneficial owners has had a material relationship with us other
than as a security holder at any time within the past three years, or has ever
been one of our officers or directors or an officer or director of our
predecessors or affiliates. </P>
<P align=justify>All of these shares were issued in reliance upon an exemption
from registration pursuant to Regulation S or Regulation D under the Securities
Act of 1933 (the &#147;Securities Act&#148;). Our reliance upon Rule 903 of Regulation S
was based on the fact that the sales of the securities were completed in an
"offshore transaction", as defined in Rule 902(h) of Regulation S. We did not
engage in any directed selling efforts, as defined in Regulation S, in the
United States in connection with the sale of the securities. Each investor was
not a U.S. person, as defined in Regulation S, and was not acquiring the
securities for the account or benefit of a U.S. person.</P>
<P align=justify>None of the selling security holders are broker-dealers or
affiliates of a broker-dealer. </P>
<P align=center>18</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_23></A>
<P align=center><B>Plan of Distribution </B></P>
<P align=justify><B>Offering of 20,000,000 units of our Common Stock in the
United States </B></P>
<P align=justify>We are offering to the public 20,000,000 units of common stock
on a &#147;$3,000,000 maximum&#148; basis at a purchase price of $0.15 per unit.</P>
<P align=justify>We are conducting a self-underwritten offering. This Prospectus
is part of a prospectus that permits Christopher Bunka, our President and CEO,
Bal Bhullar, our CFO, and David DeMartini, our director, to sell the shares
directly to the public in the United States, with no commission or other
remuneration payable to them. There are no definitive plans or arrangements to
enter into any contracts or agreements to sell the shares with a broker or
dealer in the United States. Christopher Bunka, our President and CEO, Bal
Bhullar, our CFO, and David DeMartini, our director, will sell the shares and
intends to offer them to friends, family members, acquaintances, and business
associates. In offering the securities on our behalf, they will rely on the safe
harbor from broker dealer registration set out in Rule 3a4-1 under the
Securities Exchange Act of 1934. </P>
<P align=justify>Christopher Bunka, our President and CEO, Bal Bhullar, our CFO,
David DeMartini, our director, will not register as broker-dealers pursuant to
Section 15 of the Securities Exchange Act of 1934, in reliance upon Rule 3a4-1,
which sets forth those conditions under which a person associated with an issuer
may participate in the offering of the issuer&#146;s securities and not be deemed to
be a broker-dealer. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">1. </TD>
    <TD vAlign=top>
      <P align=justify>Christopher Bunka, Bal Bhullar, David DeMartini, are not
      subject to a statutory disqualification, as that term is defined in
      Section 3(a)(39) of the Act, at the time of their participation;
    and,</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">2. </TD>
    <TD vAlign=top>
      <P align=justify>Christopher Bunka, Bal Bhullar, David DeMartini, will not
      be compensated in connection with their participation by the payment of
      commissions or other remuneration based either directly or indirectly on
      transactions in securities; and</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">3. </TD>
    <TD vAlign=top>
      <P align=justify>Christopher Bunka, Bal Bhullar, David DeMartini, are not,
      nor will they be at the time of participation in the offering, an
      associated person of a broker-dealer; and</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">4. </TD>
    <TD vAlign=top>
      <P align=justify>Christopher Bunka, Bal Bhullar, David DeMartini, meet the
      conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in
      that they (A) primarily perform, or are intended primarily to perform at
      the end of the offering, substantial duties for or on behalf of our
      company, other than in connection with transactions in securities; and (B)
      are not a broker or dealer, or been an associated person of a broker or
      dealer, within the preceding twelve months; and (C) have not participated
      in selling and offering securities for any issuer more than once every
      twelve months other than in reliance on Paragraphs (a)(4)(i) or
      (a)(4)(iii).</P></TD></TR></TABLE>
<P align=justify>Our officers, directors, control persons and affiliates of same
do not intend to purchase any shares in this offering. </P>
<P align=justify>We will not use public solicitation or general advertising in
connection with the offering. We will use our best efforts to find purchasers
for the shares offered by this prospectus within a period of 60 days from the
date of the prospectus, subject to an extension for an additional period not to
exceed 120 days. </P>
<P align=justify><B>Resale of 295,000 previously issued common shares and
200,000 shares of common stock underlying previously issued warrants by Selling
Shareholders </B></P>
<P align=justify>Selling Shareholders are also offering 295,000 previously
issued common shares and 200,000 shares of common stock underlying previously
issued warrants, which may be resold from time to time by the Selling
Shareholders at prevailing market prices or privately negotiated prices. None of
our affiliates are selling their shares as part of this offering. These sales
may be at fixed or negotiated prices. </P>
<P align=justify>The Selling Shareholders may sell some or all of their
securities in one or more transactions, including block transactions: </P>
<P align=center>19</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_24></A>
<UL style="TEXT-ALIGN: justify">
  <LI>on such public markets as the securities may be trading;
  <LI>in privately negotiated transactions;
  <LI>in any combination of these methods of distribution. </LI></UL>
<P align=justify>The sales price to the public may be: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>the market price prevailing at the time of sale;
  <LI>a price related to such prevailing market price; or
  <LI>such other price as the Selling Shareholders determine. </LI></UL>
<P align=justify>We are bearing all costs relating to the registration of
certain securities. The Selling Shareholders, however, will pay any commissions
or other fees payable to brokers or dealers in connection with any sale of
certain securities. </P>
<P align=justify>The Selling Shareholders must comply with the requirements of
the Securities Act and the Exchange Act in the offer and sale of certain
securities. In particular, during such times as the Selling Shareholders may be
deemed to be engaged in a distribution of certain securities, and therefore be
considered to be an underwriter, they must comply with applicable laws and may,
among other things: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>not engage in any stabilization activities in connection with our
  securities;
  <LI>furnish each broker or dealer through which common stock may be offered,
  such copies of this Prospectus, as amended from time to time, as may be
  required by such broker or dealer; and
  <LI>not bid for or purchase any of our securities or attempt to induce any
  person to purchase any of our securities other than as permitted under the
  Exchange Act. </LI></UL>
<P align=justify>Our common stock is quoted on the OTC Markets OTCQB, under the
trading symbol &#147;LXRP&#148;. The market for our stock is highly volatile. We cannot
assure you that there will be a market in the future for our common stock. </P>
<P align=justify>Trading in stocks quoted on the OTCQB is often thin and
characterized by wide fluctuations in trading prices, due to many factors that
may have little to do with a company&#146;s operations or business prospects. The
OTCQB should not be confused with the NASDAQ market. OTCQB companies are subject
to far fewer restrictions and regulations than are companies traded on the
NASDAQ market. Moreover, the OTCQB is not a stock exchange, and trading of
securities on the OTCQB is often more sporadic than the trading of securities
listed on the NASDAQ market or other stock exchange. In the absence of an active
trading market: (a) investors may have difficulty buying and selling or
obtaining market quotations; (b) market visibility for our common stock may be
limited; and (c) a lack of visibility for our common stock may have a depressive
effect on the market price for our common stock. </P>
<P align=justify>None of the Selling Shareholders will engage in any electronic
offer, sale or distribution of the shares. Further, neither we nor any of the
Selling Shareholders have any arrangements with a third party to host or access
our Prospectus on the Internet. </P>
<P align=justify>In the event of the transfer by any selling stockholder of his
or her shares to any pledgee, donee or other transferee, we will amend this
prospectus and the registration statement of which this prospectus forms a part
by the filing of a post-effective amendment in order to have the pledgee, donee
or other transferee in place of the selling stockholder who has transferred his
or her shares. </P>
<P align=justify>In effecting sales, brokers and dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from the Selling Shareholders or,
if any of the broker-dealers act as an agent for the purchaser of such shares,
from the purchaser in amounts to be negotiated which are not expected to exceed
those customary in the types of transactions involved. Broker-dealers may agree
with the Selling Shareholders to sell a specified number of the shares of common
stock at a stipulated price per share. Such an agreement may also
require the broker-dealer to purchase as principal any unsold shares of common stock at the price required to fulfill the broker-dealer commitment to the Selling Shareholders if such broker-dealer is unable to sell the shares on behalf of the
Selling Shareholders. Broker-dealers who acquire shares of common stock as principal may thereafter resell the shares of common stock from time to time in transactions which may involve block transactions and sales to and through other
broker-dealers, including transactions of the nature described above. Such sales by a broker-dealer could be at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated
transactions. In connection with such re-sales, the broker-dealer may pay to or receive from the purchasers of the shares, commissions as described above. </P>
<P align=center>20</P>
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<P align="justify">
The Selling Shareholders and any broker-dealers or agents that participate with the Selling Shareholders in the sale of the shares of common stock may be deemed to be &ldquo;underwriters&rdquo; within the meaning of the Securities Act in connection
with these sales. In that event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities
Act. </P>
<P align="justify">
From time to time, the Selling Shareholders may pledge their shares of common stock pursuant to the margin provisions of their customer agreements with their brokers. Upon a default by a selling stockholder, the broker may offer and sell the pledged
shares of common stock from time to time. Upon a sale of the shares of common stock, the Selling Shareholders intend to comply with the prospectus delivery requirements, under the Securities Act, by delivering a prospectus to each purchaser in the
transaction. We intend to file any amendments or other necessary documents in compliance with the Securities Act which may be required in the event any selling stockholder defaults under any customer agreement with brokers. </P>
<P align="justify">
To the extent required under the Securities Act, a post effective amendment to this registration statement will be filed, disclosing, the name of any broker-dealers, the number of shares of common stock involved, the price at which the common stock
is to be sold, the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable, that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this
prospectus and other facts material to the transaction. </P>
<P align="justify">
We and the Selling Shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5 and, insofar as the Selling Shareholders are distribution participants and
we, under certain circumstances, may be a distribution participant, under Regulation M. All of the foregoing may affect the marketability of the common stock. </P>
<P align="justify">
All expenses of the registration statement including, but not limited to, legal, accounting, printing and mailing fees are and will be borne by us. Any commissions, discounts or other fees payable to brokers or dealers in connection with any sale of
the shares of common stock will be borne by the Selling Shareholders, the purchasers participating in such transaction, or both. </P>
<P align="justify">
<B>Regulation M </B></P>
<P align="justify">
During such time as the selling security holders may be engaged in a distribution of any of the securities being registered by this Prospectus, the selling security holders are required to comply with Regulation M under the Exchange Act. In general,
Regulation M precludes any selling security holder, any affiliated purchaser and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any
security that is the subject of the distribution until the entire distribution is complete.</P>
<P align="justify">
Regulation M defines a &ldquo;distribution&rdquo;<I> </I>as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation
M also defines a &ldquo;distribution participant&rdquo;<I> </I>as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution. </P>

<P align="center">
21</P>

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<P align="justify">
Regulation M prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution.
Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. We have informed the selling security holders that the anti-manipulation provisions of Regulation M
may apply to the sales of their shares offered by this Prospectus, and we have also advised the selling security holders of the requirements for delivery of this Prospectus in connection with any sales of the shares offered by this Prospectus. </P>
<P align="justify">
With regard to short sales, the selling security holders cannot cover their short sales with securities from this offering. In addition, if a short sale is deemed to be a stabilizing activity, then the selling security holders will not be permitted
to engage in such an activity. All of these limitations may affect the marketability of our common stock. </P>
<P align="justify">
<B>Penny Stock Rules </B></P>
<P align="justify">
The SEC has 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 &#36;5.00 (other than securities registered on certain national
securities exchanges, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). </P>
<P 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 SEC which: </P>
<UL style="text-align:justify;">
<LI>
<p style="margin-bottom: 12pt">contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;</LI>
<LI>
<p style="margin-bottom: 12pt">contains a description of the broker&#146;s or dealer&#146;s duties to the customer and of the rights and remedies available to the customer with respect to violations of such duties or other requirements of federal securities laws;</LI>
<LI>
<p style="margin-bottom: 12pt">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 prices;</LI>
<LI>
<p style="margin-bottom: 12pt">contains the toll-free telephone number for inquiries on disciplinary actions;</LI>
<LI>
<p style="margin-bottom: 12pt">defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and</LI>
<LI>
<p style="margin-bottom: 12pt">contains such other information, and is in such form (including language, type size, and format) as the SEC shall require by rule or regulation.</LI>
</UL>
<P align="justify">
Prior to effecting any transaction in a penny stock, a broker-dealer must also provide a customer with: </P>
<UL style="text-align:justify;">
<LI>
<p style="margin-bottom: 12pt">the bid and ask prices for the penny stock;</LI>
<LI>
<p style="margin-bottom: 12pt">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;</LI>
<LI>
<p style="margin-bottom: 12pt">the amount and a description of any compensation that the broker-dealer and its associated salesperson will receive in connection with the transaction; and</LI>
<LI>
<p style="margin-bottom: 12pt">a monthly account statement indicating the market value of each penny stock held in the customer&#146;s account.</LI>
</UL>

<p style="margin-bottom: 12pt" align="center">22</p>

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<P align="justify">
In addition, the penny stock rules require that prior to effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for
the purchaser and receive (i) the purchaser&#146;s written acknowledgment of the receipt of a risk disclosure statement, (ii) a written agreement to transactions involving penny stocks, and (iii) a signed and dated copy of a written suitability
statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our securities, and therefore our stockholders may have difficulty selling their shares. </P>
<P align="justify">
<B>Blue Sky Restrictions on Resale</B> </P>
<P align="justify">
When a selling security holder wants to sell shares of our common stock under this Prospectus in the United States, the selling security holder will need to comply with state securities laws, also known as &ldquo;blue sky laws,&rdquo; with regard to
secondary sales. All states offer a variety of exemptions from registration of secondary sales. Many states, for example, have an exemption for secondary trading of securities registered under section 12(g) of the Exchange Act or for securities of
issuers that publish continuous disclosure of financial and non-financial information in a recognized securities manual, such as Standard &amp; Poor&rsquo;s. The broker for a selling security holder will be able to advise the stockholder as to which
states have an exemption for secondary sales of our common stock. </P>
<P align="justify">
Any person who purchases shares of our common stock from a selling security holder pursuant to this Prospectus, and who subsequently wants to resell such shares will also have to comply with blue sky laws regarding secondary sales. </P>
<P align="justify">
When this Prospectus becomes effective, and a selling security holder indicates in which state(s) he desires to sell his shares, we will be able to identify whether he will need to register or may rely on an exemption from registration. </P>
<P align="center">
<B>Description of Securities to be Registered </B></P>
<P align="justify">
Our authorized capital stock consists of 200,000,000 shares of common stock, &#36;0.001 par value, and no authorized shares of preferred stock.</P>
<P align="justify">
<B>Common Stock </B></P>
<P align="justify">
As of June 22, 2012 we had 16,431,452 shares of our common stock, options to acquire 1,740,000 shares of our common stock and warrants to acquire
2,542,857 shares of our common issued and outstanding. </P>
<P align="justify">
Holders of our common stock have no preemptive rights to purchase additional shares of common stock or other subscription rights. Our common stock carries no conversion rights and is not subject to redemption or to any sinking fund provisions. All
shares of our common stock are entitled to share equally in dividends from sources legally available, when, as and if declared by our Board of Directors, and upon our liquidation or dissolution, whether voluntary or involuntary, to share equally in
our assets available for distribution to our stockholders. </P>
<P align="justify">
Our Board of Directors is authorized to issue additional shares of our common stock not to exceed the amount authorized by our Articles of Incorporation, on such terms and conditions and for such consideration as our Board may deem appropriate
without further security holder action. </P>
<P align="justify">
<B>Voting Rights </B></P>
<P align="justify">
Each holder of our common stock is entitled to one vote per share on all matters on which such stockholders are entitled to vote. Since the shares of our common stock do not have cumulative voting rights, the holders of more than 50% of the shares
voting for the election of directors can elect all the
directors if they choose to do so and, in such event, the holders of the remaining shares will not be able to elect any person to our Board of Directors. </P>

<P align="center">
23</P>

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<P align="justify">
<B>Dividend Policy </B></P>
<P align="justify">
Holders of our common stock are entitled to dividends if declared by the Board of Directors out of funds legally available for payment of dividends. From our inception to
June 22, 2012, we did not declare any dividends. </P>
<P align="justify">
We do not intend to issue any cash dividends in the future. We intend to retain earnings, if any, to finance the development and expansion of our business. However, it is possible that our management may decide to declare a cash or stock dividend in
the future. Our future dividend policy will be subject to the discretion of our Board of Directors and will be contingent upon future earnings, if any, our financial condition, our capital requirements, general business conditions and other factors.
</P>
<P align="justify">
<B>Common Stock Purchase Warrants</B> </P>
<P align="justify">
Each unit of common stock offered hereby consists of one common share and one warrant to purchase another common share at &#36;0.30 per share for a period of one year (the &ldquo;Warrants&rdquo;). The Warrants will be created and issued pursuant to
the terms of a warrant indenture (the &ldquo;Warrant Indenture<B>&rdquo;) </B>dated the date of the closing of the Offering between us and Olympia Trust Company (the <B>&ldquo;</B>Warrant Agent<B>&rdquo;</B>)<B>, </B>as warrant agent thereunder.
</P>
<P align="justify">
Warrants may be exercised upon surrender of the Warrant certificate on or before the period of one year passes, at the principal office of the Warrant Agent, with the notice of exercise found annexed to the Warrant Indenture completed and executed
as indicated, accompanied by payment of the exercise price for the number of common shares for which the Warrants are being exercised. </P>
<P align="justify">
Under the Warrant Indenture, we will be entitled to purchase in the market, by private contract or otherwise, all or any of the Warrants then outstanding and any Warrants so purchased will be cancelled. Under the Warrant Indenture, we will have the
ability to issue further common share purchase warrants, in addition to the Warrants already outstanding and those to be issued pursuant to this offering, without consent of the holders of the Warrants. </P>
<P align="justify">
The Warrant Indenture will provide for adjustment in the number of common shares issuable upon the exercise of the Warrants and/or the exercise price per common share upon the occurrence of certain events, including: </P>
<UL style="text-align:justify;">
<LI>
<p style="margin-bottom: 12pt">the issuance of common shares or securities exchangeable for or convertible into common shares to all or substantially all of the holders of the common shares as a stock dividend or other distribution;</LI>
<LI>
<p style="margin-bottom: 12pt">the subdivision, redivision or change of the common shares into a greater number of shares;</LI>
<LI>
<p style="margin-bottom: 12pt">the reduction, combination or consolidation of the common shares into a lesser number of shares;</LI>
<LI>
<p style="margin-bottom: 12pt">the issuance to all or substantially all of the holders of the common shares of rights, options or warrants under which such holders are entitled, during a period expiring not more than 45 days after the record date for such issuance, to subscribe
for or purchase common shares, or securities exchangeable for or convertible into common shares, at a price per share to the holder (or at an exchange or conversion price per share) of less than 95% of the "current market price", as defined in the
Warrant Indenture, for the common shares on such record date; and</LI>
<LI>
<p style="margin-bottom: 12pt">the issuance or distribution to all or substantially all of the holders of the common shares of shares of any class other than the common shares, rights, options or warrants to acquire common shares
or securities exchangeable or convertible into common shares, evidences of indebtedness or cash, securities or any property or other assets. </LI>
</UL>

<p style="margin-bottom: 12pt" align="center">24</p>

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<P align="justify">
The Warrant Indenture will provide for adjustment in the class and/or number of securities issuable upon the exercise of the Warrants and/or exercise price per security in the event of the following additional events: (i) reclassifications of the
common shares; (ii) consolidations, amalgamations, plans of arrangement or mergers of the Corporation with or into another entity (other than consolidations, amalgamations, plans of arrangement or mergers that do not result in any reclassification
of the common shares or a change of the common shares into other shares); or (iii) the transfer (other than to one of our subsidiaries) of our undertaking or assets as an entirety or substantially as an entirety to another corporation or other
entity. No adjustment in the exercise price or the number of common shares issuable upon the exercise of a Warrant will be required to be made unless the cumulative effect of such adjustment or adjustments would change the exercise price by at least
1% or the number of common shares issuable upon exercise of a Warrant by at least 0.1 of a common share. </P>
<P align="justify">
We will also covenant in the Warrant Indenture that, during the period in which the Warrants are exercisable, it will give notice to the holders of Warrants of certain stated events, including events that would result in the adjustment to the
exercise price for the Warrants or the number of common shares issuable upon exercise of the Warrants, at least 21 days prior to the record date or effective date, as the case may be, of such event. </P>
<P align="justify">
No fractional common shares will be issuable to any holder of Warrants upon the exercise thereof, and no cash or other consideration will be paid in lieu of fractional shares. Holders of Warrants do not have any voting or pre-emptive rights or any
other rights of a holder of common shares. </P>
<P align="justify">
From time to time, the Warrant Agent and our company, without the consent of the holders of Warrants, may amend or supplement the Warrant Indenture for certain purposes, including curing defects or inconsistencies or making any change that does not
adversely affect the rights of any holder of Warrants. Any amendment or supplement to the Warrant Indenture that adversely affects the interest of the holders of the Warrants may only be made by "extraordinary resolution", which is defined in the
Warrant Indenture as a resolution either: (i) passed at a meeting of the holders of Warrants at which there are holders of Warrants present in person or represented by proxy representing at least 25% of the aggregate number of the then outstanding
Warrants and passed by the affirmative vote of holders of Warrants representing not less than two-thirds of the aggregate number of all the then outstanding Warrants represented at the meeting and voted on the poll upon such resolution; or (ii)
adopted by an instrument in writing signed by the holders or Warrants representing not less than two-thirds of the number of all the then outstanding Warrants. </P>
<P align="center">
<B>Legal Matters<I> </I></B></P>
<P align="justify">
Macdonald Tuskey, of 570 Granville Street, 4<SUP>th</SUP> Floor, Vancouver, British Columbia, V6C 3P1, Canada has provided an opinion on the validity of the shares of our common stock being offered pursuant to this prospectus. </P>
<P align="center">
<B>Interests of Named Experts and Counsel<I> </I></B></P>
<P align="justify">
No expert or counsel named in this Prospectus as having prepared or certified any part thereof or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or
offering of our common stock was employed on a contingency basis or had or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in us. Additionally, no such expert or counsel was connected with us as a
promoter, managing or principal underwriter, voting trustee, director, officer or employee.</P>

<P align="center">
25</P>

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<P align="justify">
<B>Experts </B></P>
<P align="justify">
Our audited financial statements for the years ended October 31, 2011 and October 31, 2010 have been included in this Prospectus in reliance upon MNP LLP and Chang Lee LLP, respectively, independent registered public accounting firms, as experts in
accounting and auditing.</P>
<P align="center">
<B>Description of Business </B></P>
<P align="justify">
<B>Forward-Looking Statements</B> </P>
<P align="justify">
This Prospectus contains forward-looking statements. To the extent that any statements made in this report contain information that is not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by
the use of words such as &ldquo;expects&rdquo;, &ldquo;plans&rdquo;, &ldquo;will&rdquo;, &ldquo;may&rdquo;, &ldquo;anticipates&rdquo;, &ldquo;believes&rdquo;, &ldquo;should&rdquo;, &ldquo;intends&rdquo;, &ldquo;estimates&rdquo; and other words of
similar meaning. These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks
and uncertainties include, without limitation, our ability to raise additional capital to finance our activities; the effectiveness, profitability and marketability of our products; legal and regulatory risks associated with the share exchange; the
future trading of our common stock; our ability to operate as a public company; our ability to protect our intellectual property; general economic and business conditions; the volatility of our operating results and financial condition; our ability
to attract or retain qualified personnel; and other risks detailed from time to time in our filings with the SEC, or otherwise. </P>
<P align="justify">
Information regarding market and industry statistics contained in this report is included based on information available to us that we believe is accurate. It is generally based on industry and other publications that are not produced for the
purposes of securities offerings or economic analysis. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications outlined above and the additional uncertainties accompanying any estimates of
future market size, revenue and market acceptance of products and services. We do not undertake any obligation to publicly update any forward-looking statements.</P>
<P align="justify">
<B>Overview</B> </P>
<P align="justify">
We were incorporated in the State of Nevada on December 9, 2004. We are an exploration and development oil and gas company currently engaged in the exploration for and development of petroleum and natural gas in North America. We maintain our
registered agent&#146;s office and our U.S. business office at Nevada Agency and Transfer Company, 50 West Liberty, Suite 880, Reno, Nevada 89501. Our telephone number is (755) 322-0626.</P>
<P align="justify">
The address of our principal executive office is Suite 950, 1130 West Pender Street, Vancouver, British Columbia V6E 4A4. Our telephone number is (604) 602-1675. We have another office located in Kelowna. Our current locations provide adequate
office space for our purposes at this stage of our development. </P>
<P align="justify">
Our common stock is quoted on the OTCQB under the symbol "LXRP" and on the Canadian National Stock Exchange under the symbol &ldquo;LXX&rdquo;.</P>
<P align="justify">
We are currently generating revenues from our business operations in Mississippi. Our business plan is to focus on development of the Belmont Lake oil field, in which we have working interests, in order to maximize cash flow and use excess cash flow
to pay debt and conduct additional development well drilling. Eventually, if cash flows are strong enough, we anticipate that we will once again be able to explore for additional oil and gas by way of our existing 60% interest option to drill 38
exploratory wells (see &ldquo;Oil &amp; Gas Properties - Mississippi and Louisiana: Frio-Wilcox Project&rdquo;). To accomplish this, we
intend to focus on development drilling first. Eventually we plan to seek a
balance between exploration, development and exploitation drilling. To achieve
sustainable and profitable growth, we intend to control the timing and costs of
its projects wherever possible. We are not currently the operator of any of our
properties. </P>

<p align="center">26</p>
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<P align=justify><B>Current Business Operations</B></P>
<P align=justify>We have acquired working interests in various oil and gas
properties in Mississippi USA. All of our current oil and gas assets are located
in Wilkinson and Amite counties, Mississippi, where we have between 32% and 60%
gross working interests in producing oil and/or gas wells and in exploration
wells yet to be drilled. Our Belmont Lake oil field, discovered in December
2006, is located within the Palmetto Point area of Wilkinson County,
Mississippi. We previously had an interest in oil and gas wells located in
Oklahoma but those assets were sold in August 2008. We had a nominal interest in
a non-commercial well located in Strachan Alberta which expired in fiscal year
2010. </P>
<P align=justify>Our business plan is to focus on development of the Belmont
Lake oil field, in which we have working interests, in order to maximize cash
flow and use excess cash flow to pay debt and conduct additional development
well drilling. </P>
<P align=justify>During the past fiscal year we experienced the following
significant corporate developments: </P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%" align=center>1. </TD>
    <TD>
      <P align=justify>On November 16, 2010, we settled the debt incurred as a
      result of a consulting agreement, in the amount of $9,376, to Mr. Tom
      Ihrke by issuing 40,761 restricted shares of common stock of our company
      at a price of $0.23 per share.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>2. </TD>
    <TD>
      <P align=justify>On November 30, 2010, we closed the first tranche of a
      private placement offering of convertible debentures in the aggregate
      amount of $450,000. The convertible debentures mature on November 30,
      2012, subject to forced conversion as set out in the convertible debenture
      certificate. The convertible debentures pay an interest rate of 12% per
      annum (on a simple basis) and are convertible at $0.35 per unit. Each unit
      is comprised of one share of our common stock and one share purchase
      warrant. Each warrant entitles the holder thereof to purchase one share of
      common stock at a price of $0.40 per share from the earlier of the
      maturity date of the convertible debenture or one year from conversion of
      the convertible debenture. We also entered into a general security
      agreement with the subscribers, whereby the obligations to repay the
      convertible debenture are secured by certain of our assets.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>3. </TD>
    <TD>
      <P align=justify>On December 16, 2010, we closed the second tranche of a
      private placement offering of convertible debentures in the aggregate
      amount of $170,000. The convertible debentures mature on November 30,
      2012, subject to forced conversion as set out in the convertible debenture
      certificate. The convertible debentures pay an interest rate of 12% per
      annum (on a simple basis) and are convertible at $0.35 per unit. Each unit
      is comprised of one share of our common stock and one share purchase
      warrant. Each warrant entitles the holder thereof to purchase one share of
      common stock at a price of $0.40 per share from the earlier of the
      maturity date of the convertible debenture or one year from conversion of
      the convertible debenture. We also entered into a general security
      agreement with the subscribers, whereby the obligations to repay the
      convertible debenture are secured by certain of our assets.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>4. </TD>
    <TD>
      <P align=justify>On December 16, 2010, we entered into an assignment
      agreement with Emerald Atlantic LLC, a company solely owned by a director
      of our company (the &#147;Assignee&#148;), whereby the Assignee has paid a fee of
      $30,076 to earn 18% of a 4.423% share of our company&#146;s net revenue
      interest after field operating expenses for a well to be drilled in
      Wilkinson County.</P></TD></TR></TABLE><BR>
<p align="center">27</p>
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width="100%" noShade>
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<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%" align=center>5. </TD>
    <TD>
      <P align=justify>On January 4, 2011, 132,600 warrants were exercised and
      we issued 66,300 shares of common stock of our company at an exercise
      price of CAD$0.22 per share for total proceeds of CAD$14,586. Of the
      132,600 warrants exercised, 100,000 warrants were exercised by a director
      of our company.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>6. </TD>
    <TD>
      <P align=justify>On March 6, 2011, we accepted and received gross proceeds
      of $21,250 for the exercise of 106,250 stock options by a director of our
      company at an exercise price of $0.20 per stock option into 106,250 shares
      of our common stock.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>7. </TD>
    <TD>
      <P align=justify>On June 8, 2011, 1,500,000 warrants were exercised and we
      issued 1,500,000 shares of our common stock at an exercise price of $0.20
      per share for total proceeds of $300,000. The warrants were exercised by a
      director of our company.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>8. </TD>
    <TD>
      <P align=justify>On June 28, 2011, 500,000 warrants were exercised and we
      issued 500,000 shares of our common stock at an exercise price of $0.20
      per share for total proceeds of $100,000. The warrants were exercised by a
      director of our company.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>9. </TD>
    <TD>
      <P align=justify>On October 27, 2008, we made a secured loan agreement in
      the amount of CAD$300,000 with CAB Financial. On July 10, 2009, $40,000 of
      the debt was converted to equity. On October 21, 2010, we settled a
      portion of the debt in the amount of CAD $1,625 with CAB Financial by
      converting 65,000 warrants into 32,500 shares of our common stock pursuant
      to a Purchase Agreement dated October 27, 2008 at a price of CAD$0.05 per
      share. On June 28, 2011, we paid down CAD$100,000 of the debt.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>10. </TD>
    <TD>
      <P align=justify>On July 11, 2011, we granted 700,000 stock options to
      directors and officers of our company at an exercise price of $0.35 per
      share, which options vest immediately and expire on July 11,
  2016.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>11. </TD>
    <TD>
      <P align=justify>On July 13, 2011, 173,043 warrants were exercised and we
      issued 173,043 shares of our common stock at a price of $0.20 per share
      for total proceeds of $34,608.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>12. </TD>
    <TD>
      <P align=justify>On July 13, 2011, we completed an equity financing and
      issued 200,000 units at $0.35 per unit, for gross proceeds of $70,000.
      Each unit consists of one share of common stock and one share purchase
      warrant which entitles a holder to purchase an additional share of common
      stock at an exercise price of $0.50 per share for a period of two years.
      All shares and warrants issued were restricted under applicable securities
      rules.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>13. </TD>
    <TD>
      <P align=justify>On July 15, 2011, we accepted and received gross proceeds
      of $23,750 for the exercise of 118,750 stock options at an exercise price
      of $0.20 per stock option and issued 118,750 shares of common stock of our
      company. All of the stock options were exercised by directors and/or
      officers of our company.</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>14. </TD>
    <TD>
      We entered into an Asset Purchase Agreement dated August
      12, 2011, with Brinx Resources Ltd. to acquire 100% of its 10% gross
      working interest in the oil and gas interests located in Mississippi, USA.
      We agreed to pay a total of $400,000 and issue 800,000 shares of our
      common stock at a deemed price of at $0.34 per
share.</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;
      </TD></TR>
  <tr>
    <TD vAlign=top width="5%" align=center>15.</TD>
    <TD>
      <p ALIGN="justify">On March 30, 2012, we entered into a loan agreement and
      promissory note with Chris Bunka, a director and officer of our company.
      The principal amount of the note is USD$50,000, it is due on demand and
      carries an interest rate of 12% per annum.</TD>
  </tr>
  <TR>
    <TD vAlign=top width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;
      </TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>16.</TD>
    <TD>
      <p ALIGN="LEFT">On April 30, 2012, at 11 am PDT, Lexaria Corp. (&#147;Lexaria&#148;
      or the &#147;Company&#148;) held its Annual and Special Meeting of Shareholders for
      the following purposes:</TD></TR></TABLE>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; font-size: 10pt" bordercolor="#111111" width="100%">
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="90%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="5%" align="center">1.</td>
    <td width="90%">
    <p ALIGN="LEFT">To elect Chris Bunka, Bal Bhullar, and David DeMartini,
    Nicolas Baxter, and Dustin Elford as directors of the Company for the
    ensuing year and until their successors are elected;</td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="5%" align="center">2.</td>
    <td width="90%">
    <p ALIGN="LEFT">To ratify MNP LLP our independent registered public
    accounting firm for the fiscal year ending October 31, 2012 and to allow
    directors to set the remuneration; and</td>
  </tr>
  <tr>
    <td width="5%">&nbsp;</td>
    <td width="5%" align="center">3.</td>
    <td width="90%">
    <p ALIGN="LEFT">To transact such other business as may properly come before
    the Meeting or any adjournment of the postponement thereof.</td>
  </tr>
</table>
<p ALIGN="justify" style="margin-left: 5%">All proposals were approved by the
shareholders. The proposals are described in detail in the Company&#146;s definitive
proxy statement filed with the Securities and Exchange Commission on March 26,
2012.</p>
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<P align="justify">
We plan to continue our current business of acquiring interests in potentially high-impact oil and gas property interests that offer a high probability of being able to drill without significant time delays. </P>
<P align="justify">
We do not anticipate that we will hire a large number of employees or that we will require extensive office space. We have to date, and plan to continue, to acquire most of the industry and geological expertise we require through third party
contractual relationships with consulting experts and with operating companies which will act as operators of our various interests. Although this exposes us to certain risks on behalf of those operators, it also allows us to participate in the
often unique experience and knowledge that local persons have related to certain properties. This strategy allows us to participate in a wider variety of oil and gas opportunities than if all of its geological expertise were in-house and confined to
a single geographical area. From a business operations perspective, this strategy also enables us to minimize our ongoing fixed in-house costs for geological or geophysical analytical expenses while still allowing it to contract for that expertise
when and as needed. This business strategy has been successful during a time of declining oil and gas prices, when many companies with high internal overheads and cost structures due to large numbers of highly expensive in-house professionals cannot
be sustained due to declining revenues. We will hire third-party consulting geophysicists and geologists on an as-needed basis to evaluate oil and gas properties that may be of interest, and to reinforce and double-check the technical work and
abilities of its third-party operators. This provides us with the required expertise we need, when it is needed, whilst avoiding high fixed long-term costs. </P>
<P align="justify">
<B>Competition</B></P>
<P align="justify">
The oil and gas industry is highly competitive. We are a new exploration stage company and have a weak competitive position in the industry. We compete with junior and senior oil and gas companies, independent producers and institutional and
individual investors who are actively seeking to acquire oil and gas properties throughout the world together with the equipment, labor and materials required to operate on those properties. Competition for the acquisition of oil and gas interests
is intense with many oil and gas leases or concessions available in a competitive bidding process in which we may lack the technological information or expertise available to other bidders.</P>
<P align="justify">
Many of the oil and gas companies with which we compete for financing and for the acquisition of oil and gas properties have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend
greater amounts on acquiring oil and gas interests of merit or on exploring or developing their oil and gas properties. This advantage could enable our competitors to acquire oil and gas properties of greater quality and interest to prospective
investors who may choose to finance their additional exploration and development. Such competition could adversely impact our ability to attain the financing necessary for us to acquire further oil and gas interests or explore and develop our
current or future oil and gas properties.</P>
<P align="justify">
We also compete with other junior oil and gas companies for financing from a limited number of investors that are prepared to invest in such companies. The presence of competing junior oil and gas companies may impact our ability to raise additional
capital in order to fund our acquisition or exploration programs if investors perceive that investments in our competitors are more attractive based on the merit of their oil and gas properties or the price of the investment opportunity. In
addition, we compete with both junior and senior oil and gas companies for available resources, including, but not limited to, professional geologists, land specialists, engineers, camp staff, helicopters, float planes, oil and gas exploration
supplies and drill rigs.</P>
<P align="justify">
General competitive conditions may be substantially affected by various forms of energy legislation and/or regulation introduced from time to time by the governments of the United States and other countries, as well as factors beyond our control,
including international political conditions, overall levels of supply and demand for oil and gas, and the markets for synthetic fuels and alternative energy sources.</P>

<p align="center">29</p>

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<P align=justify>In the face of competition, we may not be successful in
acquiring, exploring or developing profitable oil and gas properties or
interests, and we cannot give any assurance that suitable oil and gas properties
or interests will be available for our acquisition, exploration or development.
Despite this, we hope to compete successfully in the oil and gas industry
by:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-top: 0; margin-bottom: 12">keeping our costs low;
  <LI>
  <p style="margin-top: 0; margin-bottom: 12">relying on the strength of our management&#146;s contacts; and
  <LI>
  <p style="margin-top: 0; margin-bottom: 12">using our size and experience to our advantage by adapting quickly to
  changing market conditions or responding swiftly to potential opportunities.
  </LI></UL>
<P align=justify><B>Compliance with Government Regulation</B></P>
<P align=justify>Our current and future operations and exploration activities
are or will be subject to various laws and regulations in the United. These laws
and regulations govern the protection of the environment, conservation,
prospecting, development, energy production, taxes, labor standards,
occupational health and safety, toxic substances, chemical products and
materials, waste management and other matters relating to the oil and gas
industry. Permits, registrations or other authorizations may also be required to
maintain our operations and to carry out our future oil and gas exploration and
production activities, and these permits, registrations or authorizations will
be subject to revocation, modification and renewal.</P>
<P align=justify>Governmental authorities have the power to enforce compliance
with lease conditions, regulatory requirements and the provisions of required
permits, registrations or other authorizations, and violators may be subject to
civil and criminal penalties including fines, injunctions, or both. The failure
to obtain or maintain a required permit may also result in the imposition of
civil and criminal penalties, and third parties may have the right to sue to
enforce compliance.</P>
<P align=justify>We expect to be able to comply with all applicable laws and
regulations and do not believe that such compliance will have a material adverse
effect on our competitive position. We have obtained and intend to obtain all
environmental permits, licenses and approvals required by all applicable
regulatory agencies to maintain our current oil and gas operations and to carry
out our future exploration activities. We are not aware of any material
violations of environmental permits, licenses or approvals issued with respect
to our operations, and we believe that the operators of the properties in which
we have an interest comply with all applicable laws and regulations. We intend
to continue complying with all environmental laws and regulations, and at this
time we do not anticipate incurring any material capital expenditures to do
so.</P>
<P align=justify>Compliance with environmental requirements, including financial
assurance requirements and the costs associated with the cleanup of any spill,
could have a material adverse effect on our capital expenditures, earnings or
competitive position. Our failure to comply with any laws and regulations may
result in the assessment of administrative, civil and criminal penalties, the
imposition of injunctive relief, or both. Legislation affecting the oil and gas
industry is subject to constant review, and the regulatory burden frequently
increases. Changes in any of the laws and regulations could have a material
adverse effect on our business, and in view of the many uncertainties
surrounding current and future laws and regulations, including their
applicability to our operations, we cannot predict their overall effect on our
business.</P>
<P align=justify><I><U>U.S. Regulations</U></I></P>
<P align=justify>Such regulation covers permits required for drilling wells;
bonding requirements for drilling or operating wells; the implementation of
spill prevention plans; submissions and permits relating to the presence, use
and release of certain materials incidental to oil and gas operations; the
location of wells; the method of drilling and casing wells; the use,
transportation, storage and disposal of fluids and materials used in connection
with drilling and production activities; surface usage and the restoration of
properties upon
which wells have been drilled; the plugging and abandoning of wells; and the transportation of oil and gas.</P>
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<P align="justify">Our operations are or will also be subject to various conservation matters, including the regulation of the size of drilling and spacing units or proration units, the number of wells which may be drilled in a unit, and the unitization or pooling of
oil and gas properties. In this regard, some states allow forced pooling or the integration of tracts to facilitate exploration while other states rely on the voluntary pooling of lands and leases, which may make it more difficult to develop oil and
gas properties. In addition, state conservation laws establish maximum rates of production from oil and gas wells, generally limit the venting or flaring of gas and impose certain requirements regarding the ratable purchase of produced oil and gas.
The effect of these regulations is to limit the amounts of oil and gas we may be able to produce from our wells and to limit the number of wells or the locations at which we may be able to drill.</P>
<P align="justify">
Oil and natural gas exploration and production activities on federal lands are subject to the <I>National Environmental Policy Act </I>(NEPA). The NEPA requires federal agencies, including the Department of the Interior, to evaluate major agency
actions that have the potential to significantly impact the environment. In the course of such evaluations, an agency will typically prepare an environmental assessment on the potential direct, indirect and cumulative impacts of a proposed project
and, if necessary, will prepare a more detailed environmental impact statement that may be made available for public review and comment. This process has the potential to delay or limit the development of oil and natural gas projects.</P>
<P align="justify">
The <I>Resource Conservation and Recovery Act </I>(RCRA) and comparable state laws regulate the generation, transportation, treatment, storage, disposal and cleanup of &ldquo;hazardous wastes&rdquo; as well as the disposal of non-hazardous wastes.
Under the auspices of the U.S. Environmental Protection Agency, or EPA, individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. While drilling fluids, produced waters,
and many other wastes associated with the exploration, development, and production of crude oil, natural gas, or geothermal energy constitute &ldquo;solid wastes&rdquo;, which are regulated under the less stringent non-hazardous waste provisions,
there is no assurance that the EPA or individual states will not in the future adopt more stringent and costly requirements for the handling of non-hazardous wastes or categorize some non-hazardous wastes as hazardous.</P>
<P align="justify">
The <I>Comprehensive Environmental Response, Compensation and Liability Act </I>(CERCLA), also known as &ldquo;Superfund&rdquo;, and analogous state laws, impose joint and several liability, without regard to fault or legality of conduct, on persons
who are considered to be responsible for the release of a &ldquo;hazardous substance&rdquo; into the environment. These persons include the owner or operator of the site where the release occurred and any company that disposed or arranged for the
disposal of the hazardous substance at the site. Under CERCLA, such persons may be liable for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of
certain health studies. In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances into the environment.</P>
<P align="justify">
The <I>Water Pollution Control Act</I>, also known as the Clean Water Act, and analogous state laws, impose restrictions and strict controls on the discharge of pollutants, including produced waters and other oil and natural gas wastes, into waters
of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or the relevant state. The Clean Water Act also prohibits the discharge of dredge and fill
material into regulated waters, including wetlands, unless authorized by a permit issued by the U.S. Army Corps of Engineers. Federal and state regulatory agencies can impose administrative, civil and criminal penalties for non-compliance with
discharge permits or other requirements of the Clean Water Act and analogous state laws and regulations.</P>
<P align="justify">
The <I>Clean Air Act </I>and associated state laws and regulations regulate emissions of various air pollutants through the issuance of permits and the imposition of other requirements. In addition, the EPA has
developed, and continues to develop, stringent regulations governing emissions of toxic air pollutants at specified sources. In order to construct production facilities, we may be required to obtain permits before work can begin. These regulations
may increase the costs of compliance for such facilities, and federal and state regulatory agencies may impose administrative, civil and criminal penalties for non-compliance.</P>

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<P align="justify">We may be subject to the requirements of the <I>Occupational Safety and Health Act </I>(OSHA) and comparable state statutes. The OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of CERCLA, and similar
state statutes require that we organize and/or disclose information about hazardous materials used or produced in our operations.</P>
<P align="justify">
We believe that we are currently in compliance with the statutory and regulatory provisions governing our operations. We hold or will hold all necessary permits and other authorizations to the extent required by our current or future properties or
interest and their associated operations. However, we may do business and own properties in a number of different geographic areas and may therefore be subject to the jurisdiction of a large number of different authorities at different levels of
government. We plan to comply with all statutory and regulatory provisions governing our current and future operations; however, such regulations may significantly increase our costs of compliance, and regulatory authorities may also impose
administrative, civil and criminal penalties for non-compliance. At this time, it is not possible to accurately estimate how laws or regulations may impact our future business. We also cannot give any assurance that we will be able to comply with
future changes in any statutes or regulations.</P>
<P align="justify">
We own or may own interests in properties that have been used for oil and gas exploration in the past. Although industry-standard operating and waste disposal practices may have been used, hazardous substances, wastes, or petroleum hydrocarbons may
have been released on or under the properties, or on or under other locations, including off-site locations, where such substances have been taken for disposal. In addition, some of these properties may have been or may be operated by third parties
or by previous owners or operators whose treatment and disposal of hazardous substances, wastes, or hydrocarbons was not under our control. These properties and the substances disposed or released thereon may be subject to CERCLA, RCRA and analogous
state laws. Under such laws, we could be required to remove previously disposed substances and wastes, remediate contaminated property or perform remedial plugging or pit closure operations to prevent any future contamination.</P>
<P align="justify">
<B>Employees</B></P>
<P align="justify">
We primarily used the services of sub-contractors and consultants for manual labor exploration work and drilling on our properties. Our Director, Mr. David DeMartini is our technical advisor.</P>
<P align="justify">
We are party to a consulting agreement with BKB Management Ltd., a corporation organized under the laws of the Province in British Columbia. BKB Management Ltd. is a consulting company controlled by the chief financial officer and director for a
consideration of CAD &#36;5,500 per month plus HST.</P>
<P align="justify">
We are party to a consulting agreement with CAB Financial Services Ltd., a corporation organized under the laws of the Province of British Columbia. CAB Financial Services is a consulting company controlled by our director and CEO. The consulting
services provided by CAB Financial Services are on a continuing basis for a consideration of &#36;8,000 per month plus HST. CAB Financial Services Ltd. may terminate the agreement at any time by giving 30 days written notice.</P>
<P align="justify">
On August 6, 2010 we entered into a three month consulting agreement with Tom Ihrke to act as the Company&rsquo;s Senior Vice President, Business Development for consideration of US&#36;3,125 per month and 150,000 stock options granted at &#36;0.20.
On December 2, 2010, we entered into a month to month management agreement with Tom Ihrke, where by Mr. Ihrke will continue to act as our Senior Vice-President Business Development. We will pay a monthly consulting fee of &#36;3,125. </P>

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<P align=justify>We do not expect any material changes in the number of
employees over the next 12 month period. We do and will continue to outsource
contract employment as needed. However, with project advancement and if we are
successful in our initial and any subsequent drilling programs we may retain
additional employees. </P>
<P align=justify><B>Intellectual Property</B></P>
<P align=justify>We have not filed for any protection of our trademark, and
other than copyright in the contents of our website, www.lexariaenergy.com, we
do not own any intellectual property. </P>
<P align=justify><B>Research and Development</B></P>
<P align=justify>We did not incur any research and development expenses over the
last fiscal year.</P>
<P align=justify><B>Reports to Security Holders</B></P>
<P align=justify>We are subject to the reporting and other requirements of the
Exchange Act and we intend to furnish our shareholders annual reports containing
financial statements audited by our independent registered public accounting
firm and to make available quarterly reports containing unaudited financial
statements for each of the first three quarters of each year. We file Quarterly
Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form
8-K with the Securities and Exchange Commission in order to meet our timely and
continuous disclosure requirements. We may also file additional documents with
the Commission if they become necessary in the course of our company&#146;s
operations.</P>
<P align=justify>The public may read and copy any materials that we file with
the SEC at the SEC&#146;s Public Reference Room at 100 F Street, NE, Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The address
of that site is www.sec.gov. </P>
<P align=center><B>Description of Property</B></P>
<P align=justify><I>Executive Offices</I></P>
<P align=justify>The address of our principal executive office is Suite 950,
1130 West Pender Street, Vancouver, British Columbia, V6E 4A4, for which we
share 250 square feet of office space, which includes one executive office for a
monthly rental of CAD $1,337. Our telephone number is (604) 602-1675. We have an
additional office located in Kelowna, British Columbia, for which we share 1,500
square feet of office space, which includes two executive offices for a monthly
rental of CAD $600. Our current locations provide adequate office space for our
purposes at this stage of our development.</P>
<P align=justify><I>Resource Properties</I></P>
<P align=justify>We currently own a 42% gross working interest in 13 wells, and
with the exception of a 50% working interest in wells PP F-12-4 and PP F-12-5, a
55% gross working interest in 7 wells; and a 60% gross working interest in 43
wells (of which 38 remain to be drilled); all located in Mississippi under
various agreements with Griffin and Griffin Exploration, L.L.C. These properties
are grouped as the Palmetto Point Project and Frio-Wilcox Project.</P>
<P align=justify>The most significant of these wells are the producing oil wells
PP F-12-1, PP F-12-3, PP F-12-4, and PP F-12-5 located within the Belmont Lake
oil field which is located in the Palmetto Point region. The Belmont Lake oil
field is onshore, as are all of our wells, but located in a flood plain of the
Mississippi River
which forces seasonal constraints on certain field activities. We have an interest in one producing gas well, the PP F-29, but because the gas from this well is consumed by field operations it is deemed to be of no commercial value. Except for this
and the four oil wells noted immediately above, we have no other producing wells. Additional details of these interests are noted below and not all of these wells were successful. </P>
<p align="center">33</p>
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<P align="justify">A description of our Palmetto Point Project and Frio-Wilcox Project follow.</P>
<P align="justify">
<U>Palmetto Point Project</U></P>
<P align="justify">
On December 21, 2005, we agreed to purchase a 20% gross working and revenue interest in a 10 well drilling program in Palmetto Point, Mississippi owned by Griffin &amp; Griffin Exploration (&ldquo;Griffin&rdquo;) for cash payments of &#36;700,000,
comprised of &#36;220,000 paid upon entering into the agreement and the remaining balance of &#36;480,000 paid on January 17, 2006. We applied the full cost method to account for its oil and gas properties and as of July 31, 2009, seven wells were
found to be proved wells, and three wells were found impaired. One of the wells was impaired due to uneconomic life, and the other two wells were abandoned due to no apparent gas or oil shows present. The costs of impaired properties were added to
the capitalized cost in determination of the depletion expense. Palmetto Point is approximately 150 miles southwest of Jackson, Mississippi and approximately 50 miles north/northwest of Baton Rouge, Louisiana. It is 30 miles west of Woodville,
Mississippi off of State Highway 33 and is entirely within Wilkinson County. </P>
<P align="justify">
There were no further costs to us in earning its interest in the 10 well drilling program, including well development costs or pipeline connections. Griffin has agreed that the leases held by it covering any mineral estate underlying the applicable
well site acreage shall not provide for more than twenty-five (25%) percent royalty and overriding royalty interest. Our net interest in any oil and gas produced is calculated by subtracting the applicable royalties from its 20% gross interest.
Consequently, our original net working interest in the drilling program was a minimum fifteen (15%) percent net working interest. Griffin conducted the drilling program in its capacity as Operator and receives a 15% carried interest.</P>
<P align="justify">
One of these original 10 wells was the PP F-12-1 well, which was the discovery well of a field now known as the Belmont Lake field. All of these original 10 wells were targeting the Frio geological formation of the Cenozoic era and Oligocene series,
which is characterized in this region as a generally shallow, sandstone-rich layer. In this area of Mississippi, the Frio geologic formation is generally found between 2,000 and 4,500 foot depth from surface.</P>
<P align="justify">
On September 22, 2006, we elected to participate in an additional two-well program in Palmetto Point, Mississippi owned by Griffin by paying an additional &#36;140,000 (paid). We earned the same 20% gross interest in the two (2) additional wells (12
wells total and all drilled) and subsequently increased its gross interest to 32% in these 12 wells, or a net revenue interest of 20.802815% . As of July 31, 2009, the two wells were found to be proved wells. </P>
<P align="justify">
On June 23, 2007, we acquired an assignment of a 10% gross working interest in the Palmetto Point wells described above from a third party for &#36;520,000 which was payable by a secured loan. The &#36;520,000 loan was valued at a Net Present Value
of &#36;501,922, which is the capitalized amount. We calculated the net present value of the secured loan payable by applying 8% interest rate, which was based on a T-bill rate of 4.28% plus a risk premium. </P>
<P align="justify">
On October 4, 2007, we elected to participate in the drilling of the PP F-12-3 well in Palmetto Point, Mississippi which was conducted by Griffin. This well was the second well drilled in the Belmont Lake oil field. We had a 30% gross working
interest and paid &#36;266,348. On July 31, 2008, we accrued and paid an additional cost of &#36;127,707 for the workovers of wells PP F-12 and PP F-12-3. PP F-12 has had intermittent production from October 2007, and PP F-12-3 has had intermittent
production from November 2007.</P>

<P align="center">
34</P>

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<P align="justify">
On April 3, 2009, we entered into an Asset Purchase Agreement with Delta Oil &amp; Gas, Inc., and The Stallion Group to acquire additional interests in its existing core producing Mississippi oil and gas properties. We paid &#36;40,073.39 to acquire
an additional two percent (2%) working interest in the proven Belmont Lake oil and gas field and an additional 10% working interest in potential nearby exploration wells.</P>
<P align="justify">
We had a short-lived opportunity to acquire additional fractional interests in the upcoming Belmont Lake 12-4 well which was expected to be a horizontal well. An unrelated third party did not participate in its right to participate in the 12-4 well,
and therefore a share of its interest (a &ldquo;non consent&rdquo; interest) was made available to the other participating parties including Lexaria. On August 28, 2009 and effective on September 1, 2009, we entered into four separate assignment
agreements, three of which were with people or companies with related management. We received from these four parties proceeds of &#36;371,608.57 to fund additional interests in this well. As a result, we have a 25.84% perpetual gross interest in
the well (18.0% net revenue interest); as well as a 5.2% net revenue interest in the non-consent interest. The non-consent interest remains valid until such time as the well produces 500% of all costs and expenses back to the participants in the
form of revenue, at which time the non-consent interest ends. Enertopia Corp., a company with related management, had acquired from Lexaria a 6.16% perpetual gross interest in the 12-4 well; David DeMartini, a director of Lexaria, had acquired from
Lexaria a 5% gross interest in the non-consent interest in the 12-4 well; and 0743608 BC Ltd. a company owned by the President of the Company, had acquired from Lexaria a 11.60% gross interest in the non-consent interest in the 12-4 well. </P>
<P align="justify">
On May 31, 2010, we signed a Settlement Agreement with Enertopia Corp., whereby we issued 499,893 units at &#36;0.12 per unit and each unit consists of one restricted common share and one share purchase warrant at &#36;0.20 per share for a period of
two years in exchange for the working interest initially assigned on August 28, 2009.</P>
<P align="justify">
On June 16, 2010, we signed a Settlement Agreement with a third party, who had originally participated in the August 28, 2009, opportunity in the non-consent interest for Belmont Lake 12-4. We returned back &#36;144,063.46 to the third party and
cancelled its participation. </P>
<P align="justify">
On July 29, 2010, we agreed with our Operators at Belmont Lake not to proceed to drill a horizontal 12-4 well. Rather, two of the three proposed vertical wells 12-2, 12-4, or 12-5 were proposed to be drilled in August 2010. To take best advantage of
this opportunity, we cancelled all previous agreements relating to August 28, 2009 with respect to Belmont Lake horizontal well 12-4 and entered into three separate assignment agreements, of which all three were with people or companies with related
management. We received total proceeds of &#36;324,677.12 to fund additional interests in these wells. As a result, the Company has a 32% perpetual gross interest in the wells (24.0% net revenue interest); as well as a 8% gross interest (6% net
revenue interest) in the non-consent interest. The non-consent interest remains valid until such time as the well produces 500% of all costs and expenses back to the participants in the form of revenue, at which time the non-consent interest ends.
Emerald Atlantic LLC, a company owned by a director of Lexaria, has acquired from Lexaria a 8.74% gross interest in the non-consent interest in two of the three vertical wells; and 0743608 BC Ltd. a company owned by our President, has acquired from
Lexaria a 20.79% gross interest in the non-consent interest in the two of the three vertical wells; one of our advisors acquired from Lexaria 2.46% gross interest in the non-consent interest in two of the three vertical wells. </P>
<P align="justify">
On September 13, 2010, we entered into three separate assignment agreements with 0743608 BC Limited, solely owned by our Director/Officer, Emerald Atlantic LLC, jointly owned by one of our directors and our Senior VP Business Development. (the
&ldquo;Assignees&rdquo;), whereby the Assignees have paid a fee of US&#36;408,116.48 to earn a 24% share of our gross non- perpetual 32% interest in the three oil wells being drilled in Wilkinson County, Mississippi. This agreement replaces the one
signed on August 28, 2009. As a result of the three assignment agreements, Lexaria receives at no cash cost to the company, a carried interest of 8% in these same rights and benefits. We assigned, transferred and set over to the Assignees, all proportionate rights, interest and benefits in the Assigned
Non Perpetual Interest held by or granted to the Assignor in and to the
Participation Agreement between us and Griffin but limited to a gross 500%
revenue payout based on the total amount paid under the Initial Consideration
and the Subsequent Consideration after which all rights, interests and benefits
cease.</P>

<P align="center">
35</P>

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<P align=justify>Total working interest for Belmont Lake as of October 31, 2011
is 42%, with the exception of a 50% interest in wells PP F-12-4 and PP F-12-5;
and total working interest in the exploration wells on approximately 140,000
acres surrounding Belmont Lake in all directions as of October 31, 2011, is 60%.</P>
<P align=justify>As of October 31, 2011, there were additional well interest
changes or workovers pending of wells PP F-12, PP F12-3, PP F12-4, PP F12-5 and
PP F-29 in the amount of $340,549. </P>
<P align=justify>As of October 31, 2011, the status of the Palmetto Point,
Mississippi wells is as follows:</P>
<DIV>
<TABLE
style="BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="100%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%" bgcolor="#D9D9D9"><B>Well Name</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left bgcolor="#D9D9D9"><B>Spud/Start</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left bgcolor="#D9D9D9"><B>Complete</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left bgcolor="#D9D9D9"><B>Results</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left bgcolor="#D9D9D9"><B>Depth</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left bgcolor="#D9D9D9"><B>Status</B> </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%">PP F-40 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>May
      11/06 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>May
      16/06 </TD>
    <TD width="16%" align=left>Frio Gas; 12 ft. </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>3850
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left>Shut-in </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%">PP F-118 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>May
      18/06 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>May
      22/06 </TD>
    <TD width="16%" align=left>Frio Gas; 14 ft. </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>3808
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left>Shut-in </TD></TR>
  <TR vAlign=top>
    <TD align=left width="16%">PP F-121 </TD>
    <TD width="16%" align=left>May 24/06 </TD>
    <TD width="16%" align=left>May 29/06 </TD>
    <TD width="16%" align=left>Dry </TD>
    <TD width="16%" align=left>3850 </TD>
    <TD width="16%" align=left>Plug &amp; abandon </TD></TR>
  <TR vAlign=top>
    <TD align=left width="16%">PP F-7 </TD>
    <TD width="16%" align=left>May 31/06 </TD>
    <TD width="16%" align=left>June 4/06 </TD>
    <TD width="16%" align=left>Dry </TD>
    <TD width="16%" align=left>3800 </TD>
    <TD width="16%" align=left>Plug &amp; abandon </TD></TR>
  <TR vAlign=top>
    <TD align=left width="16%">PP F-39 </TD>
    <TD width="16%" align=left>June 10/06 </TD>
    <TD width="16%" align=left>June 16/06 </TD>
    <TD width="16%" align=left>Frio Gas/Oil; 12 ft. </TD>
    <TD width="16%" align=left>3900 </TD>
    <TD width="16%" align=left>Shut-in </TD></TR>
  <TR vAlign=top>
    <TD align=left width="16%">PP F-42 </TD>
    <TD width="16%" align=left>June 18/06 </TD>
    <TD width="16%" align=left>June 21/06 </TD>
    <TD width="16%" align=left>Frio Gas/Oil; 10 ft. </TD>
    <TD width="16%" align=left>3170 </TD>
    <TD width="16%" align=left>Shut-in </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%">PP F-36-2 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>June
      23/06 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>July
      2/06 </TD>
    <TD width="16%" align=left>Frio Gas; 8 ft. </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>3450
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left>Shut-in </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%">PP F-4 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Oct
      31/06 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Nov.
      5/06 </TD>
    <TD width="16%" align=left>Frio Gas; 8 ft. </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>4200
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left>Shut-in </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%">PP F- 29 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Nov
      11/06 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Nov.
      14/06 </TD>
    <TD width="16%" align=left>Frio Gas; 37 ft. </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>4100
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left>Producing </TD></TR>
  <TR vAlign=top>
    <TD align=left width="16%">PP F-12-1 <BR></TD>
    <TD width="16%" align=left>Dec 18/06 <BR></TD>
    <TD width="16%" align=left>Dec. 24/06 <BR></TD>
    <TD width="16%" align=left>Frio Gas; 3 ft. <BR>Frio Oil, 26 ft. </TD>
    <TD width="16%" align=left>4016 <BR></TD>
    <TD width="16%" align=left>Producing <BR></TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%">PP F-6B </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>July
      27/06 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Frio
      Gas </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left>Shut-in </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%">PP F-52A </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>July
      27/06 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Frio
      Gas </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left>Shut-in </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%">PP F-12-3 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Oct/07
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Oct/07
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Frio
      Oil </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>3150
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left>Producing </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%">PP F-12-4 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Aug/10
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Oct/10
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Frio
      Oil </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>3150
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left>Producing </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="16%">PP F-12-5 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Sep
      12/10 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Nov
      23/10 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>Frio
      Oil </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%" align=left>3150
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="16%"
      align=left>Producing </TD></TR></TABLE></DIV>
<P align=center><B>Mississippi and Louisiana: Frio-Wilcox Project</B></P>
<P align=justify>On August 3, 2006, we entered into a Phase II agreement with
Griffin, to acquire a working interest in multiple zones of potential oil and
gas production in Mississippi and Louisiana. This agreement contemplates a drill
program of up to a 50 wells, which are exclusive to the participants, for Wilcox
and Frio wells, at the Company&#146;s option, within the defined area of mutual
interest (&#147;AMI&#148;). From these 50 prospects, Griffin and the participants will
select all drill locations with the expectation that the wells will be drilled
to depths sufficient to test prospectively for producible hydrocarbons from the
top of the Frio Formation to the bottom of the Wilcox Formation.</P>
<P align=justify>These 50 wells are in addition to all wells drilled under the
original 10-well agreement and also in addition to any development wells to be
drilled at the Belmont Lake oil field discovery. The AMI originally included
over 200,000 gross acres located non-contiguously between Southwest Mississippi
and North East Louisiana which include the approximately 32,000 acres of the
Palmetto Point area but also include other areas. </P>
<p align="center">36</p>
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<A name="page_42"></A>

<P align="justify">
We had contracted to assume a 40% gross interest in this AMI, meaning we were obligated to pay 40% of costs related to licensing, permitting, drilling, completion and all other related costs. Upon payment of 40% of the costs, we earned a net 32% of
all production from all producible zones to the base of the Frio formation (Frio Targets); and, 30% of all production to the base of the Wilcox formation (Wilcox Targets). All working interests are to be registered our name. This 50-well AMI was
intended to be drilled in several stages.</P>
<P align="justify">
Our pro rata share of the first stage had a total cost &#36;1.6 million and we completely funded this initial commitment. During the drill program, an unrelated third party participant elected not to continue their participation in the program, and
we assumed our pro-rata portion of their 10% gross working interest as our own, at no additional cost, bringing our total gross working interest in the seven (7) wells and their leases (Initial AMI Drilling Program), to 45%.</P>
<P align="justify">
On June 21, 2007, we acquired an additional 10% from a third party for all rights, title and benefits <I>excluding </I>the seven wells drilled under the AMI Agreement between August 3, 2006 and June 19, 2007, specifically wells CMR-USA-39-14, Dixon
#1, Faust #1 TEC F-1, CMR/BR F-14, RB F-1 Red Bug #2, BR F-33, and Randall #1 F-4, and any offset wells that could be drilled to any of these specified wells (Subsequent AMI Drilling Program). This brought our interest in the remaining 43 wells to
50% and we drilled 5 wells under this arrangement. </P>
<P align="justify">
On April 3, 2009, we acquired an additional 10% working interest in the 38 exploration wells remaining to be drilled, bringing its total gross working interest to 60% in the 38 wells that remain to be drilled of this original 50-well option in over
140,000 acres surrounding Belmont Lake in all directions.</P>
<P align="justify">
On December 16, 2010, we entered into an assignment agreement with Emerald Atlantic LLC, a company solely owned by a director of our company, whereby Emerald Atlantic has paid a fee of &#36;30,076 to earn 18% of a 4.423% share of our company&rsquo;s
net revenue interest after field operating expenses for a well to be drilled in Wilkinson County.</P>
<P align="justify">
<I>Initial AMI Drilling Program</I></P>
<P align="justify">
WE successfully drilled and completed seven (7) wells under this drilling program. Certain wells were placed into production.</P>
<P align="justify">
Details of the drill program are outlined below:</P>
<P align="justify">
In December 2006, the first well CMR-US 39-14 was found to have sufficient hydrocarbons to become economic. USA 1-37 and BR F-33 had started intermittent production from November 2007. </P>
<P align="justify">
As at January 31, 2007, we abandoned the Dixon #1 due to no economic hydrocarbons being present and &#36;162,420 of drilling costs was added to the capitalized costs. The Dixon #1is the only Wilcox well we have drilled to date. Every other well we
have participated in located in Mississippi and Louisiana is a Frio well. Slightly deeper than the Frio targets, but also of the Cenozoic era, the Wilcox geologic formation is of the Eocene series, generally found at depths of less than 8,000 feet.
</P>
<P align="justify">
On June 2, 2007, we abandoned the Randall #1 and &#36;107,672 drilling costs were added to the capitalized costs in determination of depletion expense. </P>
<P align="justify">
During August to October 2007, three additional wells, PP F-90, PP F-100, and PP F-111 were drilled in the area. These Frio wells were abandoned due to modest gas shows and a total of &#36;306,562 drilling costs was added to the capitalized costs in
determination of depletion expense. </P>

<P align="center">
37</P>

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<P align=justify>During December 2007, two additional wells, PP F-6A and PP
F-83, were drilled and were plugged and abandoned due to non-economic gas shows.
A total of $247,086 drilling costs were added to the capitalized costs in
determination of depletion expense.</P>
<P align=justify>The results of the initial drill program are as follows: </P>
<DIV>
<TABLE
style="BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="100%">

  <TR vAlign=top>
    <TD align=left bgcolor="#D9D9D9"><B>Well Name</B> </TD>
    <TD width="16%" align=left bgcolor="#D9D9D9"><B>Spud/Start</B> </TD>
    <TD width="16%" align=left bgcolor="#D9D9D9"><B>Complete</B> </TD>
    <TD width="16%" align=left bgcolor="#D9D9D9"><B>Results</B> </TD>
    <TD width="16%" align=left bgcolor="#D9D9D9"><B>Depth</B> </TD>
    <TD width="16%" align=left bgcolor="#D9D9D9"><B>Status</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left>CMR-USA-39- 14 <BR>RB F-3 </TD>
    <TD width="16%" align=left>Sept. 8/06 <BR></TD>
    <TD width="16%" align=left>Sept. 12/06 <BR></TD>
    <TD width="16%" align=left>Frio Gas 14 ft. <BR></TD>
    <TD width="16%" align=left>3,200 <BR></TD>
    <TD width="16%" align=left>Shut-in <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Dixon #1 </TD>
    <TD width="16%" align=left>Jan. 03/07 </TD>
    <TD width="16%" align=left>Jan. 20/07 </TD>
    <TD width="16%" align=left>Wilcox Target; Dry </TD>
    <TD width="16%" align=left>8,650 </TD>
    <TD width="16%" align=left>Plug &amp; abandon </TD></TR>
  <TR vAlign=top>
    <TD align=left>Faust #1, <BR>TEC F-1 </TD>
    <TD width="16%" align=left>Feb. 05/07 <BR></TD>
    <TD width="16%" align=left>Feb. 11/07 <BR></TD>
    <TD width="16%" align=left>Frio Gas 9 ft <BR></TD>
    <TD width="16%" align=left>5,350 <BR></TD>
    <TD width="16%" align=left>Shut-in <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>CMR/BR F-24 </TD>
    <TD width="16%" align=left>Feb. 20/07 </TD>
    <TD width="16%" align=left>Feb. 24/07 </TD>
    <TD width="16%" align=left>Frio Gas </TD>
    <TD width="16%" align=left>3,250 </TD>
    <TD width="16%" align=left>Shut-in </TD></TR>
  <TR vAlign=top>
    <TD align=left>RB F-1 <BR>Red Bug #2 </TD>
    <TD width="16%" align=left>May 08/07 <BR></TD>
    <TD width="16%" align=left>May 13/07 <BR></TD>
    <TD width="16%" align=left>Frio Gas 10 ft <BR></TD>
    <TD width="16%" align=left>3,180 <BR></TD>
    <TD width="16%" align=left>Shut-in <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>BR F-33 </TD>
    <TD width="16%" align=left>May 20/07 </TD>
    <TD width="16%" align=left>May 24/07 </TD>
    <TD width="16%" align=left><U>Frio Gas</U> <U>12 ft</U> </TD>
    <TD width="16%" align=left>3,837 </TD>
    <TD width="16%" align=left>Shut-in </TD></TR>
  <TR vAlign=top>
    <TD align=left>Randall #1 <BR>Closure F-4 </TD>
    <TD width="16%" align=left>May 27/07 <BR></TD>
    <TD width="16%" align=left>June 03/07 <BR></TD>
    <TD width="16%" align=left>Frio Target: Dry <BR></TD>
    <TD width="16%" align=left>5,100 <BR></TD>
    <TD width="16%" align=left>Plug &amp; <BR>abandon
</TD></TR></TABLE></DIV>
<P align=justify><I>Subsequent AMI Drilling Program</I></P>
<P align=justify>As of April 30, 2008, five additional wells were drilled under
the 50-well AMI. Each of these wells encountered non commercial quantities of
hydrocarbons and were plugged and abandoned.</P>
<P align=justify><B>Production and Prices</B></P>
<P align=justify>The following table sets forth information regarding net
production of oil and natural gas, and certain price and cost information for
fiscal years ended October 31, 2011, 2010 and 2009. </P>
<DIV>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="100%">

  <TR vAlign=top>
    <TD align=left><BR><BR></TD>
    <TD width="25%" align=center><B>For the fiscal year</B> <BR><B>ended</B>
      <BR><B>October 31, 2011</B> </TD>
    <TD width="25%" align=center><B>For the fiscal year</B> <BR><B>ended</B>
      <BR><B>October 31, 2010</B> </TD>
    <TD width="25%" align=center><B>For the fiscal year</B> <BR><B>ended</B>
      <BR><B>October 31, 2009</B> </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Production
      Data:</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%" align=left>&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%" align=left>&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%" align=left>&nbsp;
    </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
      align=left>Natural gas (Mcf) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=center>0 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=center>360 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=center>13,138 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Oil (Bbls) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%"
      align=center>11,506 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%"
      align=center>4,641 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%"
      align=center>7,461 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
      align=left><B>Average Prices:</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=left>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Natural gas (per
      Mcf) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%"
      align=center>$4.20 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%"
      align=center>$4.50 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%"
      align=center>$3.77 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
      align=left>Oil (per Bbl) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=center>$108.74 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=center>$81.47 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=center>$50.00 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Production
      Costs:</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%" align=left>&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%" align=left>&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%" align=left>&nbsp;
    </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
      align=left>Natural gas (per Mcf) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=center>$Nil </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=center>$15.72 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="25%"
    align=center>$9.43 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Oil (per Bbl) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%"
      align=center>$17.21 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%"
      align=center>$17.43 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="25%"
      align=center>$11.00 </TD></TR></TABLE></DIV>
<P align=justify><B>Productive Wells</B></P>
<P align=justify>The following table summarizes information at October 31, 2011,
relating to the productive wells in which we owned a working interest as of that
date. Productive wells consist of producing wells and wells capable of
production, but specifically exclude wells drilled and cased during the fiscal
year that have yet to be tested for completion (e.g., all of the operated wells
drilled by the Company during this year have been cased in preparation for
completion, but no operations have been initiated that would allow these wells to be productive). Gross wells are the total number of
producing wells in which we have an interest, and net wells are the sum of our
fractional working interests in the gross wells. </P>
<P align=center>38</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_44></A>
<DIV>
  <TABLE
style="BORDER-COLLAPSE: collapse; FONT-SIZE: 8pt; border-left-color:black; border-left-width:0; border-right-color:black; border-right-width:0; border-top-color:black; border-top-width:0; border-bottom-color:black"
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="100%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" width="33%" colSpan=3
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" width="33%" colSpan=3
    align=center>&nbsp;</TD></TR>

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-color:#000000; border-left-width:1" align=left>
    <font size="2">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" colSpan=3
    align=center><B>Gross</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-color:#000000; border-right-width:1" width="33%" colSpan=3
    align=center><B>Net</B> </font> </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-color:#000000; border-left-width:1" align=left><B>
    <font size="2">Location</font></B><font size="2">
</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Oil</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Gas</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Total</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Oil</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Gas</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-color:#000000; border-right-width:1" width="11%"
      align=center><B>Total</B> </font> </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-color:#000000; border-left-width:1" bgColor=#e6efff
      align=left><font size="2">Mississippi </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>4 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>5 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>9 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>0.27 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>0.27 </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-color:#000000; border-right-width:1" bgColor=#e6efff width="11%"
    align=right>0.54 </font> </TD></TR>
  <TR>
    <TD style="border-left-color: #000000; border-left-width: 1"><font size="2">&nbsp; </TD>
    <TD width="11%" align=right>&nbsp; </TD>
    <TD width="11%" align=right>&nbsp; </TD>
    <TD width="11%" align=right>&nbsp; </TD>
    <TD width="11%" align=right>&nbsp; </TD>
    <TD width="11%" align=right>&nbsp; </TD>
    <TD width="11%" align=right style="border-right-color: #000000; border-right-width: 1">&nbsp;
    </font> </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-color:#000000; border-left-width:1" bgColor=#e6efff
      align=left><font size="2">Total </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>4 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>5 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>9 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>0.27 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>0.27 </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-color:#000000; border-right-width:1" bgColor=#e6efff width="11%"
    align=right>0.54 </font> </TD></TR></TABLE></DIV>
<P align=justify><B>Unaudited Oil and Gas Reserve Quantities</B></P>
<P align=justify>The unaudited reserve estimates for Mississippi, as of October
31, 2011, were prepared by Veazey &amp; Associates, an independent petroleum
engineering firm. </P>
<P align=justify>The estimated proved reserves prepared by Veazey and Associates
are summarized in the table below, in accordance with definitions and pricing
requirements as prescribed by the Securities and Exchange Commission (the
&#147;SEC&#148;). Prices paid for oil and natural gas vary widely depending upon the
quality such as the Btu content of the natural gas, gravity of the oil, sulfur
content and location of the production related to the refinery or pipelines.
</P>
<P align=justify>There are many uncertainties inherent in estimating proved
reserve quantities and in projecting future production rates and the timing of
development expenditures. In addition, reserve estimates of new discoveries that
have little production history are more imprecise than those of properties with
more production history. Accordingly, these estimates are expected to change as
future information becomes available. </P>
<P align=justify>Proved oil and gas reserves are the estimated quantities of
crude oil and natural gas which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions. </P>
<P align=justify>Proved developed oil and gas reserves are those reserves
expected to be recovered through existing wells with existing equipment and
operating methods. </P>
<P align=justify>Unaudited net quantities of proved developed and undeveloped
reserves of crude oil and natural gas (all located within United States) are as
follows: </P>
<P align=justify>The standardized measure of discounted future net cash flows
relating to proved natural gas and oil reserves is as follows:</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 2px solid"
    width="15%" align=center>USD$ </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Future cash inflows </TD>
    <TD bgColor=#e6efff width="15%" align=right>16,940,866 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Future production costs </TD>
    <TD width="15%" align=right>(4,409,690) </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Future development costs </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="15%"
    align=right>(1,070,698) </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Future net cash flows - undiscounted </TD>
    <TD width="15%" align=right>11,460,478 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>10% annual discount for estimated timing of
      cash flows </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="15%"
    align=right>(3,388,906) </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Standardized measure of discounted future net cash flows
</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" width="15%"
      align=right>8,071,572 </TD></TR></TABLE>
<P align=justify>Year-end price per Mcf of natural gas used in making
standardized measure determinations as of October 31, 2011 was $4.20. Year-end
price per Bbl of oil used in making these same calculations was $108.74.</P>
<P align=center>39</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_45></A>
<P align=justify><I>Estimated Net quantities of Natural Gas and Oil
Reserves:</I></P>
<P align=justify>The following table sets forth our proved reserves, including
changes, and proved developed reserves at the end of October 31, 2011.</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 2px solid" width="13%" align=left>&nbsp;
</TD>
    <TD style="BORDER-TOP: #000000 2px solid" width="13%"
      align=center><B>Natural</B> </TD>
    <TD style="BORDER-TOP: #000000 2px solid" width="13%"
      align=center><B>Crude Oil</B> </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD width="13%" align=center><B>Crude Oil</B> </TD>
    <TD width="13%" align=center><B>Gas</B> </TD>
    <TD width="13%" align=right><B>Equivalents</B> </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD width="13%" align=center><B>(MBbls)</B> </TD>
    <TD width="13%" align=center><B>(MMcf)</B> </TD>
    <TD width="13%" align=center><B>(MBbls)</B> </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left><B>Proved reserves:</B> </TD>
    <TD bgColor=#e6efff width="13%" align=right>&nbsp; </TD>
    <TD bgColor=#e6efff width="13%" align=right>&nbsp; </TD>
    <TD bgColor=#e6efff width="13%" align=right>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Beginning of the year reserve </TD>
    <TD width="13%" align=right>125.64 </TD>
    <TD width="13%" align=right>- </TD>
    <TD width="13%" align=right>125.64 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Adjustments of reserves in place </TD>
    <TD bgColor=#e6efff width="13%" align=right>41.65 </TD>
    <TD bgColor=#e6efff width="13%" align=right>3.22 </TD>
    <TD bgColor=#e6efff width="13%" align=right>42.19 </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Productions </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%"
      align=right>(11.54) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%"
      align=right>(3.22) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%"
      align=right>(12.04) </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>End of year reserves </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" bgColor=#e6efff width="13%"
    align=right>155.79 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" bgColor=#e6efff width="13%"
    align=right>- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" bgColor=#e6efff width="13%"
    align=right>155.79 </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="13%" align=right>&nbsp; </TD>
    <TD width="13%" align=right>&nbsp; </TD>
    <TD width="13%" align=right>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left><B>Proved developed reserves:</B> </TD>
    <TD bgColor=#e6efff width="13%" align=right>&nbsp; </TD>
    <TD bgColor=#e6efff width="13%" align=right>&nbsp; </TD>
    <TD bgColor=#e6efff width="13%" align=right>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Beginning of the year reserve </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right>57.33
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right>57.33
    </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>End of year reserves </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" bgColor=#e6efff width="13%"
    align=right>68.07 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" bgColor=#e6efff width="13%"
    align=right>- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" bgColor=#e6efff width="13%"
    align=right>68.07 </TD></TR></TABLE>
<P align=justify><B>Oil and Gas Acreage</B></P>
<P align=justify>The following table sets forth the undeveloped and developed
acreage, by area, held by us as of October 31, 2011. Undeveloped acres are acres
on which wells have not been drilled or completed to a point that would permit
the production of commercial quantities of oil and gas, regardless of whether or
not such acreage contains proved reserves. Developed acres are acres, which are
spaced or assignable to productive wells. Gross acres are the total number of
acres in which we have a working interest. Net acreage is obtained by
multiplying gross acreage by our working interest percentage in the properties.
The table does not include acreage in which we have a contractual right to
acquire or to earn through drilling projects, or any other acreage for which we
have not yet received leasehold assignments.</P>
<DIV align=center>
<TABLE
style="BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="90%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="26%" colSpan=2
    align=center>Undeveloped Acres </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="26%" colSpan=2
    align=center>Developed Acres </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%"
    align=center>Gross</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%"
    align=center>Net</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%"
    align=center>Gross</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%"
    align=center>Net</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="13%">&nbsp; </TD>
    <TD width="13%">&nbsp; </TD>
    <TD width="13%">&nbsp; </TD>
    <TD width="13%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
      align=left>Mississippi </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="13%"
    align=right>220 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="13%"
    align=right>132 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="13%"
    align=right>1,160 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="13%"
    align=right>316.72 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Total </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right>220
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right>132
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%" align=right>1,160
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="13%"
      align=right>316.72 </TD></TR></TABLE></DIV>
<P align=justify><B>Drilling Activity</B></P>
<P align=justify>The following table sets forth our drilling activity during the
years ended October 31, 2011, 2010 and 2009.</P>
<DIV align=center>
<TABLE
style="BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="90%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>2011</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>2010</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>2009</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Gross</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Net</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Gross</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Net</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Gross</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center><B>Net</B> </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><U>Exploratory wells:</U> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;
      &nbsp;Productive </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
      align=left>&nbsp; &nbsp;Dry </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>1 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>2 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>.72 </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><U>Development wells:</U> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;
      &nbsp;Productive </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=center>2
</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=center>1.28
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=center>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
      align=left>&nbsp; &nbsp;Dry </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>1 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>.64 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD>
    <TD width="11%" align=center>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
      align=center>Total wells </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>3 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>1.92 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>2 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=center>.72 </TD></TR></TABLE></DIV><BR>
<p align="center">40</p>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_46></A>
<P align=center><B>Legal Proceedings</B></P>
<P align=justify>Other than as set out below, we know of no material, existing
or pending legal proceedings against us, nor are we involved as a plaintiff in
any material proceeding or pending litigation. There are no proceedings in which
any of our directors, officers or affiliates, or any registered or beneficial
shareholder, is an adverse party or has a material interest adverse to our
company.</P>
<P align=justify>On October 20, 2011 we were served with an amended complaint
filed on behalf of John M. Deakle in the Circuit Court of Hinds County,
Mississippi. The complaint includes our company as one of the defendants and
alleges breach of contract as well as mismanagement of the drilling activity and
improper billing by Griffin and Griffin, the operator on our company&#146;s Belmont
Lake oil and gas properties. Deakle specifically alleges that we pressured
Griffin and Griffin to undertake the drilling of unnecessary wells for their own
benefit. The complaint requests injunctions to enjoin the operator from drilling
additional wells on the Belmont Lake property, declaratory judgments stating,
apart from other things, that Deakle&#146;s rights under the joint operating
agreement were breached, and punitive damages.</P>
<P align=justify>Our company believes that this is a frivolous suit, devoid of
any merit as it relates to our company&#146;s activities, and will defend our
position aggressively. Additionally, our company is considering filing a
countersuit against Deakle for damages caused by Deakle&#146;s refusal to comply with
the terms of the joint operating agreement, the unwarranted interruption of
drilling activity on the property as a result of Deakle&#146;s action, as well as
costs associated with defending the lawsuit. </P>
<P align=justify>A verbal settlement was reached on November 10, 2011 at a court
hearing. A settlement has sinced been reached with no material effect upon our
company.</P>
<P align=center><B>Market for Common Equity and Related Stockholder
Matters</B></P>
<P align=justify><B>Market Information</B></P>
<P align=justify>Our Common stock is quoted on the OTCQB under the Symbol
"LXRP". Our common shares are also quoted on the Canadian National Stock
Exchange (CNSX) under the symbol &#147;LXX&#148;. The following quotations, obtained from
Yahoo Finance, reflect the high and low bids for our common shares as quoted on
the OTCQB based on inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.</P>
<P align=justify>The high and low bid prices of our common stock for the periods
indicated below are as follows:</P>
<DIV align=center>
<TABLE
style="BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="60%" height="418">

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1px solid" colSpan=3
      align=center height="13" bgcolor="#D9D9D9">&nbsp;&nbsp;&nbsp;<B>OTCQB</B>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14" bgcolor="#D9D9D9"><B>Quarter
      Ended</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14" bgcolor="#D9D9D9"><B>High</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14" bgcolor="#D9D9D9"><B>Low</B> </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">April
    30, 2012</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.30</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.14</TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">January 31, 2012    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.30 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.20 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">October 31, 2011    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.35 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.26 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">&nbsp;
      &nbsp;April 30, 2011 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.40 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.15 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">January 31, 2011    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.35 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.16 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">October 31, 2010    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.29 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.12 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">&nbsp;
      &nbsp;July 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.20 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.12 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">&nbsp;
      &nbsp;April 30, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.13 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.12 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">January 31, 2010    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.16 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.10 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">October 31, 2009    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.16 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.14 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">&nbsp;
      &nbsp;July 31, 2009 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.16 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.16 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">&nbsp;
      &nbsp;April 30, 2009 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.16 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center height="14">$0.16 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">January 31, 2009 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center height="14">$0.32 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center height="14">$0.32 </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">October 31, 2008 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center height="14">$1.60 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center height="14">$0.40 </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">July 31, 2008 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center height="14">$3.00 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center height="14">$0.80 </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">April 30, 2008 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center height="14">$3.92 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center height="14">$1.28 </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center height="14">January 31, 2008 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center height="14">$4.92 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center height="14">$2.80 </TD>
  </TR>
</TABLE>
</DIV><BR>
<p align="center">41</p>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=-->
<P align=justify>On June 19, 2012, the last closing price for one share of
our common stock as reported by the OTCQB was $0.105. This closing price reflects
an inter-dealer price, without retail mark-up, mark-down or commission, and may
not represent an actual transaction.</P>
<P align=justify>As of June 22, 2012, there were 32 holders of record of our
common stock. As of such date, As of June 22, 2012 we had 16,431,452 shares of
our common stock, options to acquire 1,740,000 shares of our common stock and
warrants to acquire 2,542,857 shares of our common issued and outstanding.</P>
<P align=justify>Our common shares are issued in registered form. Olympia Trust
Company of 1003, 750 West Pender Street, Vancouver, BC, V6C 2T8 (Telephone
604.484.2702; Facsimile: 604.484.8638) is our transfer agent for our common
shares.</P>
<P align=justify><B><I>Sales under Rule 144 by Affiliates</I></B></P>
<P align=justify>Persons who have beneficially owned restricted shares of our
common stock for at least six months but who are our affiliates at the time of,
or at any time during the three months preceding, a sale, would be subject to
additional restrictions, by which such person would be entitled to sell within
any three-month period only a number of securities that does not exceed the
greater of either of the following:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-bottom: 12">1% of the number of shares of common stock then outstanding; and
  <LI>
  <p style="margin-bottom: 12">the average weekly trading volume of the common stock during the four
  calendar weeks preceding the filing of a notice on Form 144 with respect to
  the sale.
  <LI>
  <p style="margin-bottom: 12">Sales under Rule 144 by our affiliates are also limited by manner of sale
  provisions and notice requirements and to the availability of current public
  information about us. </LI></UL>
<P align=justify><B><I>Sales Under Rule 144 by Non-Affiliates</I></B></P>
<P align=justify>Under Rule 144, subject to the special provisions for a &#147;shell
company&#148;, a person who is not deemed to have been one of our affiliates at the
time of or at any time during the three months preceding a sale, and who has
beneficially owned the restricted ordinary shares proposed to be sold for at
least six (6) months, including the holding period of any prior owner other than
an affiliate, is entitled to sell their shares of common stock without complying
with the manner of sale and volume limitation or notice provisions of Rule 144.
We must be current in our public reporting if the non-affiliate is seeking to
sell under Rule 144 after holding his, her, or its shares of common stock
between 6 months and one year. After one year, non-affiliates do not have to
comply with any other Rule 144 requirements.</P>
<P align=justify><B>Dividends</B></P>
<P align=justify>To date, we have not paid dividends on shares of our common
stock and we do not expect to declare or pay dividends on shares of our common
stock in the foreseeable future. The payment of any dividends will depend upon
our future earnings, if any, our financial condition, and other factors deemed
relevant by our Board of Directors. </P>
<P align=center>42</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_48></A>
<P align=justify><B>Equity Compensation Plans</B></P>
<P align=justify><B>2007 Equity Plan</B></P>
<P align=justify>The 2007 Equity Incentive Stock Option Plan was approved by our
shareholders on April 25, 2007 and filed Form S-8 on May 7, 2009.</P>
<P align=justify>Discretionary Options granted to the Key Participants
hereunder, the Board, on the recommendation of the Committee, may at any time
authorize the granting of Options to such Eligible Employees and Eligible
Directors as it may select for the number of Shares that it shall designate,
subject to the provisions of the Plan. When the grant is authorized, the Board,
on the recommendation of the Committee, shall specify the date of grant. </P>
<P align=justify>Each Option granted to an Eligible Employee or to an Eligible
Director shall be evidenced by an option agreement with terms and conditions
consistent with the Plan and as approved by the Board on the recommendation of
the Committee, which terms and conditions need not be the same in each case and
may be changed from time to time. </P>
<P align=justify>Discretionary Options to be vested immediately pursuant to
grant hereunder, the Option Period for the Options remaining under the Plan
shall be four years from the date of grant thereof or such greater or lesser
duration as the Board, on the recommendation of the Committee, may determine at
the date of grant thereof, and may thereafter be reduced with respect to any
Option as provided in Section 2.8 hereof covering termination of employment or
death of the Optionee. </P>
<P align=justify>In addition, unless otherwise determined from time to time by
the Board, on the recommendation of the Committee, the Options remaining under
the Plan may be exercised (in each case to the nearest full Share) during the
Option Period as follows: </P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%" align=center>(a) </TD>
    <TD>
      <P align=justify>at any time during the first year of the Option Period,
      the Optionee may purchase up to 25% of the total number of Shares reserved
      for issuance pursuant to his or her Option; and</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>(b) </TD>
    <TD>
      <P align=justify>at any time during each additional year of the Option
      period the Optionee may purchase an additional 25% of the total number of
      Shares reserved for issuance pursuant to his or her Option plus any Shares
      not purchased in accordance with the preceding subsection (a) until, in
      the fourth year of the Option Period, 100% of the Option will be
      exercisable.</P></TD></TR></TABLE>
<P align=justify>Except as set forth in Section 2.8 hereof, no Option may be
exercised unless the Optionee is at the time of such exercise: </P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%" align=center>(a) </TD>
    <TD>
      <P align=justify>in the case of an Eligible Employee, in the employ of the
      Company or an Affiliate and shall have been continuously so employed since
      the grant of his Option, but absence on leave, having the approval of the
      Company or such Affiliate, shall not be considered an interruption of
      employment for any purpose of the Plan; or</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>(b) </TD>
    <TD>
      <P align=justify>in the case of an Eligible Director, a director of the
      Company or an Affiliate and shall have been such a director continuously
      since the grant of his Option.</P></TD></TR></TABLE>
<P align=justify>Subject to Section 2.6 hereof, the exercise of any Option will
be contingent upon the Optionee having entered into an option agreement with us
on such terms and conditions as have been approved by the Board, on the
recommendation of the Committee, and which incorporates by reference the terms
of the Plan. The exercise of any Option will also be contingent upon receipt by
us of cash payment of the full purchase price of the Shares being purchased. No
Optionee or his legal representatives or legatees will be, or will be deemed to
be, a holder of any Shares subject to an Option, unless and until certificates
for such Shares are issued to him or them under the terms of the Plan. </P>
<P align=center>43</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_49></A>
<P align=justify>On July 23, 2009 we effected a 1 for 4 share consolidation. The
2,000,000 maximum granting of stock options has now been reduced to 500,000
stock options.</P>
<P align=justify>As of October 31, 2011, there are no options outstanding under
the 2007 Plan. </P>
<P align=justify><B>2010 Equity Compensation Plan</B></P>
<P align=justify>On February 26, 2010, our shareholders approved and adopted our
2010 equity incentive plan (the &#147;2010 Plan&#148;) and filed form S-8 on July 7, 2011.
The purpose of the 2010 Plan is to enhance the our long-term stockholder value
by offering opportunities to our directors, officers, employees and eligible
consultants (&#147;Participants&#148;) to acquire and maintain stock ownership in our
company in order to give these persons the opportunity to participate in our
growth and success, and to encourage them to remain in our service.</P>
<P align=justify>The 2010 Plan is required to be administered by our Board of
Directors or a committee appointed by, and consisting of two or more members of
our Board of Directors (the &#147;Plan Administrator&#148;). The Plan Administrator has
the exclusive authority, in its discretion, to determine all matters relating to
any option granted (&#147;Awards&#148;) under the 2010 Plan including: (i) the selection
of individuals to be granted Awards; (ii) the type of Awards; (iii) the number
of shares of Common Stock subject to an Award; (iv) all terms, conditions,
restrictions and limitations, if any, of an Award; and (v) the terms of any
instrument that evidences the Award.</P>
<P align=justify>The Plan Administrator also has exclusive authority to
interpret the 2010 Plan and the terms of any instrument evidencing the Award and
may from time to time adopt and change rules and regulations of general
application for the 2010 Plan&#146;s administration. The Plan Administrator&#146;s
interpretation of the 2010 Plan and its rules and regulations is conclusive and
binding on all parties involved or affected.</P>
<P align=justify>Options that are eligible for grant under the 2010 Plan to
Participants include: (a) incentive stock options, whereby we will grant options
to purchase shares of our common stock to Participants with the intention that
the options qualify as "incentive stock options" as that term is defined in
Section 422 of the Internal Revenue Code; (b) non-incentive stock options,
whereby we will grant options to purchase shares of our common stock to
Participants that do not qualify as "incentive stock options" under the Internal
Revenue Code; (c) stock appreciation rights; and (d) restricted shares. The 2010
Plan provides that a maximum of Two Million (2,000,000) shares of common stock
are available for granting of awards under the 2010 Plan.</P>
<P align=justify>The Plan Administrator has the authority in its sole discretion
to grant Awards to participants as incentive stock options or as non-qualified
stock options, as appropriate. Unless an earlier termination date is set by the
Plan Administrator, Awards under the 2010 Plan will terminate at the earliest of
the following:</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%" align=center>(a) </TD>
    <TD>
      <P align=justify>Ten (10) years after the Award is granted;</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>(b) </TD>
    <TD>
      <P align=justify>The date the stock option expires in accordance with its
      terms;</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>(c) </TD>
    <TD>
      <P align=justify>Ninety (90) days after the Participant&#146;s employment
      terminates (or ceases to provide services to the Company if the grantee is
      a non-employee director or a consultant) (the &#147;Employment Termination
      Date&#148;), if the Participant&#146;s Employment Termination Date occurs by reason
      of retirement, resignation or for any other reasons other than for cause,
      disability or death;</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>(d) </TD>
    <TD>
      <P align=justify>Twelve (12) months after the Employment Termination Date,
      if the termination or cessation of services is a result of death or
      disability; and</P></TD></TR>
  <TR>
    <TD width="5%" align=center>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%" align=center>(e) </TD>
    <TD>
      <P align=justify>Five (5) years after the Incentive Stock Option is
      granted for holders of 10% or more of the Company&#146;s common
  stock.</P></TD></TR></TABLE><BR>
<p align="center">44</p>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_50></A>
<P align=justify>To the extent that the right to purchase shares under an Award
has vested, in order to exercise the Award the participant must execute and
deliver to the Company a written stock option exercise agreement or notice in a
form and in accordance with procedures established by the Plan Administrator. In
addition, the full exercise price of the Option Award must be delivered to the
Company and must be paid in a form acceptable to the Plan Administrator. </P>
<P align=justify>The exact terms of the option granted are contained in an
option agreement between us and the person to whom such option is granted.
Eligible employees are not required to pay anything to receive options. The
exercise price for incentive stock options must be no less than: 100% of the
fair market value of the common stock on the date of grant for Participants that
hold less than 10% of the Company&#146;s outstanding common stock; and 110% of the
fair market value of the common stock on the date of grant for Participants that
hold 10% or more of the Company&#146;s outstanding common stock. The exercise price
for nonqualified stock options is determined by the Plan Administrator in its
sole and complete discretion. An option holder may exercise options from time to
time, subject to vesting. Options will vest immediately upon death or disability
of a participant and upon certain change of control events. </P>
<P align=justify>Options will become exercisable by the participants in such
amounts and at such times as shall be determined by the Plan Administrator in
each individual grant. Options are not transferable except by will or by the
laws of descent and distribution. Options granted under the 2010 Plan will
become exercisable in the manner at the times and in the amounts determined by
the Plan Administrator. Participants may exercise options by delivery to the
Company of a written stock option exercise agreement or notice, in a form and in
accordance with procedures established by the Plan Administrator, setting forth
the number of shares purchased under such exercise agreement, accompanied by
payment in full in the form of a check or bank draft or other method of payment
or some combination thereof as may be acceptable to the Plan Administrator. All
incentive stock options granted under the 2010 Plan must comply with Section 422
of the Code.</P>
<P align=justify>As of October 31, 2011, there were 1,700,000 options
outstanding under the 2010 Plan.</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="100%">

  <TR vAlign=bottom>
    <TD colSpan=4 align=center>&nbsp;<B>Equity Compensation Plan
      Information</B>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=center><BR><BR><BR><BR><BR><BR><BR><B>Plan category</B> </TD>
    <TD width="25%" align=center><BR><BR><BR><B>Number of securities</B>
      <BR><B>to be issued upon</B> <BR><B>exercise of</B> <BR><B>outstanding
      options,</B> <BR><B>warrants and rights</B> </TD>
    <TD width="25%" align=center><BR><BR><BR><BR><B>Weighted-average</B>
      <BR><B>exercise price of</B> <BR><B>outstanding options,</B>
      <BR><B>warrants and rights</B> </TD>
    <TD width="25%" align=center><B>Number of securities</B> <BR><B>remaining
      available</B> <BR><B>for future issuance</B> <BR><B>under equity</B>
      <BR><B>compensation plans</B> <BR><B>(excluding securities</B>
      <BR><B>reflected in column</B> <BR><B>(a))</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Equity compensation <BR>plans approved by <BR>security
      holders </TD>
    <TD width="25%" align=right bgcolor="#E6EFFF"><BR>Nil <BR></TD>
    <TD width="25%" align=right bgcolor="#E6EFFF"><BR>Nil <BR></TD>
    <TD width="25%" align=right bgcolor="#E6EFFF"><BR>Nil <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>2007 Equity compensation <BR>plans not approved by
      <BR>security holders </TD>
    <TD width="25%" align=right><BR>Nil <BR></TD>
    <TD width="25%" align=right><BR>Nil <BR></TD>
    <TD width="25%" align=right><BR>500,000 <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">2010 Equity compensation <BR>plans not approved by
      <BR>security holders </TD>
    <TD width="25%" align=right bgcolor="#E6EFFF">1,700,000 <BR><BR></TD>
    <TD width="25%" align=right bgcolor="#E6EFFF">$0.26 <BR><BR></TD>
    <TD width="25%" align=right bgcolor="#E6EFFF">300,000 <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Total</B> </TD>
    <TD width="25%" align=right><B>1,700,000</B> </TD>
    <TD width="25%" align=right>0.26 </TD>
    <TD width="25%" align=right>800,000 </TD></TR></TABLE></DIV>
<P align=justify><I>Purchases of Equity Securities by the Issuer and Affiliated
Purchasers </I></P>
<P align=justify>We did not purchase any of our shares of common stock or other
securities during our fiscal year ended October 31, 2011.</P>
<P align=center>45</P>
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width="100%" noShade>


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<A name="page_51"></A>

<P align=center><B>Financial Statements</B></P>

<P align="justify">
Our audited financial statements for the years ended October 31, 2011 and 2010 have been included as follows, commencing on page F-1.
Our unaudited financial statements for the six month period ended April 30,
2012 have been included as follows, commencing on page F-25.</P>

<P align="center">
46</P>

<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>


<!--$$/page=--><A name=page_52></A>
<P align=center><B>Lexaria Corp.<BR></B><B>(A Development Stage Company)
<BR>October 31, 2011</B></P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left>Report of Independent Registered Public
      Accounting Firm </TD>
    <TD bgColor=#eeeeee width="15%" align=center>F&#150;1 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Report of Independent Registered Public Accounting Firm </TD>
    <TD width="15%" align=center>F&#150;2 </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left>Balance Sheet </TD>
    <TD bgColor=#eeeeee width="15%" align=center>F&#150;3 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Statement of Operations and Comprehensive Loss </TD>
    <TD width="15%" align=center>F&#150;4 </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left>Statement of Cash Flows </TD>
    <TD bgColor=#eeeeee width="15%" align=center>F&#150;5 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Statement of Stockholders&#146; Equity </TD>
    <TD width="15%" align=center>F&#150;6 </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left>Notes to the Financial Statements </TD>
    <TD bgColor=#eeeeee width="15%" align=center>F&#150;7 </TD></TR></TABLE>
<P align=center><B>Lexaria Corp.<BR>(A Development Stage Company)
<BR>April 30, 2012<br>
(unaudited)</B></P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left>Balance Sheet </TD>
    <TD bgColor=#eeeeee width="15%" align=center>F&#150;25</TD></TR>
  <TR vAlign=top>
    <TD align=left>Statement of Operations and Comprehensive Loss </TD>
    <TD width="15%" align=center>F&#150;26</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left>Statement of Cash Flows </TD>
    <TD bgColor=#eeeeee width="15%" align=center>F&#150;27 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Statement of Stockholders&#146; Equity </TD>
    <TD width="15%" align=center>F&#150;28 </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#eeeeee align=left>Notes to the Financial Statements </TD>
    <TD bgColor=#eeeeee width="15%" align=center>F&#150;29 </TD></TR></TABLE>
<p align="center">47<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_53></A>
<P align=right><IMG border=0 src="forms-1x53x1.jpg" width="204" height="80"> </P>
<P align=center><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
</B></P>
<P align=justify>To the Board of Directors and Stockholders of</P>
<P align=justify><B>LEXARIA CORP. </B></P>
<P align=justify>We have audited the balance sheet of Lexaria Corp. (the
&#147;Company&#148;) as at October 31, 2011 and the related statements of stockholders&#146;
equity, operations and comprehensive loss and cash flows for the year then
ended. These financial statements are the responsibility of the Company&#146;s
management. Our responsibility is to express an opinion on these financial
statements based on our audit. We did not audit the Company&#146;s financial
statements as of and for the year ended October 31, 2010, and the cumulative
data from November 1, 2009 to October 31, 2010 in the statements of
stockholders&#146; equity, operations and cash flows, which were audited by other
auditors whose report, dated January 21, 2011 which expressed an unqualified
opinion, has been furnished to us. Our opinion, insofar as it relates to the
amounts included for cumulative data from November 1, 2009 to October 31, 2010,
is based solely on the report of the other auditors. </P>
<P align=justify>We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform an audit to obtain reasonable assurance 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 circumstance, but not for the purpose of expressing an
opinion on the effectiveness of the company&#146;s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion. </P>
<P align=justify>In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as at October 31, 2011 and the result of its operations and its cash flow for
the year then ended in conformity with accounting principles generally accepted
in the United States of America. </P>
<P align=justify>The accompanying financial statements refer to above have been
prepared assuming the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company had recurring losses and
requires additional funds to maintain its planned operations. These factors
raise substantial doubt about its ability to continue as a going concern.
Management&#146;s plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. </P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left>Vancouver, Canada </TD>
    <TD  width="50%" align=right>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>January 26, 2012 </TD>
    <TD  width="50%" align=right>&nbsp;<IMG border=0
      src="forms-1x53x2.jpg" width="182" height="73"></TD></TR></TABLE>
<BR>
<P align=center><IMG border=0 src="forms-1x53x3.jpg" width="614" height="96"></P>
<p align="center">F-1<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_54></A><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left><B><I>Chang Lee LLP</I></B> </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><I>Chartered
      Accountants</I></B> </TD></TR>
  <TR vAlign=top>
    <TD align=right><I>606 &#150; 815 Hornby Street</I> </TD></TR>
  <TR vAlign=top>
    <TD align=right><I>Vancouver, B.C, V6Z 2E6</I> </TD></TR>
  <TR vAlign=top>
    <TD align=right><I>Tel: 604-687-3776</I> </TD></TR>
  <TR vAlign=top>
    <TD align=right><I>Fax: 604-688-3373</I> </TD></TR>
  <TR vAlign=top>
    <TD align=right><I>E-mail: info@changleellp.com</I> </TD></TR></TABLE>
<P align=center><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM</B></P>
<P align=justify><B>To the Board of Directors and Stockholders of </B></P>
<P align=justify><B>LEXARIA CORP.</B></P>
<P align=justify>We have audited the balance sheets of LEXARIA Corp. (&#147;the
Company&#148;) as at October 31, 2010 and 2009 and the related statements of
stockholders&#146; equity, operations and comprehensive loss and cash flows for the
years then ended. These financial statements are the responsibility of the
Company&#146;s management. Our responsibility is to express an opinion on these
financial statements based on our audits.</P>
<P align=justify>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 an audit to obtain reasonable assurance whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.</P>
<P align=justify>In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as at October31, 2010 and 2009 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles in the United States of America.</P>
<P align=justify>The accompanying financial statements refer to above have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company had recurring
losses and requires additional funds to maintain its planned operations. These
factors raise substantial doubt about its ability to continue as a going
concern. Management&#146;s plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left><I>Vancouver, Canada</I> </TD>
    <TD  rowSpan=2 width="50%" align=right>
    <IMG border=0
      src="forms-1x54x1.jpg" width="193" height="68"><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>January 21, 2011 <BR><BR><BR></TD></TR></TABLE> <BR>
<p align="center">F-2<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<A name=page_55></A><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA CORP. </B></TD></TR>
  <TR vAlign=bottom>
    <TD align=center><B>BALANCE SHEETS </B></TD></TR>
  <TR vAlign=top>
    <TD align=center><B>(Expressed in U.S. Dollars)
</B></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=right><B>October 31 </B></TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=right>October 31 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=right><B>2011 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=right>2010
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>ASSETS </B></TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Current </B></TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Cash and cash equivalents </TD>
    <TD bgColor=#e6efff  width="1%" align=left><B>$</B></TD>
    <TD bgColor=#e6efff width="11%" align=right><B>31,201 </B></TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="11%" align=right>&nbsp;62,989 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accounts
      receivable </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=right><B>230,880 </B></TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=right>74,879 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Prepaid expenses and deposit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right><B>2,147 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>2,338 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Total Current Assets </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=right><B>264,228 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=right>140,206 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Capital assets, net </B></TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right><B>- </B></TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right>425 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Deferred charges </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=right><B>33,092 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=right>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Oil and gas properties (Note 5) </B></TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Proved property </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=right><B>3,717,866 </B></TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=right>3,118,376 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Unproved properties </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right><B>19,293 </B></TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right>19,293 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD
      align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepayments
      for oil and gas explorations </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=right><B>304,890 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=right>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right><B>4,042,049 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>3,137,669 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>TOTAL ASSETS </B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="1%"
    align=left><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="11%"
      align=right><B>4,339,369 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="1%"
    align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="11%"
      align=right>&nbsp;3,278,300 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="11%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="11%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY </B></TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="11%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="11%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>LIABILITIES </B></TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Current </B></TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accounts
      payable and accrued liabilities </TD>
    <TD  width="1%" align=left><B>$</B></TD>
    <TD width="11%" align=right><B>322,313 </B></TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="11%" align=right>&nbsp;137,437 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Loan payable (Note 6a, 7a) </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right><B>754,501 </B></TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right>910,441 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Due to a
      related party </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=right><B>1,769 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%" align=right>1,769
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Total Current Liabilities </B></TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right><B>1,078,583 </B></TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right>1,049,647 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Loan Payable &#150; Long Term (Note 6b) </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=right><B>599,438 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=right>75,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>TOTAL LIABILITIES </B></TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right><B>1,678,021 </B></TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right><B>1,124,647 </B></TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>STOCKHOLDERS&#146; EQUITY </B></TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Share Capital (Note 4) </B></TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Authorized:
    </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;200,000,000 common voting shares </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>with a par value of </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;$0.001 per share </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Issued and
      outstanding: </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>16,431,452common shares at </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;October31,
    </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=right><B>16,431 </B></TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=right>12,926 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;2011 (12,926,348 common shares at </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>October 31, 2010) </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Additional paid-in capital </B></TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right><B>7,107,535 </B></TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="11%" align=right>6,065,119 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Deficit </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=right><B>(4,462,618</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="11%"
      align=right>(3,924,392</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>) </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Total Stockholders&#146; Equity </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right><B>2,661,348 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="11%"
    align=right>2,153,653 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>TOTAL LIABILITIES AND STOCKHOLDERS&#146; EQUITY </B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="1%"
    align=left><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="11%"
      align=right><B>4,339,369 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="1%"
    align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="11%"
      align=right>&nbsp;<B>3,278,300 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="2%"
    align=left>&nbsp;</TD></TR></TABLE>
<P align=center>The accompanying notes are an integral part of these financial
statements.</P>
<P align=center>F-3</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_56></A><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA CORP.</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center><B>STATEMENTS OF OPERATIONS</B> </TD></TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars)</B>
</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="27%" colSpan=4 align=center><B>Years Ended</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="27%" colSpan=4 align=center><B>October 31</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>2011</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>2010</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Revenue</B> </TD>
    <TD bgColor=#e6efff width="1%" align=left></TD>
    <TD bgColor=#e6efff width="12%" align=center>$&nbsp;</TD>
    <TD bgColor=#e6efff width="2%" align=center>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=center></TD>
    <TD bgColor=#e6efff width="12%" align=center>$&nbsp;</TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Natural gas and oil revenue </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>1,133,766</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right>362,471 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Cost of revenue</B> </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=left>&nbsp; </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=left>&nbsp; </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Natural gas and oil
      operating costs </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>297,656</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>152,479 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Depletion </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>370,199</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right>121,136 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>667,855</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>273,615 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Gross profit (loss)</B> </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>465,911</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>88,856 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Expenses</B> </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Accounting and audit </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>32,433</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>27,547 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Insurance </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>8,749</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>7,014 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Advertising and promotions </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>40,920</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>559 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Bank charges and
      exchange loss </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>55,052</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>26,832 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Stock Based Compensation </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>179,789</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>161,366 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Consulting (note 9) </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>262,134</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>168,512 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Depreciation </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>425</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>1,021 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Fees and Dues </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>36,454</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>26,567 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Interest expense from loan payable
      (note 6,7) </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>223,673</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>167,322 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Investor relation </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>29,153</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>1,943 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Legal and professional </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>58,015</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>23,015 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Office and
      miscellaneous </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>5,181</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>1,213 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Rent </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>14,620</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>15,404 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Telephone </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>3,047</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>2,917 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Taxes </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>5,977</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>5,745 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Training </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>268</B> </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>- </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Travel </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>48,247</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>4,340 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Write down of oil and
      gas property </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right><B>-</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right>1 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>1,004,137</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right>641,318 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Net (loss) for the year</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="12%"
      align=right><B>(538,226</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="2%"
      align=left><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="12%"
      align=right>(552,462</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="2%" align=left>)
  </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Basic and diluted (loss) per share</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="12%"
      align=right><B>(0.04</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="2%"
      align=left><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="12%"
    align=right>(0.04</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="2%" align=left>)
  </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Weighted average number of common shares
      outstanding - Basic and diluted</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="12%"
    align=right><B>14,176,503</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="12%"
    align=right>12,325,675 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD></TR></TABLE>
<P align=center>The accompanying notes are an integral part of these financial
statements.</P>
<P align=center>F-4</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_57></A><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA CORP.</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center><B>STATEMENT OF CASH FLOWS</B> </TD></TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars)</B>
</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="27%" colSpan=4 align=center><B>Years Ended</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="27%" colSpan=4 align=center><B>October 31</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>2011</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>2010</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Cash flows used in operating
      activities</B> </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Net (loss) </TD>
    <TD  width="1%" align=left><B>$</B></TD>
    <TD width="12%" align=right><B>&nbsp;(538,226</B></TD>
    <TD  width="2%" align=left><B>)</B> </TD>
    <TD  width="1%" align=left><B>$</B></TD>
    <TD width="12%" align=right><B>&nbsp;(552,462</B></TD>
    <TD  width="2%" align=left><B>)</B> </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp;Adjustments to reconcile net
      loss to net cash used in operating activities: </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Consulting
      -Debt Settlement </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>9,376</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>-</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Consulting - Stock based compensation </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>179,789</B> </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>161,366</B> </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Depreciation </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>425</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>1,021</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Depletion </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>370,199</B> </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>121,136</B> </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Write down
      in carrying value of oil and gas properties </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>-</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>1</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Foreign exchange gain / loss </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>52,823</B> </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>23,765</B> </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accredited
      interest on loan payable </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>6,334</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>11,672</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Change in operating assets and
      liabilities: </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;(Increase) in accounts receivable </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>(156,001</B></TD>
    <TD bgColor=#e6efff  width="2%" align=left><B>)</B> </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>(32,684</B></TD>
    <TD bgColor=#e6efff  width="2%" align=left><B>)</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;(Increase)in prepaid expenses and deposit </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>(304,699</B></TD>
    <TD  width="2%" align=left><B>)</B> </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>(2,338</B></TD>
    <TD  width="2%" align=left><B>)</B> </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Increase in accounts payable </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right><B>184,877</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right><B>(61,813</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left><B>)</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Net cash used in operating activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>(195,103</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>(330,336</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left><B>)</B> </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Cash flows used in investing activities</B> </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=left>&nbsp; </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Oil and gas property acquisition and
      exploration costs </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>(697,690</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>(285,242</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left><B>)</B> </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Net cash used in investing
      activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right><B>(697,690</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right><B>(285,242</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left><B>)</B> </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Cash flows from financing activities</B>
    </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Proceeds from loan
      payable </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>329,903</B> </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right><B>165,000</B> </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Proceeds from private placement </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>36,908</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>183,400</B> </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; &nbsp; &nbsp;Proceeds from Stock
      Options and warrant </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right><B>494,194</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right><B>-</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Net cash from financing Activities</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>861,005</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>348,400</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>(Decrease) in cash and cash equivalents</B> </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>(31,788</B></TD>
    <TD  width="2%" align=left><B>)</B> </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><B>(267,178</B></TD>
    <TD  width="2%" align=left><B>)</B> </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;<B>Cash and cash equivalents, beginning
      of period</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>62,989</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right><B>330,167</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Cash and cash equivalents, end of
      period</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="1%" align=left><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="12%"
    align=right><B>&nbsp;31,201</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="1%" align=left><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="12%"
    align=right><B>&nbsp;62,989</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD></TR></TABLE>
<P align=center>The accompanying notes are an integral part of these financial
statements.</P>
<P align=center>F-5</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_58></A><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA CORP.</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center><B>STATEMENTS OF STOCKHOLDERS&#146; EQUITY</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center><B>For Years Ended October 31, 2011 to October 31,
      2010</B> </TD></TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars)</B>
</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left valign="bottom">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="19%" colSpan=4
    align=center valign="bottom">COMMON STOCK </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">&nbsp; </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">&nbsp; </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">&nbsp; </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">&nbsp; </TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">&nbsp; </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">&nbsp; </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">ADDITIONAL </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">&nbsp; </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">TOTAL </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">&nbsp; </TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">&nbsp; </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">&nbsp; </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">PAID-IN </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">&nbsp; </TD>
    <TD width="2%" align=center valign="bottom">&nbsp;</TD>
    <TD width="1%" align=center valign="bottom">&nbsp;</TD>
    <TD width="8%" align=center valign="bottom">STOCKHOLDERS&#146; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=center valign="bottom">SHARES </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=center valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=center valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=center valign="bottom">AMOUNT </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=center valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=center valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=center valign="bottom">CAPITAL </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=center valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=center valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=center valign="bottom">DEFICIT </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=center valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=center valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=center valign="bottom">EQUITY </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Balance, October 31, 2009 </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">10,732,870 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">$</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">&nbsp;10,733 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">$</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">&nbsp;5,658,768 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">$</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">&nbsp;(3,371,930</TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">)</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">$ </TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">2,297,571 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR>
    <TD valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="8%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="8%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="8%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="8%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="8%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Stock Options @ $0.20 Jan 10 </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">139,050 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">139,050 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Issuance of common stock per Subscription </TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Agreement at $0.1143 per share </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">1,617,752 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">1,618 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">181,782 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">183,400 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Issuance of common stock per Settlement Agreement at $0.12 per share
    </TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">499,893 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">500 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">59,487 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">59,987 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Stock Options @ $0.20 Aug. 16 </TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">22,316 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">22,316 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Warrant conversion @$0.05 </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">75,833 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">76 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">3,716 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">3,792 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Comprehensive income (loss): </TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp;&nbsp;&nbsp;&nbsp; (Loss) for the
      year </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=left valign="bottom">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="2%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=left valign="bottom">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="2%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=left valign="bottom">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="2%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=right valign="bottom">(552,462</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="2%"
    align=left valign="bottom">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="8%"
    align=right valign="bottom">(552,462</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="2%"
    align=left valign="bottom">) </TD></TR>
  <TR>
    <TD valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="8%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="8%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="8%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="8%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD>
    <TD width="1%" valign="bottom">&nbsp;</TD>
    <TD width="8%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Balance, October 31, 2010 </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">12,926,348 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">12,926 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">6,065,118 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">(3,924,392</TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">) </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">2,153,653 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Warrant conversion @$0.22 </TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">66,300 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">66 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">14,520 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">14,586 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Issuance of common stock per Settlement
      Agreement at $0.23 per share </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">40,761 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">41 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">9,335 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">9,375 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Warrants for Convertible Debt </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">20,562 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">20,562 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Issuance of common stock per stock option exercise @ $0.20
    </TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">106,250 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">106 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">21,144 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">21,250 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Issuance of common stock per warrant
      exercise @ $0.20 </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">2,173,043 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">2,173 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">432,436 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">434,609 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Issuance of common stock per stock option exercise @ $0.20
    </TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">118,750 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">119 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">23,631 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">23,750 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Issuance of common stock per PP @ $0.35 </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">200,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">200 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">69,800 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">70,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Stock Options @$0.35 </TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">179,789 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">179,789 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Issuance of common stock for acquisition of
      oil and gas property </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">800,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">800 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">271,200 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right valign="bottom">272,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Comprehensive income (loss): </TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=left valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp;&nbsp;&nbsp;&nbsp; (Loss) for the year </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=left valign="bottom">&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=left valign="bottom">&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=left valign="bottom">&nbsp;
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=right valign="bottom">(538,226</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%" align=left valign="bottom">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=right valign="bottom">(538,226</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%" align=left valign="bottom">)
</TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">&nbsp; </TD>
    <TD bgColor=#e6efff width="1%" valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" valign="bottom">&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" valign="bottom">&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -15pt; margin-left: 15pt">Balance, October 31, 2011 </TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="8%" align=right valign="bottom">16,431,452 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">$</TD>
    <TD width="8%" align=right valign="bottom">&nbsp;16,431 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">$</TD>
    <TD width="8%" align=right valign="bottom">&nbsp;7,107,535 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">$</TD>
    <TD width="8%" align=right valign="bottom">&nbsp;(4,462,618</TD>
    <TD width="2%" align=left valign="bottom">)</TD>
    <TD width="1%" align=left valign="bottom">$ </TD>
    <TD width="8%" align=right valign="bottom">2,661,348 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD></TR></TABLE>
<P align=center>The accompanying notes are an integral part of these financial
statements.</P>
<P align=center>F-6</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_59></A><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=bottom>
    <TD align=center><B>LEXARIA CORP.</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center><B>NOTES TO THE FINANCIAL STATEMENTS</B> </TD></TR>
  <TR vAlign=bottom>
    <TD align=center><B>October 31, 2011</B> </TD></TR>
  <TR vAlign=bottom>
    <TD align=center><B>(Expressed in U.S. Dollars)</B> </TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
      align=center><B>(Unaudited)</B> </TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%">1. </TD>
    <TD colSpan=3>
      <P align=justify>Organization and Business</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>The Company was formed on December 9, 2004 under the laws
      of the State of Nevada and commenced operations on December 9, 2004. The
      Company is an independent natural gas and oil company engaged in the
      exploration, development and acquisition of oil and gas properties in the
      United States and Canada. The Company&#146;s entry into the oil and gas
      business began on February 3, 2005. The Company has offices in Vancouver
      and Kelowna, BC, Canada.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>These financial statements have been prepared in
      accordance with United States generally accepted accounting principles
      applicable to a going concern, which contemplates the realization of
      assets and the satisfaction of liabilities and commitments in the normal
      course of business. The Company has incurred an operating loss and
      required additional funds to maintain its operations. Management&#146;s plans
      in this regard are to raise equity and/or debt financing as
    required.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>These conditions raise substantial doubt about the
      Company&#146;s ability to continue as a going concern. These financial
      statements do not include any adjustment that might result from this
      uncertainty.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">2. </TD>
    <TD vAlign=top colSpan=3>
      <P align=justify>Business Risk and Liquidity</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>The Company is subject to several categories of risk
      associated with its operating activities. Natural gas and oil exploration
      and production is a speculative business and involves a high degree of
      risk. Among the factors that have a direct bearing on the Company&#146;s
      financial information are uncertainties inherent in estimating natural gas
      and oil reserves, future hydrocarbon production and cash flows,
      particularly with respect to wells that have not been fully tested and
      with wells having limited production histories; access and cost of
      services and equipment; and the presence of competitors with greater
      financial resources and capacity.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">3.</TD>
    <TD vAlign=top colSpan=3>
      <P align=justify>Significant Accounting Policies</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD width="5%">a)</TD>
    <TD vAlign=top colSpan=2>
      <P align=justify>Principles of Accounting</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>These financial statements are stated in U.S. dollars and
      have been prepared in accordance with U.S. generally accepted accounting
      principles.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD width="5%">b)</TD>
    <TD vAlign=top colSpan=2>
      <P align=justify>Revenue Recognition</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>The Company uses the sales method of accounting for
      natural gas and oil revenues. Under this method, revenues are recognized
      upon the passage of title, net of royalties. Revenues from natural gas
      production are recorded using the sales method. When sales volumes exceed
      the Company&#146;s entitled share, an overproduced imbalance occurs. To the
      extent the overproduced imbalance exceeds the Company&#146;s share of the
      remaining estimated proved natural gas reserves for a given property, the
      Company records a liability. At October 31, 2011 and 2010, the Company had
      no overproduced imbalances.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD width="5%">c)</TD>
    <TD vAlign=top colSpan=2>
      <P align=justify>Cash and Cash Equivalents</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>Cash equivalents comprise certain highly liquid
      instruments with a maturity of three months or less when purchased. As of
      October 31, 2011 and 2010, cash and cash equivalents consist of cash
      only.</P></TD></TR></TABLE>
<P align=center>F-7</P>
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width="100%" noShade>
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<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="5%" align=left>d)</TD>
    <TD width="88%" align=left>Oil and Gas Properties </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2 align=left>The Company utilizes the full cost
      method to account for its investment in oil and gas properties.
      Accordingly, all costs associated with acquisition, exploration and
      development of oil and gas reserves, including such costs as leasehold
      acquisition costs, capitalized interest costs relating to unproved
      properties, geological expenditures, tangible and intangible development
      costs including direct internal costs are capitalized to the full cost
      pool. When the Company obtains proven oil and gas reserves, capitalized
      costs, including estimated future costs to develop the reserves and
      estimated abandonment costs, net of salvage, will be depleted on the
      units-of-production method using estimates of proved reserves. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2 align=left>Investments in unproved properties
      are not depleted pending determination of the existence of proved
      reserves. Unproved properties are assessed periodically to ascertain
      whether impairment has occurred. Unproved properties whose costs are
      individually significant are assessed individually by considering the
      primary lease terms of the properties, the holding period of the
      properties, and geographic and geologic data obtained relating to the
      properties. Where it is not practicable to assess individually the amount
      of impairment of properties for which costs are not individually
      significant, such properties are grouped for purposes of assessing
      impairment. The amount of impairment assessed is added to the costs to be
      amortized, or is reported as a period expense, as appropriate. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2 align=left>Pursuant to full cost accounting
      rules, the Company must perform a ceiling test periodically on its proved
      oil and gas assets. The ceiling test provides that capitalized costs less
      related accumulated depletion and deferred income taxes for each cost
      center may not exceed the sum of (1) the present value of future net
      revenue from estimated production of proved oil and gas reserves using
      current prices, excluding the future cash outflows associated with
      settling asset retirement obligations that have been accrued on the
      balance sheet, at a discount factor of 10%; plus (2) the cost of
      properties not being amortized, if any; plus (3) the lower of cost or
      estimated fair value of unproved properties included in the costs being
      amortized, if any; less (4) income tax effects related to differences in
      the book and tax basis of oil and gas properties. Should the net
      capitalized costs for a cost center exceed the sum of the components noted
      above, an impairment charge would be recognized to the extent of the
      excess capitalized costs. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2 align=left>Sales of proved and unproved
      properties are accounted for as adjustments of capitalized costs with no
      gain or loss recognized, unless such adjustments would significantly alter
      the relationship between capitalized costs and proved reserves of oil and
      gas, in which case the gain or loss is recognized in the statement of
      operations. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2 align=left>Exploration activities conducted
      jointly with others are reflected at the Company&#146;s proportionate interest
      in such activities. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2 align=left>Cost related to site restoration
      programs are accrued over the life of the project. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="5%" align=left>e) </TD>
    <TD width="88%" align=left>Stock-Based Compensation </TD></TR>
  <TR>
    <TD  align=left width="5%">&nbsp;</TD>
    <TD  width="5%" align=left>&nbsp;</TD>
    <TD  width="88%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD  align=left width="5%">&nbsp;</TD>
    <TD  width="93%" colSpan=2 align=left>Accounting Standards
      Codification (&#147;ASC&#148;) 718, &#147;<I>Compensation &#150; Stock Compensation</I>&#148;,
      accounts for its stock options and similar equity instruments issued.
      Accordingly, compensation costs attributable to stock options or similar
      equity instruments granted are measured at the fair value at the grant
      date, and expensed over the expected vesting period. ASC 718 requires
      excess tax benefits be reported as a financing cash inflow rather than as
      a reduction of taxes paid. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;f)</TD>
    <TD width="88%" align=left>&nbsp;Accounting Estimates </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2 align=left>The preparation of financial
      statements in conformity with generally accepted accounting principles
      requires management to make estimates and assumptions that affect the
      reported amounts of assets and liabilities and disclosure of contingent
      assets and liabilities at the date of the financial statements and the
      reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates and assumptions.
  </TD></TR></TABLE>
<P align=center>F-8</P>
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width="100%" noShade>
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<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="5%" align=left>g) </TD>
    <TD width="89%" align=left>Capital Assets </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="89%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD width="94%" colSpan=2 align=left>The capital asset represents computer
      equipment which is carried at cost and is amortized over its estimated
      useful life of 3 years straight-line. Computer equipment is written down
      to its net realizable value if it is determined that its carrying value
      exceeds estimated future benefits to the Company. </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="89%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>h) </TD>
    <TD width="89%" align=left>Loss Per Share </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="89%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD width="94%" colSpan=2 align=left>Loss per share is computed using the
      weighted average number of shares outstanding during the period. The
      Company has adopted ASC 220 &#147;<I>Earnings Per Share</I>&#148;. Diluted loss per
      share is equivalent to basic loss per share because the potential exercise
      of the equity-based financial instruments was anti-dilutive. </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="89%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>i) </TD>
    <TD width="89%" align=left>Foreign Currency Translations </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="89%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD width="94%" colSpan=2 align=left>The Company&#146;s operations are located
      in the United States of America and Canada, and it has offices in Canada.
      The Company maintains its accounting records in U.S. Dollars, as follows:
    </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="94%" colSpan=2 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD width="94%" colSpan=2 align=left>At the transaction date, each asset,
      liability, revenue and expense that was acquired or incurred in a foreign
      currency is translated into U.S. dollars by the using of the exchange rate
      in effect at that date. At the period end, monetary assets and liabilities
      are translated at the exchange rate in effect at that date. The resulting
      foreign exchange gains and losses are included in operations. </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="89%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>j) </TD>
    <TD width="89%" align=left>Financial Instruments </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="89%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="89%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD width="94%" colSpan=2 align=left>ASC 820 &#147;<I>Fair Value Measurements
      and Disclosures</I>&#148; requires an entity to maximize the use of observable
      inputs and minimize the use of unobservable inputs when measuring fair
      value. ASC 820 establishes a fair value hierarchy based on the level of
      independent, objective evidence surrounding the inputs used to measure
      fair value. A financial instrument&#146;s categorization within the fair value
      hierarchy is based upon the lowest level of input that is significant to
      the fair value measurement. ASC 820 prioritizes the inputs into three
      levels that may be used to measure fair value: </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="94%" colSpan=2 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD width="94%" colSpan=2 align=left>Level 1 - Quoted prices in active
      markets for identical assets or liabilities; </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="94%" colSpan=2 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD width="94%" colSpan=2 align=left>Level 2 - Inputs other than quoted
      prices included within Level 1 that are either directly or indirectly
      observable; and </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="94%" colSpan=2 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD width="94%" colSpan=2 align=left>Level 3 - Unobservable inputs that
      are supported by little or no market activity, therefore requiring an
      entity to develop its own assumptions about the assumptions that market
      participants would use in pricing. </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="94%" colSpan=2 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD width="94%" colSpan=2 align=left>The Company&#146;s financial instruments
      consist primarily of cash and cash equivalents, accounts receivable,
      accounts payable and accrued liabilities, loan payable and due to a
      related party. The carrying amounts of cash and cash equivalents, accounts
      receivable, accounts payable and accrued liabilities, loans payable and
      due to a related partyapproximate their fair values due to their short
      maturities. The carrying values of the Company&#145;s long-term debt
      approximate their fair values based upon a comparison of the interest rate
      and terms of such debt to the rates and terms of debt currently available
      to the Company. </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="94%" colSpan=2 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD width="94%" colSpan=2 align=left>The Company is located in Canada,
      which results in exposure to market risks from changes in foreign currency
      rates. The financial risk is the risk to the Company&#146;s operations that
      arise from fluctuations in foreign exchange rates and the degree of
      volatility of these rates. Currently, the Company does not use derivative
      instruments to reduce its exposure to foreign currency risk. </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="89%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>k) </TD>
    <TD width="89%" align=left>Income Taxes </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD width="89%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD width="94%" colSpan=2 align=left>The Company has adopted ASC 740,
      &#147;<I>Income Taxes&#148;</I>, which requires the Company to recognize deferred
      tax liabilities and assets for the expected future tax consequences of
      events that have been recognized in the Company&#146;s financial statements or
      tax returns using the liability method. Under this method, deferred tax
      liabilities and assets are determined based on the temporary differences
      between the financial statement and tax bases of assets and liabilities
      using enacted tax rates in effect in the year in which the differences are
      expected to reverse. </TD></TR></TABLE>
<P align=center>F-9</P>
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width="100%" noShade>
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<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;l) </TD>
    <TD width="88%" align=left>Long-Lived Assets Impairment </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%"></TD>
    <TD width="93%" colSpan=2 align=left>Long-term assets of the Company are
      reviewed for impairment when circumstances indicate the carrying value may
      not be recoverable in accordance with the guidance established in ASC 360,
      &#147;<I>Property, Plant and</I> <I>Equipment</I>&#146;. For assets that are to be
      held and used, an impairment loss is recognized when the estimated
      undiscounted cash flows associated with the asset or group of assets is
      less than their carrying value. If impairment exists, an adjustment is
      made to write the asset down to its fair value. Fair values are determined
      based on discounted cash flows or internal and external appraisals, as
      applicable. Assets to be disposed of are carried at the lower of carrying
      value or estimated net realizable value. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;m) </TD>
    <TD width="88%" align=left>Asset Retirement Obligations </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%"></TD>
    <TD width="93%" colSpan=2 align=left>The Company accounts for asset
      retirement obligations in accordance with the provisions of <I>ASC 410,
      &#147;Asset</I> <I>Retirement and Environmental Obligations</I>&#148;. ASC 410
      requires the Company to record the fair value of an asset retirement
      obligation as a liability in the period in which it incurs a legal
      obligation associated with the retirement of tangible long-lived assets
      that result from the acquisition, construction, development and/or normal
      use of the assets. The management of the Company had estimated the asset
      retirement obligation to be immaterial and therefore was not reflected on
      the financial statements as of October 31, 2011 and 2010. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;n) </TD>
    <TD width="88%" align=left>Comprehensive Income </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%"></TD>
    <TD width="93%" colSpan=2 align=left>The Company has adopted ASC 220,
      &#147;<I>Comprehensive Income&#148;</I>, which establishes standards for reporting
      and display of comprehensive income, its components and accumulated
      balances. The Company is disclosing this information on its Statement of
      Stockholders&#146; Equity. Comprehensive income comprises equity changes except
      those transactions resulting from investments by owners and distributions
      to owners. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;o) </TD>
    <TD width="88%" align=left>Credit risk and receivable Concentration </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%"></TD>
    <TD width="93%" colSpan=2 align=left>The Company places its cash and cash
      equivalent with high credit quality financial institution. As of October
      31, 2011, the Company had approximately $31,201 in a bank beyond insured
      limit (October 31, 2010: $62,989). </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%"></TD>
    <TD width="93%" colSpan=2 align=left>The revenues were generated from the
      Company&#146;s sole customer for fiscal year 2011 and 2010; the corresponding
      accounts receivable balances were $194,293 and $63,285 at December 31,
      2011 and 2010, respectively. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;p) </TD>
    <TD width="88%" align=left>Convertible Debentures </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%"></TD>
    <TD width="93%" colSpan=2 align=left>The Company accounts for its
      convertible debt instruments that may be settled in cash upon conversion
      according to ASC 470-20-30-22 which requires the proceeds from the
      issuance of such convertible debt instruments to be allocated between debt
      and equity components so that debt is discounted to reflect the Company&#146;s
      non-convertible debt borrowing rate. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="93%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%"></TD>
    <TD width="93%" colSpan=2 align=left>Further, the Company applies ASC
      470-20-35-13 which requires the debt discount to be amortized over the
      period the convertible debt is expected to be outstanding as additional
      non-cash interest expense. </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%">&nbsp;</TD>
    <TD width="5%" align=left>&nbsp;q) </TD>
    <TD width="88%" align=left>Commitments and Contingencies </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left width="5%"></TD>
    <TD width="93%" colSpan=2 align=left>In accordance with ASC 450-20,
      &#147;Accounting for Contingencies&#148;, the Company records accruals for such loss
      contingencies when it is probable that a liability has been incurred and
      the amount of loss can be reasonably estimated. In the event that
      estimates or assumptions prove to differ from actual results, adjustments
      are made in subsequent periods to reflect more current information.
      Historically, the Company has not experienced any material claims.
  </TD></TR></TABLE>
<P align=center>F-10</P>
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width="100%" noShade>
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<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD width="5%"></TD>
    <TD width="5%">r)</TD>
    <TD>
      <P align=justify>&nbsp;Newly Adopted Accounting Policies</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>In February 2010, the FASB issued ASC No. 2010-09,
      &#147;Amendments to Certain Recognition and Disclosure Requirements&#148;, which
      eliminates the requirement for SEC filers to disclose the date through
      which an entity has evaluated subsequent events. The adoption of ASC No.
      2010-09 does not have a material impact on the Company&#146;s financial
      statements.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>In April 2010, the FASB issued ASU 2010-13,
      &#147;Compensation&#151;Stock Compensation (Topic 718): Effect of Denominating the
      Exercise Price of a Share-Based Payment Award in the Currency of the
      Market in Which the Underlying Equity Security Trades,&#148; or ASU 2010-13.
      This ASU provides amendments to Topic 718 to clarify that an employee
      share-based payment award with an exercise price denominated in currency
      of a market in which a substantial portion of the entity&#146;s equity
      securities trades should not be considered to contain a condition that is
      not a market, performance, or service condition. Therefore, an entity
      would not classify such an award as a liability if it otherwise qualifies
      as equity. The adoption does not have significant impact on its financial
      statements.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD width="5%">s)</TD>
    <TD>
      <P align=justify>&nbsp;New Accounting Pronouncements</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>In June 2011, the Financial Accounting Standards Board
      (FASB) issued Accounting Standards Update (ASU) 2011-05, Comprehensive
      Income (Topic 220): Presentation of Comprehensive Income, which is
      effective for annual reporting periods beginning after December 15, 2011.
      ASU 2011-05 will become effective for the Company on January 1, 2012. This
      guidance eliminates the option to present the components of other
      comprehensive income as part of the statement of changes in stockholders&#146;
      equity. In addition, items of other comprehensive income that are
      reclassified to profit or loss are required to be presented separately on
      the face of the financial statements. This guidance is intended to
      increase the prominence of other comprehensive income in financial
      statements by requiring that such amounts be presented either in a single
      continuous statement of income and comprehensive income or separately in
      consecutive statements of income and comprehensive income. The adoption of
      ASU 2011-05 is not expected to have a material impact on the Company&#146;s
      financial position or results of operations.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>In May 2011, the FASB issued ASU 2011-04, &#147;Fair Value
      Measurement (Topic 820): Amendments to Achieve Common Fair Value
      Measurement and Disclosure Requirements in U.S. GAAP and IFRSs&#148;, which is
      effective for annual reporting periods beginning after December 15, 2011.
      This guidance amends certain accounting and disclosure requirements
      related to fair value measurements. Additional disclosure requirements in
      the update include: (1) for Level 3 fair value measurements, quantitative
      information about unobservable inputs used, a description of the valuation
      processes used by the entity, and a qualitative discussion about the
      sensitivity of the measurements to changes in the unobservable inputs; (2)
      for an entity&#146;s use of a nonfinancial asset that is different from the
      asset&#146;s highest and best use, the reason for the difference; (3) for
      financial instruments not measured at fair value but for which disclosure
      of fair value is required, the fair value hierarchy level in which the
      fair value measurements were determined; and (4) the disclosure of all
      transfers between Level 1 and Level 2 of the fair value hierarchy. The
      Company is currently evaluating the impact of the adoption.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>Accounting standards that have been issued or proposed by
      the FASB or other standards-setting bodies that do not require adoption
      until a future date are not expected to have a material impact on the
      Company&#146;s financial statements upon adoption.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">4. </TD>
    <TD colSpan=2>
      <P align=justify>Capital Stock Share Issuances</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On December 24, 2009, the Company completed an equity
      financing and issued 1,617,752 units at the price of CAD$0.12 per unit and
      each unit consists of one share purchase warrant which two warrants
      entitle a holder to purchase one common share at CAD$0.20 per share for a
      period of one year, so that effective December 24, 2009, the Company had
      12,350,622 shares of common stock issued and outstanding. All shares and
      warrants issued were restricted under applicable securities
  rules.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On March 17, 2010, the Company had increased its
      authorized share capital from 18,750,000 common shares to 200,000,000
      common shares.</P></TD></TR></TABLE>
<P align=center>F-11</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_64></A>
<P style="MARGIN-LEFT: 5%" align=justify>On May 31, 2010, the Company issued
499,893 units at a price of $0.12 per unit for a Settlement Agreement valued at
$59,987. Each unit consists of one common share and one share purchase warrants
at $0.12 per share for a period of two years. All shares and warrants issued
were restricted under applicable securities rules.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On October 21, 2010, the Company
settled a portion of the debt, namely $1,625 with CAB Financial Services by
converting 65,000 warrants into 32,500 common shares of the Company as per
Purchase Agreement dated October 27, 2008 at a price of $0.05 per share.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On October 21, 2010, the Company
settled a portion of the debt, namely $2,167 with Christopher Bunka by
converting 86,667 warrants into 43,333 common shares of the Company as per
Purchase Agreement dated October 27, 2008 at a price of $0.05 per share.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On November 16, 2010, the Company
settled the debt incurred as a result of that consulting agreement, being $9,375
to Mr. Tom Ihrke by issuing 40,761 restricted common shares of the Company at a
price of $0.23 per share. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On January 4, 2011, 132,600 warrants
were exercised for 66,300 common shares of the Company at a price of CAD$0.22
for total proceeds of $14,586. 100,000 warrants of the 132,600 warrants were
exercised by a Director of the Company.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On March 6, 2011, the Company accepted
and received gross proceeds of $21,250 for the exercise of 106,250 stock options
by a Director of the Company at an exercise price of $0.20 per stock option into
106,250 common shares of the Company.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 8, 2011, 1,500,000 warrants
were exercised for 1,500,000 common shares of the Company at a price of $0.20
for total proceeds of $300,000. The warrants were exercised by a Director of the
Company.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 28, 2011, 500,000 warrants were
exercised for 500,000 common shares of the Company at a price of $0.20 for total
proceeds of $100,000. The warrants were exercised by a Director/Officer of the
Company.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 13, 2011, 173,043 warrants were
exercised for 173,043 common shares of the Company at a price of $0.20 for total
proceeds of $34,608.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 13, 2011, the Company completed
an equity financing and issued 200,000 units at the price of $0.35 per unit and
each unit consists of one share of common stock and one share purchase warrant
which entitles a holder to purchase one common share at $0.50 per share for a
period of two years. All shares and warrants issued were restricted under
applicable securities rules. The Company accepted and received gross proceeds of
$70,000. $3,500 of finder&#146;s fee was paid to an officer of the Company. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 15, 2011, the Company accepted
and received gross proceeds of $23,750 for the exercise of 118,750 stock options
at an exercise price of $0.20 per ctock option into 118,750 common shares of the
Company. 100,000 stock options were exercised by a Director/Officer of the
Company.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On August 12, 2011, the Company issued
800,000 common shares of the Company at the price of $0.34 for the acquisition
of acquiring an additional 10% working interest in Belmont Lake.</P>
<P style="MARGIN-LEFT: 5%" align=justify>As at October 31, 2011, Lexaria Corp.
has 16,431,452 shares issued and outstanding and 2,471,322 warrants issued and
outstanding.</P>
<P align=center>F-12</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<A name=page_65></A>
<P style="MARGIN-LEFT: 5%" align=justify>The following table summarizes warrant
activity in the fiscal year ended October 31, 2011:</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=center><B>Number of </B></TD>
    <TD width="2%" align=center>&nbsp;</TD>
    <TD width="1%" align=center>&nbsp;</TD>
    <TD width="12%" align=center><B>Weighted-average </B></TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>warrants </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=center><B>exercise price </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Outstanding and exercisable at October 31,
      2010 </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>5,853,769 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;0.20 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Issued </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>1,971,429 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Exercised </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>(2,305,643</TD>
    <TD width="2%" align=left>) </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=left>&nbsp; </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Expired </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right>(3,048,233</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="2%"
    align=left>) </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Oustanding and exercisable at October 31,
      2011 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="12%"
    align=right>2,471,322 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;0.37 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of warrants as at October 31,
2011 is as follows:</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="50%">

  <TR vAlign=top>
    <TD width="10%" >&nbsp;</TD>
    <TD align=center><B>Number </B></TD>
    <TD width="33%" align=center><B>Exercise </B></TD>
    <TD width="33%" align=center><B>Expiry </B></TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><B>Outstanding
      </B><B><SUP>1 </SUP></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center><B>Price </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center><B>Date </B></TD></TR>
  <TR>
    <TD width="10%">&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="33%">&nbsp; </TD>
    <TD width="33%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD bgColor=#e6efff align=right>499,893 </TD>
    <TD bgColor=#e6efff width="33%" align=center>$0.20 </TD>
    <TD bgColor=#e6efff width="33%" align=right>May 31, 2012 </TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=right>1,771,429 </TD>
    <TD width="33%" align=center>$0.40 </TD>
    <TD width="33%" align=right>November 30, 2012 </TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
      align=right>200,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="33%"
    align=center>$0.50 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="33%"
    align=right>July 13, 2013 </TD></TR>
  <TR>
    <TD width="10%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="33%">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="33%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD bgColor=#e6efff colSpan=3 align=left>1. Each warrant entitles a holder
      to purchase one common share. </TD></TR></TABLE></DIV><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="4%">5. </TD>
    <TD colSpan=2>
      <P align=justify>Oil and Gas Properties</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="4%"></TD>
    <TD width="5%">&nbsp;<STRONG>(a) </STRONG></TD>
    <TD>
      <P align=justify><B>Proved properties</B></P></TD></TR></TABLE><BR>
<DIV align=center>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="80%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Properties
      </B><BR></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="17%"
      align=center><B>October 31, </B><BR><B>2010 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="17%"
      align=center><B>Addition </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=center><BR></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="17%"
      align=center><B>Depletion </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=center><BR></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="17%"
      align=center><B>October 31, </B><BR><B>2011 </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>U.S.A. &#150; Proved <BR>property </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="1%" align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="17%" align=right><BR>3,118,376 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="1%" align=left>&nbsp;$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="17%" align=right><BR>&nbsp;969,689 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="1%" align=left>&nbsp;$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="17%" align=right><BR>&nbsp;(370,199</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="2%" align=left>) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="1%" align=left>&nbsp;$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="17%" align=right><BR>&nbsp;3,717,866 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff vAlign=bottom
    width="2%" align=left>&nbsp;</TD></TR></TABLE></DIV>
<P style="MARGIN-LEFT: 5%" align=justify><B>(1) </B><B>Palmetto Point
Project</B></P>
<P style="MARGIN-LEFT: 5%" align=justify>On December 21, 2005, the Company
agreed to purchase a 20% working and revenue interest in a 10 well drilling
program in Mississippi owned by Griffin &amp; Griffin Exploration for $700,000.
Concurrent with signing the Company paid $220,000 and January 17, 2006 the
Company paid the remaining $480,000. The Company applied the full cost method to
account for its oil and gas properties, seven wells were found to be proved
wells, and three wells were found impaired. One of the wells was impaired due to
uneconomic life, and the other two wells were abandoned due to no apparent gas
or oil shows present. The costs of impaired properties were added to the
capitalized cost in determination of the depletion expense.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On September 22, 2006, the Company
elected to participate in an additional two-well program in Mississippi owned by
Griffin &amp; Griffin Exploration and paid $140,000. The two wells were found to
be proved wells.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 23, 2007, the Company acquired
an assignment of 10% gross working interest from a third party for $520,000
secured loan payable. The Company recognized $501,922 in the oil and gas
property. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On October 4, 2007, the Company elected
to participate in the drilling of PP F-12-3 in Mississippi by Griffin &amp;
Griffin Exploration. The Company had 30% gross working interest and paid
$266,348. On July 31, 2008, the Company accrued and paid an additional cost of
$127,707 for the workovers of wells PP F-12 and PP F-12-3. PP F-12 started
production from October 2007, and PP F-12-3 started production from November
2007.</P>
<P align=center>F-13</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_66></A>
<P style="MARGIN-LEFT: 5%" align=justify>On April 3, 2009, the Company entered
into an Asset Purchase Agreement to acquire additional interests in its existing
core producing Mississippi oil and gas properties. The Company paid $40,073.39
to acquire additional 2% working interest in the proven Belmont Lake oil and gas
and an additional 10% working interest in potential nearby exploration wells. At
this time the total working interest for Belmont Lake is 32%; and total working
interest in the exploration wells on approximately 140,000 acres surrounding
Belmont Lake in all directions is 60%.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company had a short-lived
opportunity to acquire additional fractional interests in the Belmont Lake 12-4
well which was expected to be a horizontal well. An unrelated third party did
not participate in its right to participate in the 12-4 well, and therefore a
share of its interest (a &#147;non consent&#148; interest) was made available to the other
participating parties including Lexaria. On August 28, 2009 and effective on
September 1, 2009, to take best advantage of this opportunity, the Company
entered into four separate assignment agreements, three of which were with
people or companies with related management. The Company received from these
four parties proceeds of $371,608.57 to fund additional interests in this well.
As a result, the Company has a 25.84% perpetual gross interest in the well
(18.0% net revenue interest); as well as a 5.2% net revenue interest in the
non-consent interest. The non-consent interest remains valid until such time as
the well produces 500% of all costs and expenses back to the participants in the
form of revenue, at which time the non-consent interest ends. Enertopia, a
company with related management, had acquired from Lexaria a 6.16% perpetual
gross interest in the 12-4 well; David DeMartini, a director of Lexaria,
acquired from Lexaria a 5% gross interest in the non-consent interest in the
12-4 well; and 0743608 BC Ltd. a company owned by the President of the Company,
acquired from Lexaria a 11.60% gross interest in the non-consent interest in the
12-4 well.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On May 31, 2010, the Company signed a
Settlement Agreement with Enertopia Corp., whereby the Company issued 499,893
units at $0.12 per unit and each unit consists of one restricted common share
and one share purchase warrant at $0.20 per share for a period of two years in
exchange for the working interest initially assigned on August 28, 2009.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 16, 2010, the Company signed a
Settlement Agreement with a third party, who had originally participated in the
August 28, 2009, opportunity in the non-consent interest for Belmont Lake 12-4.
The Company returned back $144,063.46 to the third party and cancelled its
participation.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 29, 2010, the Company had
agreed with its Operators at Belmont Lake not to proceed to drill a horizontal
12-4 well. Rather, two of the three proposed vertical wells 12-2, 12-4, or 12-5
were proposed to be drilled. To take best advantage of this opportunity, the
Company cancelled all previous agreements relating to August 28, 2009 with
respect to Belmont Lake horizontal well 12-4 and entered into three separate
assignment agreements, of which all three were with people or companies with
related management. The Company received total proceeds of $324,677.12 to fund
additional interests in these wells. As a result, the Company had a 32%
perpetual gross interest in the wells (24.0% net revenue interest); as well as a
8% gross interest (6% net revenue interest) in the non-consent interest. The
non-consent interest remains valid until such time as the well produces 500% of
all costs and expenses back to the participants in the form of revenue, at which
time the non-consent interest ends. Emerald Atlantic LLC, a company owned by a
director of Lexaria, acquired from Lexaria a 8.74% gross interest in the
non-consent interest in two of the three vertical wells; and 0743608 BC Ltd. a
company owned by the President of the Company, acquired from Lexaria a 20.79%
gross interest in the non-consent interest in the two of the three vertical
wells; an advisor to the Company acquired from Lexaria 2.46% gross interest in
the non-consent interest in two of the three vertical wells.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The July 29, 2010 agreements were
replaced on September 13, 2010, when the Company entered into three separate
assignment agreements with 0743608 BC Ltd, solely owned by Director/Officer of
the Company; Emerald Atlantic LLC, solely owned by a Director of the Company,
and the Senior VP Business Development. (the &#147;Assignees&#148;), whereby the Assignees
have paid a fee of $408,116 to earn a 24% share of the Company&#146;s gross
non-perpetual 32% interest in the three oil wells being drilled in Wilkinson
County, Mississippi. As a result of the three assignment agreements, Lexaria
receives at no cost to the company, a carried interest of 8% in these same
rights and benefits. The Company assigns, transfers and sets over to the
Assignees, all proportionate rights, interest and benefits in the Assigned Non
Perpetual Interest held by or granted to the Assignor in and to the
Participation Agreement between the Company and Griffin but limited to a gross 500%
      revenue payout based on the total amount paid under the Initial
      Consideration and the Subsequent Consideration after which all rights,
interests and benefits cease. </P>
<P align=center>F-14</P>
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width="100%" noShade>
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<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%" align=left>i. </TD>
    <TD colSpan=2 align=left>Lexaria entered into an Asset
      Purchase Agreement dated August 12, 2011, with Brinx Resources Ltd. to
      acquire 100% of its 10% gross working interest in the oil and gas
      interests located in Mississippi, USA. By acquiring the additional 10%
      working interest in Belmont Lake oil and gas field, Lexaria then had 42%
      working interest in Belmont Lake and retains its existing 60% working
      interest in the exploration wells on approximately 130,000 acres
      surrounding Belmont Lake in all directions. </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colSpan=2 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD align=left>ii. </TD>
    <TD colSpan=2 align=left>Lexaria has agreed to considerations
      as follows; </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD width="5%" align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;1.</TD>
    <TD align=left>&nbsp;$200,000 on the August 12, 2011 (the
      "Initial Payment") (paid), and </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;2. </TD>
    <TD align=left>$200,000 on or before November 12, 2011; or
      interim payments, as agreed, in the amount of $10,000 per month for up to
      3 months following November 12, 2011 with the remaining balance of
      $200,000 then due and payable (the "Final Payment"), and, should Lexaria
      not make the final payment on February 12, 2011 a penalty of $500 per day
      (the &#147;Penalty Payments&#148;) beginning one day after February 12, 2011 and
      accruing until the balance of the $200,000 Final Payment is made to the
      Vendor. Both the Vendor and the Purchaser agree that, should any Penalty
      Payments be due, such Penalty Payments are not deductible from the balance
      of the $200,000 Final Payment. Subsequent to the year ended October 31,
    2011, the Company has paid $30,000, the above mentioned interim payments.    </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD align=left></TD>
    <TD align=left>&nbsp;3.</TD>
    <TD align=left>800,000 shares of restricted common stock
      issued from Lexaria treasury were issued on August 12, </TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>2011. </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left>&nbsp;</TD>
    <TD align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD align=left></TD>
    <TD colSpan=2 align=left>As of October 31, 2011, additional
      expenditures of $340,549 were incurred for workovers and there were
      additional well interest changes or workovers pending of wells PP F-12, PP
      F12-3, and PP F12-29. </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colSpan=2 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD align=left></TD>
    <TD colSpan=2 align=left>As of October 31, 2011, the Company&#146;s
      working interest and production in PPF-12-4 and PPF-12-5 well located at
      Belmont Lake, Mississippi, with carrying values of $1M, are used to secure
      for the convertible debentures issued on November 30, 2010, December 16,
      2010 and December 1, 2011 (see note 7 (b) and note 12 (a)), with aggregate
      amount of $820,000. </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD colSpan=2 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD colSpan=3 align=left>(2) Mississippi and Louisiana, Frio-Wilcox
      Project </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colSpan=3 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD colSpan=3 align=left>In December 2006, the first well CMR-US 39-14 was
      found to have sufficient hydrocarbons to become economic. USA 1-37 and BR
      F-33 had started intermittent production from November 2007. The Company
  applied the full cost method to account for its oil and gas properties.  </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colSpan=3 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD colSpan=3 align=left>As at January 31, 2007, the Company abandoned
      Dixon #1 due to no economic hydrocarbons being present and $162,420 of
      drilling costs was added to the capitalized costs. The Dixon #1 was the
      only Wilcox well the Company has drilled to date. Every other well it has
  participated in located in Mississippi and Louisiana is a Frio well.</TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colSpan=3 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD colSpan=3 align=left>On June 2, 2007, the Company abandoned Randall #1
      and $107,672 drilling costs was added to the capitalized costs in
      determination of depletion expense. </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD colSpan=3 align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD colSpan=3 align=left>During August to October 2007, three additional
      wells, PP F-90, PP F-100, and PP F-111 were drilled in the area. These
      Frio wells were abandoned due to modest gas shows and a total of $306,562
      drilling costs was added to the capitalized costs in determination of
      depletion expense. </TD></TR></TABLE>
<P align=center>F-15</P>
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<TABLE
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border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD colspan="2">
      <P align=justify>During December 2007, two additional wells, PP F-6A and
        PP F-83, were drilled and were plugged and abandoned due to non-economic
    gas shows.</P></TD>
    </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%"><B>(b)</B> </TD>
    <TD>
      <P align=justify>Unproved Properties</P></TD></TR></TABLE>
<BR>
<DIV>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="50%">

  <TR vAlign=top>
    <TD width="20%"  >&nbsp;</TD>
    <TD align=left ><B>Properties</B> </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="38%" align=center><B>October 31,</B> </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="20%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      >&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="38%"
      align=center><B>2011 and 2010</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="20%" >&nbsp;</TD>
    <TD bgColor=#e6efff align=left >U.S.A.-Unproved
      <BR>properties </TD>
    <TD bgColor=#e6efff vAlign=bottom width="1%" align=left>&nbsp;$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="38%"
    align=right><BR>&nbsp;19,293 </TD>
    <TD bgColor=#e6efff width="2%"
align=left>&nbsp;</TD></TR></TABLE></DIV><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>(1) Mississippi and Louisiana, USA</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>The Company entered into an Agreement to acquire a
      working interest in multiple zones of potential oil and gas production in
      Mississippi and Louisiana. This Agreement contemplates up to a 50 well
      drill program for Wilcox and Frio wells, at the Company&#146;s option, within
      the defined area of mutual interest (AMI). The AMI includes over 200,000
      gross acres located non-contiguously between Southwest Mississippi and
      North East Louisiana.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>The Company originally agreed to pay 40% of all prospect
      fees, mineral leases, surface leases, and drilling and completion costs to
      earn a net 32% of all production from all producible zones to the base of
      the Frio formation (Frio Targets); and, 30% of all production to the base
      of the Wilcox formation (Wilcox Targets). All working interests are to be
      registered in the name of Lexaria Corp.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>The Joint Participation Agreement and Joint Lands
      Agreements are between Lexaria Corp. and Griffin &amp; Griffin Exploration
      LLC (G&amp;G) of Jackson, Mississippi.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>On June 21, 2007, the Company acquired an additional 10%
      from a third party for all rights, title and benefits excluding the seven
      wells drilled under the AMI Agreement between August 3, 2006 and June 19,
      2007, specifically wells CMR-USA-39-14, Dixon #1, Faust #1 TEC F-1, CMR/BR
      F-14, RB F-1 Red Bug #2, BR F-33, and Randall #1 F-4, and any offset wells
      that could be drilled to any of these specified wells.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>On July 26, 2007, the Company acquired 5% from a third
      party for all rights, title and benefits in the seven wells drilled under
      the AMI Agreement between August 3, 2006 and June 19, 2007, specifically
      wells CMR-USA-39-14, Dixon #1, Faust #1 TEC F-1, CMR/BR F-14, RB F-1 Red
      Bug #2, BR F-33, and Randall #1 F-4, and any offset wells that could be
      drilled to any of these specified wells.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>On April 3, 2009, the Company entered into an Asset
      Purchase Agreement to acquire additional interests in its existing core
      producing Mississippi oil and gas properties. The Company paid $40,073 to
      acquire an additional 2% working interest in the proven Belmont Lake oil
      and gas field, and an additional 10% working interest in potential nearby
      exploration wells. Further, the Company is required to pay $100 per month
      for a period of 4 years from the closing. Total working interest for
      Belmont Lake as of October 31, 2010 is 32%; and total working interest in
      the exploration wells on approximately 140,000 acres surrounding Belmont
      Lake in all directions as of October 31, 2010, is 60%.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"></TD>
    <TD colSpan=3>
      <P align=justify>On December 16, 2010, the Company entered into an
      assignment agreement with Emerald Atlantic LLC, solely owned by a Director
      of the Company (the Assignee&#148;), whereby the Assignee has paid a fee of
      $30,076 to earn 18% of a 4.423% share of the Company&#146;s net revenue
      interest after field operating expenses for a well to be drilled in
      Wilkinson County.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  <TR>
    <TD width="5%">&nbsp;<STRONG>6.</STRONG> </TD>
    <TD vAlign=top colSpan=4>
      <P align=justify><B>Loan Payable</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">a)</TD>
    <TD vAlign=top colSpan=3>
      <P align=justify>On April 1, 2010, the Company entered into a purchase
      agreement with CAB Financial Services Ltd., a company controlled by
      Christopher Bunka, our President, Chief Executive Officer and Director,
      (&#147;Purchaser&#148;) for a non-secured promissory note in the amount of $75,000
      (the &#147;Promissory Note&#148;). The Purchaser agreed to purchase a non-secured
      18% interest bearing Promissory Note of our company
  subjectto and upon the terms and conditions of the Purchase
      Agreement. The Promissory Note is due and payable on April 1, 2012. The
      Promissory Note may be prepaid in whole or in part at any time prior to
      April 1, 2012 by payment of 108% of the outstanding principal amount
  including accrued and unpaid interest.</P></TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top colSpan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top colSpan=3>As long as the Promissory Note is outstanding, the
      Purchaser may voluntarily convert the Promissory Note including accrued
      and unpaid interest to common shares of our company at the conversion
    price of $0.30 per common share.</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top colSpan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top colSpan=3>The Company did not incur beneficiary conversion charges
      as the conversion price is greater than the fair value of the Company&#146;s
    equity at the time of issuance.</TD>
  </TR>
</TABLE>
<P align=center>F-16</P>
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  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">b) </TD>
    <TD>
      <P align=justify>On November 30, 2010, we closed the first tranche of a
      private placement offering of convertible debentures in the aggregate
      amount of $450,000. The convertible debentures mature on November 30,
      2012, subject to forced conversion as set out in the convertible debenture
      certificate. The convertible debentures pay an interest rate of 12% per
      annum (on a simple basis) and are convertible at $0.35 per unit. Each unit
      is comprised of one share of our common stock and one share purchase
      warrant. Each warrant entitles the holder thereof to purchase one share at
      a price of $0.40 per share up to the earlier of the maturity date of the
      convertible debenture or one year from conversion of the convertible
      debenture. We also entered into a general security agreement with the
      subscribers, whereby the obligations to repay the convertible debenture
      are secured by the Company&#146;s working interest and production in and only
      in two oil wells located at Belmont Lake, Mississippi, with carrying value
      of $1M as of October 31, 2011. One director of the Company and Emerald
      Atlantic LLC, solely owned by the director, subscribed the convertible
      debentures with amount of $50,000.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On December 16, 2010, the Company closed the second
      tranche of a private placement offering of convertible debentures in the
      aggregate amount of $170,000. The convertible debentures mature on
      November 30, 2012, subject to forced conversion as set out in the
      convertible debenture certificate. The convertible debentures pay an
      interest rate of 12% per annum (on a simple basis) and are convertible at
      $0.35 per unit. Each unit is comprised of one share of our common stock
      and one share purchase warrant. Each warrant entitles the holder thereof
      to purchase one share at a price of $0.40 per share up to the earlier of
      the maturity date of the convertible debenture or one year from conversion
      of the convertible debenture. We also entered into a general security
      agreement with the subscribers, whereby the obligations to repay the
      convertible debenture are secured by the same assets for the first tranche
      of the private placement offering on November 30, 2010. One director of
      the Company and Emerald Atlantic LLC, solely owned by the director,
      subscribed the convertible debentures with amount of $120,000.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The aggregate principal value of the above convertible
      debentures was $620,000 and was allocated to the individual components on
      a relative fair value basis. In addition, because the effective conversion
      price of the convertible debentures was below the current trading price of
      the Company&#146;s common shares at the date of issuance, the Company recorded
      a beneficial conversion feature of approximately $20,000. The value of the
      warrants and beneficial conversion feature has been recorded as additional
      paid in capital.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  <TR>
    <TD vAlign=top width="5%"><B>7.</B> </TD>
    <TD colSpan=2>
      <P align=justify><B>(a) Secured loan payable</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On October 27, 2008 the Company entered into a Purchase
      Agreement in the amount of CAD$900,000 of Notes being purchased by the
      President (CAD$400,000), the President&#146;s wholly-owned company
      (CAD$300,000) and a shareholder (CAD$200,000) of the Company
      (&#147;Purchasers&#148;). The Purchasers agreed to purchase an 18% interest bearing
      Promissory Note of the Company subject to and upon the terms and
      conditions of the Purchase Agreement. The Company&#146;s obligations to repay
      the Promissory Note will be secured by certain specified assets of the
      Company pursuant to a Security Agreement. As long as the Promissory Note
      is outstanding, the Purchasers may voluntarily convert the Promissory Note
      to Common Shares at the conversion price of $0.45 per share of Common
      Stock. The Promissory Note matures on October 27, 2010 or by mutual
      agreement by all parties on October 27, 2009.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>In connection with the Purchase Agreement, the Company
      issued a total of 390,000 (1,560,000 pre-consolidation) warrants which two
      warrants entitle a holder to purchase a common share of the Company of
      which 195,000 (780,000 pre-consolidation) warrants are eligible at $0.05
      (adjusted price) and 195,000 (780,000 pre-consolidation) warrants are eligible at
      $0.05 (adjusted price) per share and expire October 27, 2009 and October
      27, 2010, respectively.</P></TD></TR></TABLE>
<P align=center>F-17</P>
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<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>The Company did not incur beneficiary conversion charges
      as the conversion price is greater than the fair value of the Company&#146;s
      equity.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>As at the date of the issuance of the above noted
      Promissory Note, the Company allocated CAD$21,321 and CAD$683,559 to
      warrants (additional paid-in capital) and Promissory Note based on their
      relative fair value.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On July 10, 2009 the Purchasers converted $45,000 of the
      Promissory Note into equity at $0.05.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On October 27, 2009, 191,000 warrants were exercised for
      95,500 common shares.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On October 21, 2010, the Company settled a portion of the
      debt, namely $1,625 with the President&#146;s wholly-owned companyby converting
      65,000 warrants into 32,500 common shares of the Company as per Purchase
      Agreement dated October 27, 2008 at a price of $0.05 per share.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On October 21, 2010, the Company settled a portion of the
      debt, namely $2,166.65 with the President by converting 86,667 warrants
      into 43,333 common shares of the Company as per Purchase Agreement dated
      October 27, 2008 at a price of $0.05 per share.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On October 21, 2010, the Company entered into an
      amendment with loan holders to extend the loan to be on a month-to-month
      basis with the same terms and conditions as pursuant to the
    amendment.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>During the year ended October 31, 2011, the Company has
      paid down the debt by CAD$185,000 and the carrying amount of the secured
      loan is $679,504 as of year end.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%"><B>(b)</B> </TD>
    <TD>
      <P align=justify><B>Unsecured Loan Payable</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On September 13, 2010, we entered into a demand loan
      agreement and promissory note with CAB Financial Services Ltd. (the
      &#147;Lender&#148; or &#147;CAB&#148;), a company controlled by the President of our company.
      The principal amount of the note is $90,000. The loan agreement and
      promissory note provides that the debt be payable on demand. The note has
      an interest rate of 12% per annum.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On January 31, 2011, the Company had paid back the loan
      for the full amount of $90,000 to CAB and accrued interest of
    $3,884.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On April 1, 2010, the Company entered into a purchase
      agreement with a company controlled by the President (the &#147;Purchaser&#148;),
      for a non-secured promissory note in the amount of US$75,000 (the
      &#147;Promissory Note&#148;). The Purchaser agreed to purchase a non-secured 18%
      interest bearing Promissory Note of our company subject to and upon the
      terms and conditions of the Purchase Agreement. The Promissory Note is due
      and payable on April 1, 2012. The Promissory Note may be prepaid in whole
      or in part at any time prior to April 1, 2012 by payment of 108% of the
      outstanding principal amount including accrued and unpaid
  interest.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>As long as the Promissory Note is outstanding, the
      Purchaser may voluntarily convert the Promissory Note including accrued
      and unpaid interest to common shares of our company at the conversion
      price of $0.30 per common share.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>The Company did not incur beneficiary conversion charges
      as the conversion price is great than the fair value of the Company&#146;s
      equity. As of October 31, 2011, the carrying amount of the unsecured loan
      is $75,000.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  <TR>
    <TD vAlign=top width="5%"><B>8.</B> </TD>
    <TD colSpan=2>
      <P align=justify><B>Related Party Transactions</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD>
      <P align=justify>For the year ended October 31, 2011, the Company paid /
      accrued $96,000 to CAB (2010: $97,200), Tom Ihrke, the VP of business
      development, $34,375 (2010: $8,557), and BKB Management Ltd. (&#147;BKB&#148;)
      CAD$64,000 (2010: CAD$54,900) for management, consulting and accounting
      services. CAB is owned by the president of the Company and BKB is owned by
      the CFO of the Company.</P></TD></TR></TABLE>
<P align=center>F-18</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_71></A><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD width="5%"></TD>
    <TD width="5%"></TD>
    <TD >The related party transactions are recorded at the
      exchange amount established and agreed to between the related
  parties.</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD>
      <P align=justify>On October 27, 2008 the Company entered a secured loan
      agreement in the amount of CAD$300,000 with CAB. (See Note 7a). On July
      10, 2009 $40,000 of the debt was converted to equity. On October 21, 2010,
      the Company settled a portion of the debt, namely US$1,625 with CAB by
      converting 65,000 warrants into 32,500 common shares of the Company as per
      Purchase Agreement dated October 27, 2008 at a price of $0.05 per share.
      On June 28, 2011, the Company paid down CAD $100,000 of the debt. For the
      year ended, October 31, 2011, the Company accrued and paid interest
      expenses of CAD $41,509 (2010: CAD$51,025)</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD>
      <P align=justify>On October 27, 2008 the Company entered a secured loan
      agreement in the amount of CAD$400,000 with Christopher Bunka. (See Note
      7a). On October 21, 2010, the Company settled a portion of the debt,
      namely $2,166.65 with Christopher Bunka by converting 86,667 warrants into
      43,333 common shares of the Company as per Purchase Agreement dated
      October 27, 2008 at a price of $0.05 per share. For the year ended,
      October 31, 2011, the Company accrued and paid interest expenses of CAD
      $71,610 (2010: CAD$80,874).</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD>
      <P align=justify>See Note 4, 5, 6, and 7.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(e) </TD>
    <TD>
      <P align=justify>On April 1, 2010, the Company entered a non-secured loan
      agreement in the amount of US$75,000 with CAB (See Note 7). For the year
      ended October 31, 2011, the Company accrued and paid interest expenses of
      $13,500 (2010: $7,875).</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(f) </TD>
    <TD>
      <P align=justify>On September 13, 2010, the Company entered a demand loan
      agreement in the amount of US$90,000 with CAB (See Note 8b). The Company
      accrued interest of $3,884 and paid interest of $3,150. On January 31,
      2011, the Company paid back the loan in full.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(g) </TD>
    <TD>
      <P align=justify>Included in accounts payable, $94,696 (October 31, 2010:
      $90,027) was payable to companies controlled by the president, key
      management personnel and directors of the Company.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(h) </TD>
    <TD>
      <P align=justify>For the year ended October 31, 2011, the Company has
      paid/accrued $153,563 (2010: $Nil) to 0743608 BC Ltd., $64,553 (2010:$Nil)
      to Emerald Atlantic LLC, and $18,196 to Tom Ihrke (2010: $Nil) for their
      respective Non-consent Interests in Belmont Lake. 0743608 BC Ltd. is owned
      by the president of the Company and Emerald Atlantic LLC is owned by a
      Director of the Company.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  <TR>
    <TD vAlign=top width="5%"><B>9.</B> </TD>
    <TD colSpan=2>
      <P align=justify><B>Stock Options</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On January 20, 2010, the Company approved a new 2010
      Equity Compensation plan and granted 975,000 stock options to directors
      and consultants of the Company with an exercise prices of $0.20, vested
      immediately and expiring on January 20, 2015.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>On August 16, 2010, the Company granted 150,000 stock
      options to a consultant of the Company with an exercise price of $0.20,
      vested 75,000 immediately and 75,000 on August 16, 2011 and expiring on
      August 16, 2015.</P></TD></TR></TABLE>
<P align=center>F-19</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_72></A>
<P style="MARGIN-LEFT: 5%" align=justify>On July 11, 2011, the Company granted
700,000 stock options to directors and officers of the Company with an exercise
price of $0.35 per share, vested immediately and expiring on July 11, 2016.</P>
<P style="MARGIN-LEFT: 5%" align=justify>For the year ended October 31, 2011,
the Company recorded a total of $179,789 (2010: $161,366) for stock based
compensation expenses.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The fair value of each option granted
has been estimated as of the date of the grant using the Black-Scholes option
pricing model with the following assumptions: </P>
<DIV align=center>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="80%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=center>Year
      ended October 31, 2011 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=center>Year
      ended October 31, 2010 </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Expected volatility </TD>
    <TD bgColor=#e6efff width="33%" align=center>131.14% </TD>
    <TD bgColor=#e6efff width="33%" align=center>145.85% </TD></TR>
  <TR vAlign=top>
    <TD align=left>Risk-free interest rate </TD>
    <TD width="33%" align=center>2.75% </TD>
    <TD width="33%" align=center>2.46% </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Expected life </TD>
    <TD bgColor=#e6efff width="33%" align=center>5 years </TD>
    <TD bgColor=#e6efff width="33%" align=center>5 years </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Dividend yield </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%" align=center>0.0%
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="33%"
      align=center>0.00% </TD></TR></TABLE></DIV>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of weighted average fair
value of stock options granted during the year ended October 31, 2011 is as
follows:</P>
<DIV align=center>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="80%">

  <TR vAlign=top>
    <TD style="BORDER-TOP: #000000 1px solid" align=left>&nbsp; </TD>
    <TD style="BORDER-TOP: #000000 1px solid" width="15%"
      align=center>Weighted </TD>
    <TD style="BORDER-TOP: #000000 1px solid" width="15%"
      align=center>Weighted </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="15%" align=center>Average </TD>
    <TD width="15%" align=center>Average </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="15%" align=center>Exercise </TD>
    <TD width="15%" align=center>Fair </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Period ended
      October 31, 2011 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="15%"
      align=center>Price </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="15%"
      align=center>Value </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left bgcolor="#E6EFFF">Exercise price is
      greater than market price at grant date: </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="15%" align=center bgcolor="#E6EFFF">$
      0.35 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="15%" align=center bgcolor="#E6EFFF">$
      0.26 </TD></TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="15%"
      align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="15%"
      align=center>&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="15%" align=center>Weighted </TD>
    <TD width="15%" align=center>Weighted </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="15%" align=center>Average </TD>
    <TD width="15%" align=center>Average </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="15%" align=center>Exercise </TD>
    <TD width="15%" align=center>Fair </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Year ended October
      31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="15%"
      align=center>Price </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="15%"
      align=center>Value </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left bgcolor="#E6EFFF">Exercise price is
      greater than market price at grant date: </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="15%" align=center bgcolor="#E6EFFF">$
      0.20 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="15%" align=center bgcolor="#E6EFFF">$
      0.14 </TD></TR></TABLE></DIV>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of the stock options for the
year ended October 31, 2011 is presented below:</P>
<DIV align=center>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="80%">

  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="23%" colSpan=4
    align=center>Options Outstanding </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="10%" align=center>&nbsp; </TD>
    <TD  width="2%" align=center>&nbsp;</TD>
    <TD  width="1%" align=center>&nbsp;</TD>
    <TD width="10%" align=center>Weighted Average </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%"
      align=center>Number of Shares </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%"
      align=center>Exercise Price </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Balance, October 31, 2010 </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="10%" align=right>1,525,000 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="10%" align=right>&nbsp;0.20 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Granted </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="10%" align=right>700,000 </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="10%" align=right>0.35 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Exercised </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="10%" align=right>(225,000</TD>
    <TD bgColor=#e6efff  width="2%" align=left>) </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="10%" align=right>0.20 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Expired </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%"
      align=right>(300,000</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right>0.20
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>A. Balance, October 31, 2011 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="10%"
    align=right>1,700,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="1%" align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="10%"
    align=right>&nbsp;0.26 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD></TR></TABLE></DIV>
<P style="MARGIN-LEFT: 5%" align=justify>The Company has the following options
outstanding and exercisable:</P>
<div align="center">
  <center>
<TABLE
style="BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="80%">

  <TR vAlign=top>
    <TD align=left>October 31, 2011</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="19%" align=right colspan="4">Options outstanding</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="19%" align=left colspan="4">
    <p align="right">Options exercisable </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>

  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>

  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Weighted </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Weighted </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Weighted </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>average </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Average </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Average </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Range of </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Number </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>remaining </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Exercise </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Number </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Exercise </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Exercise prices
</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>of
      shares </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=right>contractual life </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>Price
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>of
      shares </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>Price
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#E6EFFF align=left>$0.20 </TD>
    <TD bgColor=#E6EFFF width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#E6EFFF width="8%" align=right>150,000 </TD>
    <TD bgColor=#E6EFFF width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#E6EFFF width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#E6EFFF width="8%" align=right>3.80 years </TD>
    <TD bgColor=#E6EFFF width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#E6EFFF width="1%" align=left>$</TD>
    <TD bgColor=#E6EFFF width="8%" align=right>0.20 </TD>
    <TD bgColor=#E6EFFF width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#E6EFFF width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#E6EFFF width="8%" align=right>150,000</TD>
    <TD bgColor=#E6EFFF width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#E6EFFF width="1%" align=left>$</TD>
    <TD bgColor=#E6EFFF width="8%" align=right>0.20 </TD>
    <TD bgColor=#E6EFFF width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>$0.20 </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="11%" align=right>850,000 </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>3.23 years </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>$</TD>
    <TD width="8%" align=right>0.20 </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>850,000</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>$</TD>
    <TD width="8%" align=right>0.20 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#E6EFFF align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" bordercolorlight="#000000" bordercolordark="#000000">
    $0.25</TD>
    <TD bgColor=#E6EFFF width="1%" align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" bordercolorlight="#000000" bordercolordark="#000000">&nbsp;</TD>
    <TD style="border-bottom-color:#000000" bgColor=#E6EFFF width="11%"
    align=right bordercolor="#000000" bordercolorlight="#000000" bordercolordark="#000000">700,000 </TD>
    <TD bgColor=#E6EFFF width="2%" align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" bordercolorlight="#000000" bordercolordark="#000000">&nbsp;</TD>
    <TD bgColor=#E6EFFF width="1%" align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" bordercolorlight="#000000" bordercolordark="#000000">&nbsp;</TD>
    <TD bgColor=#E6EFFF width="8%" align=right style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" bordercolorlight="#000000" bordercolordark="#000000">
    4.70 years </TD>
    <TD bgColor=#E6EFFF width="2%" align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">&nbsp;</TD>
    <TD bgColor=#E6EFFF width="1%" align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">$</TD>
    <TD bgColor=#E6EFFF width="8%" align=right style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    0.35 </TD>
    <TD bgColor=#E6EFFF width="2%" align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">&nbsp;</TD>
    <TD bgColor=#E6EFFF width="1%" align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">&nbsp;</TD>
    <TD bgColor=#E6EFFF width="8%" align=right style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    700,000</TD>
    <TD bgColor=#E6EFFF width="2%" align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">&nbsp;</TD>
    <TD bgColor=#E6EFFF width="1%" align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">$</TD>
    <TD bgColor=#E6EFFF width="8%" align=right style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    0.35 </TD>
    <TD bgColor=#E6EFFF width="2%" align=left style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1"
      align=left>Total </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="11%"
      align=right>1,700,000 </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="8%"
    align=right>3.87 years </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="1%"
    align=left>$</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="8%"
    align=right>0.26 </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="8%"
    align=right>1,700,000</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="1%"
    align=left>$</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="8%"
    align=right>0.26 </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-top-style:solid; border-top-width:1" width="2%"
    align=left>&nbsp;</TD></TR></TABLE></center>
</div>
<P align=center>F-20</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_73></A><BR>
<DIV align=center>
<TABLE
style="BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="80%">

  <TR vAlign=top>
    <TD align=left>October 31, 2010 </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="19%" align=right colspan="4">Options outstanding</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="19%" align=left colspan="4">
    <p align="right">Options exercisable </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>

  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>

  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Weighted </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Weighted </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp;</TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Weighted </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>average </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Average </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=left>&nbsp; </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Average </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Range of </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Number </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>remaining </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Exercise </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Number </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>Exercise </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Exercise prices
</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>of
      shares </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=right>contractual life </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>Price
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>of
      shares </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>Price
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>$0.20 </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right>150,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right>4.79 years </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="8%" align=right>0.20 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right>75,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="8%" align=right>0.20 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>$0.20 </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>975,000 </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>4.22 years </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>$</TD>
    <TD width="8%" align=right>0.20 </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="8%" align=right>975,000 </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>$</TD>
    <TD width="8%" align=right>0.20 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>$0.20 </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right>75,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right>0.72 years </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="8%" align=right>0.20 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="8%" align=right>75,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="8%" align=right>0.20 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>$0.20 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=right>325,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>0.64
      years </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%" align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>0.20
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%"
      align=right>325,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%" align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="8%" align=right>0.20
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
      align=left>Total </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="8%"
    align=right>1,525,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="8%"
    align=right>3.34 years </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="1%"
    align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="8%"
    align=right>0.20 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="8%"
    align=right>1,450,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="1%"
    align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="8%"
    align=right>0.20 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD></TR></TABLE></DIV><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>10.</B> </TD>
    <TD>
      <P align=justify><B>Commitments, Significant Contracts and
      Contingencies</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On November 27, 2008, the Company entered into a
      Consulting Agreement with CAB Financial Services Ltd. for consulting
      services of CAB on a continuing basis for a consideration of US$8,000 per
      month plus GST.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On May 12, 2009 the Company entered into a consulting
      agreement with BKB Management Ltd. to act as the Chief Financial Officer
      and a Director for an initial period of six months for consideration of
      CAD $4,500 per month plus GST. This agreement replaces the September 1,
      2008, Controller Agreement with CAB Financial Services Ltd. Subsequent to
      October 31, 2010, effective January 1, 2011, the consideration was
      increased to CAD$5,500 per month plus GST/HST.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On August 5, 2010 we entered into a three-month
      Management agreement with Tom Ihrke, whereby Mr. Ihrke will act as the
      Senior Vice-President, Business Development for the Company for
      consideration of $3,125 per month. On December 2, 2010, the Company
      entered into a month to month management agreement with Tom Ihrke, where
      by Mr. Ihrke will continue to act as the Senior Vice-President Business
      Development for the Company. On October 3, 2011 Mr. Ihrke and the Company
      amended the agreement whereby his title changed to Manager, Business
      Development. The Company will pay a monthly consulting fee of
    $3,125.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>As of October 31, 2011, there is one pending lawsuit
      against the Company. While the ultimate outcome of this matter is not
      presently determinable, it is the opinion of our management that the
      resolution of this outstanding claim will not have a material adverse
      effect on our financial position or results of operations. As of October
      31, 2011, the Company has not recorded any loss in terms of this
      lawsuit.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>See also Note 5, 6, and 7.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>11.</B> </TD>
    <TD>
      <P align=justify><B>Income Tax</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company&#146;s provision for income taxes comprise of the
      following:</P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD  align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><U>2011</U> </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><U>2010</U> </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff  align=left>Current Tax Provision </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;Nil </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;Nil </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD  align=left>Deferred Tax Provision </TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;Nil </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;Nil </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff  align=left>Tax Expense </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;Nil </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;Nil </TD>
    <TD bgColor=#e6efff  width="2%"
  align=left>&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify><B>Rate Reconciliation </B></P>
<P style="MARGIN-LEFT: 5%" align=justify>Income taxes vary from the amount that
would be computed by applying the statutory federal income tax rate of 35%.</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><U>2011</U> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><U>2010</U> </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>U.S. Federal Statutory Rate </TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;(125,453</TD>
    <TD bgColor=#e6efff width="2%" align=left>) </TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;(132,973</TD>
    <TD bgColor=#e6efff width="2%" align=left>) </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Tax Benefit Not Recognized </TD>
    <TD width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;125,453 </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;132,973 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Tax Expenses </TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;Nil </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;Nil </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR></TABLE>
<p align=center>F-21</p>
<hr style="PAGE-BREAK-AFTER: always" align=center color=black size=5
width="100%" noshade>
<!--$$/page=-->
<a name=page_74></a><br>
<P align=justify>The tax effects of temporary differences that give rise to the
Company&#146;s deferred tax asset (liability) are as follows: </P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><U>2011</U> </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right><U>2010</U> </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left><B>Deferred Tax Assets:</B> </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Net Operating Loss Carry forward </TD>
    <TD width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;1,408,175 </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;1,191,357 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Valuation Allowance </TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;(1,408,175</TD>
    <TD bgColor=#e6efff width="2%" align=left>) </TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;(1,191,357</TD>
    <TD bgColor=#e6efff width="2%" align=left>) </TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Net Deferred Tax Assets </TD>
    <TD width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;Nil </TD>
    <TD width="2%" align=left>&nbsp;</TD>
    <TD width="1%" align=left>$</TD>
    <TD width="12%" align=right>&nbsp;Nil </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Changes in the valuation allowance
relate primarily to net operating losses, resources expenditures and others
which are not currently recognized. The Company has reviewed its net deferred
tax assets and has not recognized potential tax benefits arising there from
because at this time management believes it is more likely than not that the
benefits will not be realized in future year.</P>
<P style="MARGIN-LEFT: 5%" align=justify>For tax purpose, as of October 31,
2011, the Company has operating loss carry forwards of approximately
<U>$4,023,000 which expire in 2025 through 203</U>1 as follow:</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="50%">

  <TR vAlign=top>
    <TD width="10%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid"
    align=center><B>Year</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid"
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid"
    width="47%" align=center><B>Amount</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid"
    width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD bgColor=#e6efff align=center>2025 </TD>
    <TD bgColor=#e6efff width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="47%" align=right>&nbsp;76,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=center>2026 </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="47%" align=right>508,000 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD bgColor=#e6efff align=center>2027 </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="47%" align=right>1,056,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=center>2028 </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="47%" align=right>720,000 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD bgColor=#e6efff align=center>2029 </TD>
    <TD bgColor=#e6efff width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="47%" align=right>753,000 </TD>
    <TD bgColor=#e6efff width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD align=center>2030 </TD>
    <TD width="1%" align=left>&nbsp;</TD>
    <TD width="47%" align=right>552,000 </TD>
    <TD width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
      align=center>2031 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="47%"
    align=right>358,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD></TR>
  <TR>
    <TD width="10%">&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="47%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="10%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
      align=center><B>Total</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="1%"
    align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="47%"
    align=right>&nbsp;4,023,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="2%"
    align=left>&nbsp;</TD></TR></TABLE></DIV><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><b>12. </b> </TD>
    <TD>
      <P align=justify><B>Subsequent Events</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On December 1, 2011 we closed a private placement
      offering of convertible debentures in the aggregate amount of $200,000.
      The convertible debentures mature on December 1, 2012, subject to forced
      conversion as set out in the convertible debenture certificate. The
      convertible debentures pay an interest rate of 12% per annum (on a simple
      basis) and are convertible at $0.35 per unit. Each unit is comprised of
      one share of our common stock and one share purchase warrant. Each warrant
      entitles the holder thereof to purchase one share at a price of $0.40 per
      share from the earlier of the maturity date of the convertible debenture
      or one year from conversion of the convertible debenture. We also entered
      into a general security agreement with the subscribers, whereby the
      obligations to repay the convertible debenture are secured by oil and gas
      properties with carrying value of $1M for the $620,000 private placement
      offering on November 30, 2010 and December 16, 2010 (see note 6(b)). The
      convertible debenture was entered into by two directors of the
    Company.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Also see Note 5 (a).</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>13.</B> </TD>
    <TD>
      <P align=justify><B>Segmented Information</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company&#146;s business is considered as operating in one
      segment (Oil and gas in the United States) based upon the Company&#146;s
      organizational structure, the way in which the operation is managed and
      evaluated, the availability of separate financial results and materiality
      considerations.</P></TD></TR>
  </TABLE>
<P align=center>F-22</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_75></A>
<BR><TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>14.</B> </TD>
    <TD>
      <P align=justify><B>Supplemental Information On Natural Gas and Oil
      Exploration, Development and Production Activities
  (Unaudited):</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify><I>Standardized measure of discounted
future net cash flows relating to proved oil and gas reserve quantities:
</I></P>
<P style="MARGIN-LEFT: 5%" align=justify>The following summarizes the policies
we used in the preparation of the accompanying natural gas and oil reserve
disclosures, standardized measures of discounted future net cash flows from
proved natural gas and oil reserves and the reconciliations of standardized
measures from year to year. The information disclosed, as prescribed by the
Statement of Financial Accounting Standards No. 69 (ASC 932), is an attempt to
present the information in a manner comparable with industry peers.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The information is based on estimates
of proved reserves attributable to our interest in natural gas and oil
properties as of October 31, 2011. These estimates were prepared by independent
petroleum consultants. Proved reserves are estimated quantities of natural gas
and crude oil which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The standardized measure of discounted
future net cash flows from production of proved reserves was developed as
follows:</P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">1. </TD>
    <TD>
      <P align=justify>Estimates are made of quantities of proved reserves and
      future periods during which they are expected to be produced based on
      year-end economic conditions.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">2. </TD>
    <TD>
      <P align=justify>The estimated future cash flows are compiled by applying
      year-end prices of natural gas and oil relating to our proved reserves to
      the year-end quantities of those reserves.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">3. </TD>
    <TD>
      <P align=justify>The future cash flows are reduced by estimated production
      costs, costs to develop and produce the proved reserves and abandonment
      costs, all based on year-end economic conditions.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">4. </TD>
    <TD>
      <P align=justify>Future net cash flows are discounted to present value by
      applying a discount rate of 10%.</P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>The standardized measure of discounted
future net cash flows does not purport, nor should it be interpreted, to present
the fair value of our natural gas and oil reserves. An estimate of fair value
would also take into account, among other things, the recovery of reserves not
presently classified as proved, anticipated future changes in prices and costs,
and a discount factor more representative of the time value of money and the
risks inherent in reserve estimates.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The standardized measure of discounted
future net cash flows relating to proved natural gas and oil reserves is as
follows: </P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid; BORDER-TOP: #000000 1px solid"
    width="15%" align=center>USD$ </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Future cash inflows </TD>
    <TD bgColor=#e6efff width="15%" align=center>16,940,866 </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Future production costs </TD>
    <TD width="15%" align=center>(4,409,690) </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD bgColor=#e6efff align=left>Future development costs </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="15%"
    align=center>(1,070,698) </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Future net cash flows - undiscounted </TD>
    <TD width="15%" align=center>11,460,478 </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD bgColor=#e6efff align=left>10% annual discount for estimated timing of
      cash flows </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="15%"
    align=center>(3,388,906) </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Standardized measure of discounted future net cash flows
</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="15%"
      align=center>8,071,572 </TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>Year-end price per Mcf of natural gas
used in making standardized measure determinations as of October 31, 2011 was
$4.20. Year-end price per Bbl of oil used in making these same calculations was
$108.74. </P>
<P style="MARGIN-LEFT: 5%" align=justify><I>Estimated Net quantities of Natural
Gas and Oil Reserves:</I></P>
<P style="MARGIN-LEFT: 5%" align=justify>The following table sets forth our
proved reserves, including changes, and proved developed reserves at the end of
October 31, 2011. </P>
<P align=center>F-23</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_76></A><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD bgColor=#ffffff align=left>&nbsp;</TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#ffffff align=left>&nbsp;</TD>
    <TD bgColor=#ffffff align=left>&nbsp;</TD>
    <TD bgColor=#ffffff align=center>&nbsp;</TD>
    <TD bgColor=#ffffff align=center>&nbsp;</TD>
    <TD bgColor=#ffffff align=center>&nbsp;</TD>
    <TD bgColor=#ffffff align=center><font style="BORDER-TOP: #000000 1px solid"><b>Natural</b></font></TD>
    <TD bgColor=#ffffff align=center>&nbsp;</TD>
    <TD bgColor=#ffffff align=center>&nbsp;</TD>
    <TD bgColor=#ffffff align=center><font style="BORDER-TOP: #000000 1px solid"><b>Crude Oil</b></font></TD>
    <TD bgColor=#ffffff align=left>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#ffffff align=left>&nbsp;</TD>
    <TD bgColor=#ffffff align=left>&nbsp;</TD>
    <TD bgColor=#ffffff align=center><b>Crude Oil</b></TD>
    <TD bgColor=#ffffff align=center>&nbsp;</TD>
    <TD bgColor=#ffffff align=center>&nbsp;</TD>
    <TD bgColor=#ffffff align=center><b>Gas</b></TD>
    <TD bgColor=#ffffff align=center>&nbsp;</TD>
    <TD bgColor=#ffffff align=center>&nbsp;</TD>
    <TD bgColor=#ffffff align=center><b>Equivalents</b></TD>
    <TD bgColor=#ffffff align=left>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#ffffff align=left>&nbsp;</TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=center bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid"><font style="BORDER-BOTTOM: #000000 1px solid"><b>(MBbls)</b></font></TD>
    <TD align=center bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=center bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=center bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid"><font style="BORDER-BOTTOM: #000000 1px solid"><b>(MMcf)</b></font></TD>
    <TD align=center bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=center bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD align=center bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid"><font style="BORDER-BOTTOM: #000000 1px solid"><b>(MBbls)</b></font></TD>
    <TD align=left bgColor=#ffffff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD bgColor=#ffffff align=left><B>Proved reserves:</B> </TD>
    <TD bgColor=#ffffff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#ffffff width="10%" align=left>&nbsp;</TD>
    <TD bgColor=#ffffff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#ffffff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#ffffff width="10%" align=left>&nbsp; </TD>
    <TD bgColor=#ffffff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#ffffff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#ffffff width="10%" align=left>&nbsp; </TD>
    <TD bgColor=#ffffff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Beginning of the year reserve </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="10%" align=right>125.64 </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="10%" align=right>- </TD>
    <TD  width="2%" align=left>&nbsp;</TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="10%" align=right>125.64 </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Adjustments of reserves in place </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="10%" align=right>41.65 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="10%" align=right>3.22 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="10%" align=right>42.19 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Productions </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%"
    align=right>(11.54</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%"
    align=right>(3.22</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%"
    align=right>(12.04</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>) </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>End of year reserves </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="10%"
    align=right>155.79 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="10%"
    align=right>- </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="10%"
    align=right>155.79 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left><B>Proved developed reserves:</B> </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="10%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="10%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="10%" align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Beginning of the year reserve </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right>57.33    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=right>57.33    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>End of year reserves </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="10%"
    align=right>68.07 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="10%"
    align=right>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="10%"
    align=right>68.07 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD></TR></TABLE>
<P align=center>F-24</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<p align="center"><b>LEXARIA CORP.</b><BR></B><B>BALANCE SHEETS<BR>(Expressed
in U.S. Dollars)</B></p>
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="12%" valign="bottom"><B>April 30</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="12%" valign="bottom">October 31 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><B>2012</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom">2011 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><B>ASSETS</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR>
    <TD valign="bottom">&nbsp; </TD>
    <TD width="1%" valign="bottom" >&nbsp;</TD>
    <TD width="12%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom" >&nbsp;</TD>
    <TD width="1%" valign="bottom" >&nbsp;</TD>
    <TD width="12%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><B>Current</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Cash and
      cash equivalents </TD>
    <TD noWrap align=left width="1%" valign="bottom" ><B>$</B></TD>
    <TD noWrap align=right width="12%" valign="bottom"><B>&nbsp;120,561</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >$</TD>
    <TD noWrap align=right width="12%" valign="bottom">&nbsp;31,201 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Accounts receivable </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><B>139,517</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom">230,880 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Prepaid
      expenses and deposit </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><B>4,424</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom">2,147 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>Total Current Assets</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><B>264,502</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom">264,228 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>Deferred charges (Note 13)</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><B>48,871</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom">33,092 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><B>Oil and gas properties (Note
      6)</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap
      align=left valign="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Proved property </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><B>3,658,563</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom">3,717,866 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Prepayment for oil and gas exploration </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><B>139,891</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom">304,890 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Unproved properties </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><B>19,293</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom">19,293 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><B>3,817,747</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom">4,042,049 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>TOTAL ASSETS</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><B>&nbsp;4,131,120</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom">&nbsp;4,339,369 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>LIABILITIES</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>Current</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Accounts payable and accrued liabilities </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><B>$</B></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><B>&nbsp;197,051</B>
</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom">&nbsp;322,313 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Loan
      payable (Note 7 and 8) </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><B>1,612,403</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom">754,501 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Due to a related party </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><B>1,769</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom">1,769 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>Total Current Liabilities</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><B>1,811,223</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom">1,078,583 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>Loan Payable (Note 7b)</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><B>-</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom">599,438 </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>TOTAL LIABILITIES</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><B>1,811,223</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><B>1,678,021</B> </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>STOCKHOLDERS&#146; EQUITY</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>Share Capital</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Authorized: </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="margin-left: 23pt">200,000,000 common voting shares with a par value of $0.001
      per share Issued and outstanding: 16,431,452 common shares at April 30,
      2012 (16,431,452 common shares at October 31, 2011) </TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="12%" valign="bottom"><B>16,431</B> </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="12%" valign="bottom">16,431 </TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><B>Additional paid-in capital</B>
</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><B>7,117,124</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom">7,107,535 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><B>Deficit</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><B>(4,813,658</B></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><B>)</B> </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom">(4,462,618</TD>
    <TD noWrap align=left width="2%" valign="bottom" >) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><B>Total Stockholders&#146; Equity</B>
</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><B>2,319,897</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom">2,661,348 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR>
    <TD valign="bottom">&nbsp; </TD>
    <TD width="1%" valign="bottom" >&nbsp;</TD>
    <TD width="12%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom" >&nbsp;</TD>
    <TD width="1%" valign="bottom" >&nbsp;</TD>
    <TD width="12%" valign="bottom">&nbsp; </TD>
    <TD width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><B>TOTAL LIABILITIES AND
      STOCKHOLDERS&#146; EQUITY</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><B>&nbsp;4,131,120</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><B>4,339,369</B> </TD>
    <TD noWrap align=left width="2%"
  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR></TABLE>
<P align=center>The accompanying notes are an integral part of these financial
statements.</P>
<P align=center>F-25</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_4></A>
<P align=center><B>LEXARIA CORP.<BR></B><B>STATEMENTS OF STOCKHOLDERS&#146; EQUITY
AND COMPREHENSIVE INCOME <BR>For Six Months Ended April 30, 2012 <BR>(Expressed
in U.S. Dollars)</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left style="font-size: 10pt" valign="bottom" >&nbsp; </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center width="21%"
    colSpan=4 valign="bottom">COMMON STOCK </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="9%" style="font-size: 10pt" valign="bottom">ADDITIONAL </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="9%" style="font-size: 10pt" valign="bottom">TOTAL </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="font-size: 10pt" valign="bottom" >&nbsp; </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="9%" style="font-size: 10pt" valign="bottom">PAID-IN </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="9%" style="font-size: 10pt" valign="bottom">STOCKHOLDERS&#146; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="font-size: 10pt" valign="bottom" >&nbsp; </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="9%" valign="bottom">SHARES </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="9%" valign="bottom">AMOUNT </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="9%" valign="bottom">CAPITAL </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="9%" valign="bottom">DEFICIT </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="9%" valign="bottom">EQUITY </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff style="font-size: 10pt" valign="bottom" >Balance, October 31,
      2010 </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">12,926,348 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">12,926 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">6,065,118 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">(3,924,392</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">) </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">2,153,653 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="font-size: 10pt" valign="bottom" >Warrant conversion @$0.22 </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">66,300 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">66 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">14,520 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">14,586 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff style="font-size: 10pt" valign="bottom" >Issuance of common stock per
      Settlement Agreement at $0.23 per share </TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">40,761 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">41 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">9,335 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom"></TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">9,375 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="font-size: 10pt" valign="bottom" >Warrants for Convertible Debt </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">20,562 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">20,562 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff style="font-size: 10pt" valign="bottom" >Issuance of common stock per
      stock option exercise </TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">106,250 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">106 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">21,144 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom"></TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">21,250 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left style="font-size: 10pt" valign="bottom" >Issuance of common stock per warrant exercise
      @ $0.20 </TD>
    <TD align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=right width="9%" style="font-size: 10pt" valign="bottom">2,173,043 </TD>
    <TD align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=right width="9%" style="font-size: 10pt" valign="bottom">2,173 </TD>
    <TD align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=right width="9%" style="font-size: 10pt" valign="bottom">432,436 </TD>
    <TD align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=left width="9%" style="font-size: 10pt" valign="bottom"></TD>
    <TD align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=right width="9%" style="font-size: 10pt" valign="bottom">434,609 </TD>
    <TD align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff style="font-size: 10pt" valign="bottom" >Issuance of common stock per
      stock option exercise @ $0.20 </TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">118,750 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">119 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">23,631 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom"></TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">23,750 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="font-size: 10pt" valign="bottom" >Issuance of common stock per PP @
      $0.35 </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">200,000 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">200 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">69,800 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">70,000 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff style="font-size: 10pt" valign="bottom" >Stock Options @$0.35
    </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">179,789 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">179,789 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left style="font-size: 10pt" valign="bottom" >Issuance of common stock per Agreement at
      $0.30 per share </TD>
    <TD align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=right width="9%" style="font-size: 10pt" valign="bottom">800,000 </TD>
    <TD align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=right width="9%" style="font-size: 10pt" valign="bottom">800 </TD>
    <TD align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=right width="9%" style="font-size: 10pt" valign="bottom">239,200 </TD>
    <TD align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=left width="9%" style="font-size: 10pt" valign="bottom"></TD>
    <TD align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD align=right width="9%" style="font-size: 10pt" valign="bottom">240,000 </TD>
    <TD align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff style="font-size: 10pt" valign="bottom" >Issuance of common stock for
      oil &amp; gas property @ $0.34 </TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom"></TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom"></TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">32,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom"></TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">32,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="font-size: 10pt" valign="bottom" >Comprehensive income (loss): </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff style="font-size: 10pt" valign="bottom"
      >&nbsp;&nbsp;&nbsp;&nbsp; (Loss) for the period </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">(538,226</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">) </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">(538,226</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="font-size: 10pt" valign="bottom" >Balance, October 31, 2011 </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">16,431,452 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">16,431 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">7,107,535 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">(4,462,618</TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >) </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">2,661,348 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff style="font-size: 10pt" valign="bottom" >Stock Options @ $0.30
    </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">9,589 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">9,589 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="font-size: 10pt" valign="bottom" >Comprehensive income (loss): </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">(351,040</TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >) </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">(351,040</TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff style="font-size: 10pt" valign="bottom"
      >&nbsp;&nbsp;&nbsp;&nbsp; (Loss) for the period </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="9%" bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff style="font-size: 10pt" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="font-size: 10pt" valign="bottom" >Balance, April 30, 2012 </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">16,431,452 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">16,431 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">7,117,124 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">(4,813,658</TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >) </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt" valign="bottom">2,319,897 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" valign="bottom" >&nbsp;</TD></TR></TABLE>
<P align=center>The accompanying notes are an integral part of these financial
statements<B> </B></P>
<P align=center>F-26</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_5></A>
<P align=center><B>LEXARIA CORP.<BR></B><B>STATEMENTS OF
OPERATIONS<BR></B><B>For Six Months ended April 30, 2012 (Expressed in U.S.
Dollars)</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="23%" colSpan=4><B>THREE MONTHS ENDED</B>
</TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="23%" colSpan=4><B>SIX MONTHS ENDED</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="23%" colSpan=4><B>April 30</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="23%" colSpan=4><B>April 30</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2012</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2011</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2012</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2011</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>Revenue</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Natural gas and oil revenue *
</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%"><B>144,860</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%">287,596 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%"><B>394,243</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%">549,273 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>Cost of revenue</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Natural gas and oil operating
      costs </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>104,211</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">129,940 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>183,846</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">213,364 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Depletion </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>38,934</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>81,845 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>104,504</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>209,064 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>143,145</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">211,785 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>288,350</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">422,428 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Gross profit (loss)</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>1,715</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">75,811 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>105,893</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">126,845 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Expenses</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Accounting and
      audit </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>28,342</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>5,096 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>28,342</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>23,069 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Insurance </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>1,474</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">2,137 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>3,621</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">4,475 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Advertising and
      promotions </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>770</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>20,335 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>2,616</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>20,955 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Bank charges and exchange loss
    </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>11,868</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">49,351 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>12,337</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">63,417 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Stock Based
      Compensation </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>-</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>- </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>9,589</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>- </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Consulting (note 9) </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>50,707</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">66,613 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>126,599</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">114,728 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Depreciation </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>-</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>170 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>-</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>425 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Fees and Dues </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>17,787</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">4,524 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>27,962</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">11,012 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Interest expense
      from loan payable (note 7,8) </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>59,897</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>57,843 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>112,995</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>114,707 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Investor relation </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>12,079</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">7,000 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>29,616</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">29,153 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Legal and
      professional </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>35,419</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>3,578 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>75,811</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>7,889 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Office and miscellaneous </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>524</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">592 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>1,651</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">2,015 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Rent </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>3,921</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>3,545 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>7,675</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>6,972 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Telephone </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>624</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">531 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>1,274</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">1,926 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Taxes </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>-</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>5,385 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>-</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>5,385 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Training </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>-</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>-</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">268 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Travel </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>10,422</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>4,878 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>16,845</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>6,394 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%"><B>233,834</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%">231,578 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%"><B>456,933</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%">412,790 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Net (loss) and comprehensive (loss) for the
      period</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%"><B>(232,119</B></TD>
    <TD noWrap align=left width="2%" ><B>)</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%">(155,767</TD>
    <TD noWrap align=left width="2%" >) </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%"><B>(351,040</B></TD>
    <TD noWrap align=left width="2%" ><B>)</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%">(285,945</TD>
    <TD noWrap align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>Basic and diluted (loss) per
      share</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff><B>(0.01</B></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><B>)</B>
</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff>(0.01</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff><B>(0.02</B></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><B>)</B>
</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff>(0.02</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Weighted average number of common shares
      outstanding</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>- Basic and diluted</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff><B>16,431,452</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff>13,087,131 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff><B>16,431,452</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff>13,032,412 </TD>
    <TD noWrap align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify>* 2011 Revenue has been reclassified The accompanying notes are
an integral part of these financial statements.</P>
<P align=center>F-27</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_6></A>
<P align=center><B>LEXARIA CORP.<BR></B><B>STATEMENT OF CASH FLOWS<BR></B><B>For
Six Months ended April 30, 2012 (Expressed in U.S. Dollars)</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><B>Six Months Ended</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><B>April 30</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2012</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2011</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>Cash flows used in operating
      activities</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Net (loss) </TD>
    <TD noWrap align=left width="1%" ><B>$</B></TD>
    <TD noWrap align=right width="12%"><B>&nbsp;(351,040</B></TD>
    <TD noWrap align=left width="2%" ><B>)</B> </TD>
    <TD noWrap align=left width="1%" ><B>$</B></TD>
    <TD noWrap align=right width="12%"><B>&nbsp;(285,945</B></TD>
    <TD noWrap align=left width="2%" ><B>)</B> </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Adjustments to reconcile net loss to net cash used in
      operating activities: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%"></TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%"></TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Consulting -Debt Settlement </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>9,375</B> </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Consulting
      - Stock based compensation </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>9,589</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>-</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Depreciation </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>-</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>425</B> </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Depletion
    </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>104,504</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>209,064</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Foreign exchange gain / loss </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>11,276</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>47,143</B> </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accredited
      interest on loan payable </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>-</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>1,506</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Change in operating assets and
      liabilities: </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;(Increase)/Decrease in accounts receivable </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>91,363</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>(95,593</B></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><B>)</B>
  </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;(Increase)/
      Decrease in prepaid expenses and deposit </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>144,131</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>(4,073</B></TD>
    <TD noWrap align=left width="2%" ><B>)</B> </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Increase in accounts payable </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>(125,262</B></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><B>)</B>
</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>(36,821</B></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><B>)</B>
  </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Net cash (used in) operating activities</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><B>(115,439</B></TD>
    <TD noWrap align=left width="2%" ><B>)</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><B>(154,919</B></TD>
    <TD noWrap align=left width="2%" ><B>)</B> </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Cash flows used in investing activities</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Oil and gas
      property acquisition and exploration costs </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>(45,201</B></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><B>)</B>
</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>(281,164</B></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><B>)</B>
  </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Net cash (used in) investing activities</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><B>(45,201</B></TD>
    <TD noWrap align=left width="2%" ><B>)</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><B>(281,164</B></TD>
    <TD noWrap align=left width="2%" ><B>)</B> </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Cash flows from financing activities</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Proceeds from
      loan payable </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>50,000</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><B>464,094</B> </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; &nbsp; &nbsp;Proceeds from private placement
      and convertible debt </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>200,000</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>-</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Proceeds from
      Stock Options and warrant </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><B>-</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><B>35,836</B> </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Net cash from financing Activities</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><B>250,000</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><B>499,930</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Increase (Decrease) in cash and cash
      equivalents</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>89,360</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>63,847</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;<B>Cash and cash
      equivalents, beginning of period</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><B>31,201</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><B>62,989</B> </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash
      equivalents, end of period</B> </TD>
    <TD noWrap align=left width="1%" ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><B>&nbsp;120,561</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><B>&nbsp;126,836</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>The accompanying notes are an integral part of these financial
statements.</P>
<P align=center>F-28</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_7></A>
<P align=center><B>LEXARIA CORP. <BR></B><B>NOTES TO THE FINANCIAL STATEMENTS
<BR>April 30, 2012 <BR>(Expressed in U.S. Dollars) <BR>(Unaudited) </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">1. </TD>
    <TD colSpan=2>
      <P align=justify><B>Basis of Presentation</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>The unaudited interim financial statements for the six
      months ended April 30, 2012 included herein have been prepared pursuant to
      the rules and regulations of the Securities and Exchange Commission.
      Certain information and footnote disclosures normally included in annual
      financial statements prepared in accordance with United States generally
      accepted accounting principles have been condensed or omitted pursuant to
      such rules and regulations. In the opinion of management, all adjustments
      (consisting of normal recurring accruals) considered necessary for a fair
      presentation have been included. These unaudited interim financial
      statements should be read in conjunction with the October 31, 2011 audited
      annual financial statements and notes thereto.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>2.</B> </TD>
    <TD colSpan=2>
      <P align=justify><B>Organization and Business</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>The Company was formed on December 9, 2004 under the laws
      of the State of Nevada and commenced operations on December 9, 2004. The
      Company is an independent natural gas and oil company engaged in the
      exploration, development and acquisition of oil and gas properties in the
      United States and Canada. The Company&#146;s entry into the oil and gas
      business began on February 3, 2005. The Company has offices in Vancouver
      and Kelowna, BC, Canada.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>These financial statements have been prepared in
      accordance with United States generally accepted accounting principles
      applicable to a going concern, which contemplates the realization of
      assets and the satisfaction of liabilities and commitments in the normal
      course of business. The Company has incurred an operating loss and
      required additional funds to maintain its operations. Management&#146;s plans
      in this regard are to raise equity and/or debt financing as
    required.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>These conditions raise substantial doubt about the
      Company&#146;s ability to continue as a going concern. These financial
      statements do not include any adjustment that might result from this
      uncertainty.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>3.</B> </TD>
    <TD colSpan=2>
      <P align=justify><B>Business Risk and Liquidity</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>The Company is subject to several categories of risk
      associated with its operating activities. Natural gas and oil exploration
      and production is a speculative business and involves a high degree of
      risk. Among the factors that have a direct bearing on the Company&#146;s
      financial information are uncertainties inherent in estimating natural gas
      and oil reserves, future hydrocarbon production and cash flows,
      particularly with respect to wells that have not been fully tested and
      with wells having limited production histories; access and cost of
      services and equipment; and the presence of competitors with greater
      financial resources and capacity.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>4.</B> </TD>
    <TD colSpan=2>
      <P align=justify><B>Significant Accounting Policies</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%"><B>a)</B> </TD>
    <TD>
      <P align=justify><B>Principles of Accounting</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>These financial statements are stated in U.S. dollars and
      have been prepared in accordance with U.S. generally accepted accounting
      principles.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%"><B>b)</B> </TD>
    <TD>
      <P align=justify><B>Convertible Debentures</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  <TR>
    <TD width="5%"></TD>
    <TD colSpan=2>
      <P align=justify>The Company accounts for its convertible debt instruments
      that may be settled in cash upon conversion according to ASC 470-20-30-22
      which requires the proceeds from the issuance of such convertible
    debt instruments to be allocated between debt and equity
      components so that debt is discounted to reflect the Company&#146;s
      non-convertible debt borrowing rate.</P></TD></TR></TABLE>
<p align="center">F-29<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_8></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Further, the Company applies ASC 470-20-35-13 which
      requires the debt discount to be amortized over the period the convertible
      debt is expected to be outstanding as additional non-cash interest
      expense.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  </TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"><B>c) </B></TD>
    <TD><B>New Accounting Pronouncements</B></TD></TR>
  </TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In June 2011, the Financial Accounting Standards Board
      (FASB) issued Accounting Standards Update (ASU) 2011-05, Comprehensive
      Income (Topic 220): Presentation of Comprehensive Income, which is
      effective for annual reporting periods beginning after December 15, 2011.
      ASU 2011-05 will become effective for the Company on November 1, 2012.
      This guidance eliminates the option to present the components of other
      comprehensive income as part of the statement of changes in stockholders&#146;
      equity. In addition, items of other comprehensive income that are
      reclassified to profit or loss are required to be presented separately on
      the face of the financial statements. This guidance is intended to
      increase the prominence of other comprehensive income in financial
      statements by requiring that such amounts be presented either in a single
      continuous statement of income and comprehensive income or separately in
      consecutive statements of income and comprehensive income. The adoption of
      ASU 2011-05 is not expected to have a material impact on the Company&#146;s
      financial position or results of operations.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>In May 2011, the FASB issued ASU 2011-04, &#147;Fair Value
      Measurement (Topic 820): Amendments to Achieve Common Fair Value
      Measurement and Disclosure Requirements in U.S. GAAP and IFRSs&#148;, which is
      effective for annual reporting periods beginning after December 15, 2011.
      This guidance amends certain accounting and disclosure requirements
      related to fair value measurements. Additional disclosure requirements in
      the update include: (1) for Level 3 fair value measurements, quantitative
      information about unobservable inputs used, a description of the valuation
      processes used by the entity, and a qualitative discussion about the
      sensitivity of the measurements to changes in the unobservable inputs; (2)
      for an entity&#146;s use of a nonfinancial asset that is different from the
      asset&#146;s highest and best use, the reason for the difference; (3) for
      financial instruments not measured at fair value but for which disclosure
      of fair value is required, the fair value hierarchy level in which the
      fair value measurements were determined; and (4) the disclosure of all
      transfers between Level 1 and Level 2 of the fair value hierarchy. The
      Company is currently evaluating the impact of the adoption.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Accounting standards that have been issued or proposed by
      the FASB or other standards-setting bodies that do not require adoption
      until a future date are not expected to have a material impact on the
      Company&#146;s financial statements upon adoption.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>5.</B> </TD>
    <TD>
      <P align=justify><B>Capital Stock</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Share Issuances</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On November 16, 2010, the Company settled the debt
      incurred as a result of that consulting agreement, being $9,375 to Mr. Tom
      Ihrke by issuing 40,761 restricted common shares of the Company at a price
      of $0.23 per share.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On January 4, 2011, 132,600 warrants were exercised for
      66,300 common shares of the Company at a price of CAD$0.22 for total
      proceeds of $14,586. 100,000 warrants of the 132,600 warrants were
      exercised by a Director of the Company.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On March 6, 2011, the Company accepted and received gross
      proceeds of $21,250 for the exercise of 106,250 stock options by a
      Director of the Company at an exercise price of $0.20 per stock option
      into 106,250 common shares of the Company.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On June 8, 2011, 1,500,000 warrants were exercised for
      1,500,000 common shares of the Company at a price of $0.20 for total
      proceeds of $300,000. The warrants were exercised by a Director of the
      Company.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On June 28, 2011, 500,000 warrants were exercised for
      500,000 common shares of the Company at a price of $0.20 for total
      proceeds of $100,000. The warrants were exercised by a Director/Officer of
      the Company.</P></TD></TR></TABLE>
<p align="center">F-30<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_9></A>
<P style="MARGIN-LEFT: 5%" align=justify>On July 13, 2011, 173,043 warrants were
exercised for 173,043 common shares of the Company at a price of $0.20 for total
proceeds of $34,608.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 13, 2011, the Company completed
an equity financing and issued 200,000 units at the price of $0.35 per unit and
each unit consists of one share of common stock and one share purchase warrant
which entitles a holder to purchase one common share at $0.50 per share for a
period of two years. All shares and warrants issued were restricted under
applicable securities rules. The Company accepted and received gross proceeds of
$70,000. $3,500 of finder&#146;s fee was paid to an officer of the Company. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 15, 2011, the Company accepted
and received gross proceeds of $23,750 for the exercise of 118,750 stock options
at an exercise price of $0.20 per stock option into 118,750 common shares of the
Company. 100,000 stock options were exercised by a Director/Officer of the
Company.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On August 12, 2011, the Company issued
800,000 common shares of the Company at the price of $0.34 for the acquisition
of acquiring an additional 10% working interest in Belmont Lake.</P>
<P style="MARGIN-LEFT: 5%" align=justify>As at April 30, 2012, Lexaria Corp. has
16,431,452 shares issued and outstanding and 3,042,751 warrants issued and
outstanding.</P>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of warrants as at April 30,
2012 is as follows:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD noWrap align=left><B>Number</B> </TD>
    <TD noWrap align=left width="33%"><B>Exercise</B> </TD>
    <TD noWrap align=left width="33%"><B>Expiry</B> </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap
      align=left><B>Outstanding </B><B><SUP>1</SUP></B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="33%"><B>Price</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="33%"><B>Date</B> </TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="33%">&nbsp; </TD>
    <TD width="33%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left bgColor=#e6efff>499,893 </TD>
    <TD noWrap align=left width="33%" bgColor=#e6efff>$0.20 </TD>
    <TD noWrap align=left width="33%" bgColor=#e6efff>May 31, 2012
      <SUP>2</SUP> </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left>1,771,429 </TD>
    <TD noWrap align=left width="33%">$0.40 </TD>
    <TD noWrap align=left width="33%">November 30, 2012 </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left bgColor=#e6efff>200,000 </TD>
    <TD noWrap align=left width="33%" bgColor=#e6efff>$0.50 </TD>
    <TD noWrap align=left width="33%" bgColor=#e6efff>July 13, 2013 </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left>571,429 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="33%">$0.40 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="33%">December 1, 2012 </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
    bgColor=#e6efff>3,042,751 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="33%"
    bgColor=#e6efff>$0.37 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="33%"
    bgColor=#e6efff>&nbsp; </TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">1. </TD>
    <TD>
      <P align=justify>Each warrant entitles a holder to purchase one common
      share.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">2. </TD>
    <TD>
      <P align=justify>The warrants expired in the subsequent
  period.</P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>6.</B> </TD>
    <TD>
      <P align=justify><B>Oil and Gas Properties </B></P>
      <P align=justify><B>(a) Proved properties</B></P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD noWrap align=left><B>Properties</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>October 31,</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>Addition</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>Depletion</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>April 30,</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2011</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2012</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left bgColor=#e6efff><B>U.S.A. &#150; Proved property</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3"><B>$</B></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3"><B>&nbsp;3,717,866</B>
    </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3"><B>$</B></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3"><B>&nbsp;45,201</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3"><B>$</B></TD>
    <TD noWrap align=right width="10%"
bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3"><B>&nbsp;(104,504</B></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3"><B>)</B>
</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3"><B>$</B></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3"><B>&nbsp;3,658,563</B>
    </TD>
    <TD noWrap align=left width="2%"
  bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3">&nbsp;</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%"><B>(1)</B> </TD>
    <TD>
      <P align=justify><B>Palmetto Point Project</B></P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On December 21, 2005, the Company agreed to purchase a
      20% working and revenue interest in a 10 well drilling program in
      Mississippi owned by Griffin &amp; Griffin Exploration for $700,000.
      Concurrent with signing the Company paid $220,000 and January 17, 2006 the
      Company paid the remaining $480,000. The Company applied the full cost
      method to account for its oil and gas properties, seven wells were found
      to be proved wells, and three wells were found impaired. One of the wells
      was impaired due to uneconomic life, and the other two wells were
      abandoned due to no apparent gas or oil shows present. The costs of
      impaired properties were added to the capitalized cost in determination of
      the depletion expense.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On September 22, 2006, the Company elected to participate
      in an additional two-well program in Mississippi owned by Griffin &amp;
      Griffin Exploration and paid $140,000. The two wells were found to be
      proved wells.</P></TD></TR></TABLE>
<p align="center">F-31<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_10></A>
<P style="MARGIN-LEFT: 10%" align=justify>On June 23, 2007, the Company acquired
an assignment of 10% gross working interest from a third party for $520,000
secured loan payable. The Company recognized $501,922 in the oil and gas
property. </P>
<P style="MARGIN-LEFT: 10%" align=justify>On October 4, 2007, the Company
elected to participate in the drilling of PP F-12-3 in Mississippi by Griffin
&amp; Griffin Exploration. The Company had 30% gross working interest and paid
$266,348. On July 31, 2008, the Company accrued and paid an additional cost of
$127,707 for the workovers of wells PP F-12 and PP F-12-3. PP F-12 started
production from October 2007, and PP F-12-3 started production from November
2007. </P>
<P style="MARGIN-LEFT: 10%" align=justify>On April 3, 2009, the Company entered
into an Asset Purchase Agreement to acquire additional interests in its existing
core producing Mississippi oil and gas properties. The Company paid $40,073.39
to acquire additional 2% working interest in the proven Belmont Lake oil and gas
and an additional 10% working interest in potential nearby exploration wells. At
this time the total working interest for Belmont Lake is 32%; and total working
interest in the exploration wells on approximately 140,000 acres surrounding
Belmont Lake in all directions is 60%.</P>
<P style="MARGIN-LEFT: 10%" align=justify>The Company had a short-lived
opportunity to acquire additional fractional interests in the Belmont Lake 12-4
well which was expected to be a horizontal well. An unrelated third party did
not participate in its right to participate in the 12-4 well, and therefore a
share of its interest (a &#147;non consent&#148; interest) was made available to the other
participating parties including Lexaria. On August 28, 2009 and effective on
September 1, 2009, to take best advantage of this opportunity, the Company
entered into four separate assignment agreements, three of which were with
people or companies with related management. The Company received from these
four parties proceeds of $371,608.57 to fund additional interests in this well.
As a result, the Company has a 25.84% perpetual gross interest in the well
(18.0% net revenue interest); as well as a 5.2% net revenue interest in the
non-consent interest. The non-consent interest remains valid until such time as
the well produces 500% of all costs and expenses back to the participants in the
form of revenue, at which time the non-consent interest ends. Enertopia, a
company with related management, had acquired from Lexaria a 6.16% perpetual
gross interest in the 12-4 well; David DeMartini, a director of Lexaria,
acquired from Lexaria a 5% gross interest in the non-consent interest in the
12-4 well; and 0743608 BC Ltd. a company owned by the President of the Company,
acquired from Lexaria a 11.60% gross interest in the non-consent interest in the
12-4 well.</P>
<P style="MARGIN-LEFT: 10%" align=justify>On May 31, 2010, the Company signed a
Settlement Agreement with Enertopia Corp., whereby the Company issued 499,893
units at $0.12 per unit and each unit consists of one restricted common share
and one share purchase warrant at $0.20 per share for a period of two years in
exchange for the working interest initially assigned on August 28, 2009.</P>
<P style="MARGIN-LEFT: 10%" align=justify>On June 16, 2010, the Company signed a
Settlement Agreement with a third party, who had originally participated in the
August 28, 2009, opportunity in the non-consent interest for Belmont Lake 12-4.
The Company returned back $144,063.46 to the third party and cancelled its
participation.</P>
<P style="MARGIN-LEFT: 10%" align=justify>On July 29, 2010, the Company had
agreed with its Operators at Belmont Lake not to proceed to drill a horizontal
12-4 well. Rather, two of the three proposed vertical wells 12-2, 12-4, or 12-5
were proposed to be drilled. To take best advantage of this opportunity, the
Company cancelled all previous agreements relating to August 28, 2009 with
respect to Belmont Lake horizontal well 12-4 and entered into three separate
assignment agreements, of which all three were with people or companies with
related management. The Company received total proceeds of $324,677.12 to fund
additional interests in these wells. As a result, the Company had a 32%
perpetual gross interest in the wells (24.0% net revenue interest); as well as a
8% gross interest (6% net revenue interest) in the non-consent interest. The
non-consent interest remains valid until such time as the well produces 500% of
all costs and expenses back to the participants in the form of revenue, at which
time the non-consent interest ends. Emerald Atlantic LLC, a company owned by a
director of Lexaria, acquired from Lexaria a 8.74% gross interest in the
non-consent interest in two of the three vertical wells; and 0743608 BC Ltd. a
company owned by the President of the Company, acquired from Lexaria a 20.79%
gross interest in the non-consent interest in the two of the three vertical
wells; an advisor to the Company acquired from
Lexaria 2.46% gross interest in the non-consent interest in two of the three
vertical wells.</P>
<P align=center>F-32</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_11></A>
<P style="MARGIN-LEFT: 10%" align=justify>The July 29, 2010 agreements were
replaced on September 13, 2010, when the Company entered into three separate
assignment agreements with 0743608 BC Ltd, solely owned by Director/Officer of
the Company; Emerald Atlantic LLC, solely owned by a Director of the Company,
and the Senior VP Business Development. (the &#147;Assignees&#148;), whereby the Assignees
have paid a fee of $408,116 to earn a 24% share of the Company&#146;s gross
non-perpetual 32% interest in the three oil wells being drilled in Wilkinson
County, Mississippi. As a result of the three assignment agreements, Lexaria
receives at no cost to the company, a carried interest of 8% in these same
rights and benefits. The Company assigns, transfers and sets over to the
Assignees, all proportionate rights, interest and benefits in the Assigned Non
Perpetual Interest held by or granted to the Assignor in and to the
Participation Agreement between the Company and Griffin but limited to a gross
500% revenue payout based on the total amount paid under the Initial
Consideration and the Subsequent Consideration after which all rights, interests
and benefits cease.</P>
<P style="MARGIN-LEFT: 10%" align=justify>Lexaria entered into an Asset Purchase
Agreement dated August 12, 2011, with Brinx Resources Ltd. to acquire 100% of
its 10% gross working interest in the oil and gas interests located in
Mississippi, USA. By acquiring the additional 10% working interest in Belmont
Lake oil and gas field, Lexaria then had 42% working interest in Belmont Lake
and retains its existing 60% working interest in the exploration wells on
approximately 130,000 acres surrounding Belmont Lake in all directions.</P>
<P style="MARGIN-LEFT: 10%" align=justify>Lexaria has agreed to considerations
as follows;</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">1. </TD>
    <TD>
      <P align=justify>$200,000 on the August 12, 2011 (the "Initial Payment")
      (paid), and</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">2. </TD>
    <TD>
      <P align=justify>$200,000 on or before November 12, 2011; or interim
      payments, as agreed, in the amount of $10,000 per month for up to 3 months
      following November 12, 2011 with the remaining balance of $200,000 then
      due and payable (the "Final Payment"), and, should Lexaria not make the
      final payment on February 12, 2011 a penalty of $500 per day (the &#147;Penalty
      Payments&#148;) beginning one day after February 12, 2011 and accruing until
      the balance of the $200,000 Final Payment is made to the Vendor. Both the
      Vendor and the Purchaser agreed that, should any Penalty Payments be due,
      such Penalty Payments are not deductible from the balance of the $200,000
      Final Payment. As at April 30, 2012, the Company has paid $230,000,
      including the Final Payment.</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">3. </TD>
    <TD>
      <P align=justify>800,000 shares of restricted common stock issued from
      Lexaria treasury were issued on August 12, 2011.</P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 10%" align=justify>As of April 30, 2012, additional
expenditures of $45,201 were incurred for workovers and there were additional
well interest changes or workovers pending of wells PP F-12, PP F12-3, and PP
F29. </P>
<P style="MARGIN-LEFT: 5%" align=justify>As of April 30, 2012, the Company&#146;s
working interest and production in PPF-12-4 and PPF-12-5 well located at Belmont
Lake, Mississippi, with carrying values of $1M, are used as security for the
convertible debentures issued on November 30, 2010, December 16, 2010 and
December 1, 2011 (see note 7 (b) and note 12 (a), with aggregate amount of
$820,000. </P>
<p align="center">F-33</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_12></A>
<P align=justify style="margin-left: 5%"><B>(b) </B>Unproved Properties </P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD noWrap align=left><B>Properties</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>April 30,</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>October 31,</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><B>2012</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><B>2011</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left bgColor=#e6efff><B>U.S.A.-Unproved properties</B>
</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><B>&nbsp;19,293</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><B>19,293</B> </TD>
    <TD noWrap align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE></DIV>
<P style="MARGIN-LEFT: 5%" align=justify><B>(1)</B> <B>Mississippi and
Louisiana, USA</B> </P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company entered into an Agreement
to acquire a working interest in multiple zones of potential oil and gas
production in Mississippi and Louisiana. This Agreement contemplates up to a 50
well drill program for Wilcox and Frio wells, at the Company&#146;s option, within
the defined area of mutual interest (AMI). The AMI includes over 200,000 gross
acres located non-contiguously between Southwest Mississippi and North East
Louisiana. </P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company originally agreed to pay
40% of all prospect fees, mineral leases, surface leases, and drilling and
completion costs to earn a net 32% of all production from all producible zones
to the base of the Frio formation (Frio Targets); and, 30% of all production to
the base of the Wilcox formation (Wilcox Targets). All working interests are to
be registered in the name of Lexaria Corp. </P>
<P style="MARGIN-LEFT: 5%" align=justify>The Joint Participation Agreement and
Joint Lands Agreements are between Lexaria Corp. and Griffin &amp; Griffin
Exploration LLC (G&amp;G) of Jackson, Mississippi. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On June 21, 2007, the Company acquired
an additional 10% from a third party for all rights, title and benefits
excluding the seven wells drilled under the AMI Agreement between August 3, 2006
and June 19, 2007, specifically wells CMR-USA-39-14, Dixon #1, Faust #1 TEC F-1,
CMR/BR F-14, RB F-1 Red Bug #2, BR F-33, and Randall #1 F-4, and any offset
wells that could be drilled to any of these specified wells. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On July 26, 2007, the Company acquired
5% from a third party for all rights, title and benefits in the seven wells
drilled under the AMI Agreement between August 3, 2006 and June 19, 2007,
specifically wells CMR-USA-39-14, Dixon #1, Faust #1 TEC F-1, CMR/BR F-14, RB
F-1 Red Bug #2, BR F-33, and Randall #1 F-4, and any offset wells that could be
drilled to any of these specified wells. </P>
<P style="MARGIN-LEFT: 5%" align=justify>On April 3, 2009, the Company entered
into an Asset Purchase Agreement to acquire additional interests in its existing
core producing Mississippi oil and gas properties. The Company paid $40,073 to
acquire an additional 2% working interest in the proven Belmont Lake oil and gas
field, and an additional 10% working interest in potential nearby exploration
wells. Further, the Company is required to pay $100 per month for a period of 4
years from the closing. Total working interest for Belmont Lake as of October
31, 2010 is 32%; and total working interest in the exploration wells on
approximately 140,000 acres surrounding Belmont Lake in all directions as of
October 31, 2010, is 60%.</P>
<P style="MARGIN-LEFT: 5%" align=justify>On December 16, 2010, the Company
entered into an assignment agreement with Emerald Atlantic LLC, solely owned by
a Director of the Company (the Assignee&#148;), whereby the Assignee has paid a fee
of $30,076 to earn 18% of a 4.423% share of the Company&#146;s net revenue interest
after field operating expenses for a Tuscaloosa well to be drilled in Wilkinson
County. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>7.</B> </TD>
    <TD>
      <P align=justify><B>Loan Payable</B> </P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>&nbsp;
      </TD></TR>
  </TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">a) </TD>
    <TD>
      <P align=justify>On April 1, 2010, the Company entered into a purchase
      agreement with CAB Financial Services Ltd., a company controlled by
      Christopher Bunka, our President, Chief Executive Officer and Director,
      (&#147;Purchaser&#148;) for a non-secured promissory note in the amount of $75,000
      (the &#147;Promissory Note&#148;). The Purchaser agreed to purchase a non-secured
      18% interest bearing Promissory Note of our company subject to and upon
      the terms and conditions of the Purchase Agreement. The Promissory Note is
      due and payable on April 1, 2012. The Promissory Note may be
      prepaid in whole or in part at any time prior to April 1, 2012 by payment
      of 108% of the outstanding principal amount including accrued and unpaid
      interest. Upon the mature of the Promissory Note, it has been renewed to a
      month to month basis.</P></TD></TR></TABLE>
<p align="center">F-34<BR>
</p>
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noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>As long as the Promissory Note is outstanding, the
      Purchaser may voluntarily convert the Promissory Note including accrued
      and unpaid interest to common shares of our company at the conversion
      price of $0.30 per common share.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company did not incur beneficiary conversion charges
      as the conversion price is greater than the fair value of the Company&#146;s
      equity at the time of issuance.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">b) </TD>
    <TD>
      <P align=justify>On November 30, 2010, we closed the first tranche of a
      private placement offering of convertible debentures in the aggregate
      amount of $450,000. The convertible debentures mature on November 30,
      2012, subject to forced conversion as set out in the convertible debenture
      certificate. The convertible debentures pay an interest rate of 12% per
      annum (on a simple basis) and are convertible at $0.35 per unit. Each unit
      is comprised of one share of our common stock and one share purchase
      warrant. Each warrant entitles the holder thereof to purchase one share at
      a price of $0.40 per share up to the earlier of the maturity date of the
      convertible debenture or one year from conversion of the convertible
      debenture. We also entered into a general security agreement with the
      subscribers, whereby the obligations to repay the convertible debenture
      are secured by the Company&#146;s working interest and production in and only
      in two oil wells located at Belmont Lake, Mississippi, with carrying value
      of $1M as of April 30, 2012. One director of the Company and Emerald
      Atlantic LLC, solely owned by the director, subscribed the convertible
      debentures with amount of $50,000.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On December 16, 2010, the Company closed the second
      tranche of a private placement offering of convertible debentures in the
      aggregate amount of $170,000. The convertible debentures mature on
      November 30, 2012, subject to forced conversion as set out in the
      convertible debenture certificate. The convertible debentures pay an
      interest rate of 12% per annum (on a simple basis) and are convertible at
      $0.35 per unit. Each unit is comprised of one share of our common stock
      and one share purchase warrant. Each warrant entitles the holder thereof
      to purchase one share at a price of $0.40 per share up to the earlier of
      the maturity date of the convertible debenture or one year from conversion
      of the convertible debenture. We also entered into a general security
      agreement with the subscribers, whereby the obligations to repay the
      convertible debenture are secured by the same assets for the first tranche
      of the private placement offering on November 30, 2010. One director of
      the Company and Emerald Atlantic LLC, solely owned by the director,
      subscribed the convertible debentures with amount of $120,000.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The aggregate principal value of the above convertible
      debentures was $620,000 and was allocated to the individual components on
      a relative fair value basis. In addition, because the effective conversion
      price of the convertible debentures was below the current trading price of
      the Company&#146;s common shares at the date of issuance, the Company recorded
      a beneficial conversion feature of approximately $20,000. The value of the
      warrants and beneficial conversion feature has been recorded as additional
      paid in capital.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On December 1, 2011, the Company closed a private
      placement offering of convertible debentures in the aggregate amount of
      $200,000. The convertible debentures mature on December 1, 2012, subject
      to forced conversion as set out in the convertible debenture certificate.
      The convertible debentures pay an interest rate of 12% per annum (on a
      simple basis) and are convertible at $0.35 per unit. Each unit is
      comprised of one share of our common share and one share purchase warrant.
      Each warrant entitles the holder thereof to purchase one share at a price
      of $0.40 per share up to the earlier of the maturity date of the
      convertible debenture or one year from conversion of the convertible
      debenture. We also entered into a general security agreement with the
      subscribers, whereby the obligations to repay the convertible debenture
      are secured by the Company&#146;s working interest and production in and only
      in two oil wells located at Belmont Lake, Mississippi, with carrying value
      of $1M as of April 30, 2012. Two directors of the Company, David DeMartini
      and CAB Financial Services Ltd, solely owned by the director, subscribed
      to the convertible debentures with the amount of
  $200,000.</P></TD></TR></TABLE>
<p align="center">F-35<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The aggregate principal value of the above convertible
      debentures was $200,000 and was allocated to the individual components on
      a relative fair value basis. Because the effective conversion price of the
      convertible debentures was above the current trading price of the
      Company&#146;s common shares at the date of issuance, beneficial conversion
      feature is $Nil, therefore, the amount of $200,000 was recorded under loan
      payable.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">c) </TD>
    <TD>
      <P align=justify>On March 30, 2012, the Company entered into a purchase
      agreement with Christopher Bunka, our President, Chief Executive Officer
      and Director, (&#147;Purchaser&#148;) for a non-secured promissory note in the
      amount of $50,000 (the &#147;Promissory Note&#148;). The Purchaser agreed to
      purchase a non-secured 12% interest bearing Promissory Note of our company
      subject to and upon the terms and conditions of the agreement. The
      Promissory Note has a month to month term.</P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>8.</B> </TD>
    <TD noWrap align=left width="95%"><B>Secured loan payable</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left ></TD>
    <TD align=left width="95%">
      <P align=justify>On October 27, 2008 the Company entered into a Purchase
      Agreement in the amount of CAD$900,000 of Notes being purchased by the
      President (CAD$400,000), the President&#146;s wholly-owned company
      (CAD$300,000) and a shareholder (CAD$200,000) of the Company
      (&#147;Purchasers&#148;). The Purchasers agreed to purchase an 18% interest bearing
      Promissory Note of the Company subject to and upon the terms and
      conditions of the Purchase Agreement. The Company&#146;s obligations to repay
      the Promissory Note will be secured by certain specified assets of the
      Company pursuant to a Security Agreement. As long as the Promissory Note
      is outstanding, the Purchasers may voluntarily convert the Promissory Note
      to Common Shares at the conversion price of $0.45 per share of Common
      Stock. The Promissory Note matures on October 27, 2010 or by mutual
      agreement by all parties on October 27, 2009. </P></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="95%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left ></TD>
    <TD align=left width="95%">
      <P align=justify>In connection with the Purchase Agreement, the Company
      issued a total of 390,000 (1,560,000 pre- consolidation) warrants which
      two warrants entitle a holder to purchase a common share of the Company of
      which 195,000 (780,000 pre-consolidation) warrants are eligible at $0.05
      (adjusted price) and 195,000 (780,000 pre-consolidation) warrants are
      eligible at $0.05 (adjusted price) per share and expire October 27, 2009
      and October 27, 2010, respectively. </P></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="95%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left ></TD>
    <TD align=left width="95%">
      <P align=justify>The Company did not incur beneficiary conversion charges
      as the conversion price is greater than the fair value of the Company&#146;s
      equity. </P></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="95%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left ></TD>
    <TD align=left width="95%">
      <P align=justify>As at the date of the issuance of the above noted
      Promissory Note, the Company allocated CAD$21,321 and CAD$683,559 to
      warrants (additional paid-in capital) and Promissory Note based on their
      relative fair value. </P></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="95%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="95%">
      <P align=justify>On July 10, 2009 the Purchasers converted $45,000 of the
      Promissory Note into equity at $0.05. </P></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="95%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="95%">
      <P align=justify>On October 27, 2009, 191,000 warrants were exercised for
      95,500 common shares. </P></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="95%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left ></TD>
    <TD align=left width="95%">
      <P align=justify>On October 21, 2010, the Company settled a portion of the
      debt, namely $1,625 with the President&#146;s wholly- owned company by
      converting 65,000 warrants into 32,500 common shares of the Company as per
      Purchase Agreement dated October 27, 2008 at a price of $0.05 per share.
      </P></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="95%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left ></TD>
    <TD align=left width="95%">
      <P align=justify>On October 21, 2010, the Company settled a portion of the
      debt, namely $2,1675 with the President by converting 86,667 warrants into
      43,333 common shares of the Company as per Purchase Agreement dated
      October 27, 2008 at a price of $0.05 per share. </P></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="95%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left ></TD>
    <TD align=left width="95%">
      <P align=justify>On October 21, 2010, the Company entered into an
      amendment with loan holders to extend the loan to be on a month-to-month
      basis with the same terms and conditions as pursuant to the amendment.
    </P></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="95%">
      <P align=justify> </P></TD></TR>
  <TR vAlign=top>
    <TD align=left ></TD>
    <TD align=left width="95%">
      <P align=justify>During the year ended October 31, 2011, the Company has
      paid down the debt by CAD$185,000 and the carrying amount of the secured
      loan is $673,998 as of April 30, 2012. </P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt"  >&nbsp;</TD>
    <TD noWrap align=center style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt"><B>Interest</B> </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center>&nbsp;
</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="16%"><B>Effective Int. Date</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="16%">&nbsp;<B>Due Date</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="16%"><B>Amount</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="16%"><B>%</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="16%"><B>Interest</B> </TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left bgcolor="#E6EFFF" style="font-size: 10pt">Third Party </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">&nbsp;December 1, 2010 </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">December 1, 2012 </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">50,000 </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">@ 12% </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">6,000/annum </TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt">Third Party </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">&nbsp;December 1, 2010 </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">December 1, 2012 </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">250,000 </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">@ 12% </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">30,000/annum </TD></TR>
  <tr>
    <TD width="5%" style="font-size: 10pt"  >&nbsp;</TD>
    <TD noWrap align=left bgcolor="#E6EFFF" style="font-size: 10pt">David DeDemartini </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">December 2, 2010 </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">December 1, 2012 </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">50,000 </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">@ 12% </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">6,000/annum </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt">Emerald Atlantic </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">December 16, 2010 </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">December 1, 2012 </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">120,000 </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">@ 12% </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">14,400/annum </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left bgcolor="#E6EFFF" style="font-size: 10pt">Third Party </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">December 1, 2010 </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">December 1, 2012 </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">100,000 </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">@ 12% </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">12,000/annum </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt">Third Party </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">December 13, 2010 </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">December 1, 2012 </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">50,000 </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">@ 12% </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">6,000/annum </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left bgcolor="#E6EFFF" style="font-size: 10pt">CAB Financial </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">Month to month </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">75,000 </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">@ 18% </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">1,125/month </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt">CAB Financial </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">Month to month </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">151,525 </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">@ 18% </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">2,273/month </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left bgcolor="#E6EFFF" style="font-size: 10pt">Third Party </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">Month to month </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">110,000 </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">@ 18% </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">1,650 /month </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt">Chris Bunka </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">Month to month </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">395,988 </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">@ 18% </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">5,940/month </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left bgcolor="#E6EFFF" style="font-size: 10pt">CAB Financial </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">December 1, 2011 </TD>
    <TD noWrap align=center width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">December 1, 2012 </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">100,000 </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">@ 12% </TD>
    <TD noWrap align=right width="16%" bgcolor="#E6EFFF" style="font-size: 10pt">12,000/annum </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt">David DeDemartini </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">December 1, 2011 </TD>
    <TD noWrap align=center width="16%" style="font-size: 10pt">December 1, 2012 </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">100,000 </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">@ 12% </TD>
    <TD noWrap align=right width="16%" style="font-size: 10pt">12,000/annum </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left bgcolor="#E6EFFF">Chris Bunka
    </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="16%" bgcolor="#E6EFFF">March 30, 2012 </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=center
      width="16%" bgcolor="#E6EFFF">Month to month </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="16%" bgcolor="#E6EFFF">50,000 </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="16%" bgcolor="#E6EFFF">@ 12% </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="16%" bgcolor="#E6EFFF">6,000/month </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD style="font-size: 10pt">&nbsp; </TD>
    <TD width="16%" style="font-size: 10pt" align="center">&nbsp; </TD>
    <TD width="16%" style="font-size: 10pt" align="center">&nbsp; </TD>
    <TD width="16%" style="font-size: 10pt">&nbsp; </TD>
    <TD width="16%" style="font-size: 10pt">&nbsp; </TD>
    <TD width="16%" style="font-size: 10pt">&nbsp; </TD>
  </tr>
  <tr>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left bgcolor="#E6EFFF"><B>Total
      Outstanding</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left
      width="16%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left
      width="16%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="16%" bgcolor="#E6EFFF"><B>1,602,513</B> </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left
      width="16%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left
      width="16%" bgcolor="#E6EFFF">&nbsp; </TD>
  </tr>
</TABLE>
<p align="center">F-36<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_15></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><b>9.</b> </TD>
    <TD noWrap align=left width="95%"><B>Related Party Transactions</B> </TD></TR>

  <TR vAlign=top>
    <TD noWrap align=left >&nbsp;</TD>
    <TD noWrap align=left width="95%">&nbsp;</TD></TR>

  <TR vAlign=top>
    <TD noWrap align=left >&nbsp;</TD>
    <TD noWrap align=left width="95%">&nbsp;</TD></TR>
  </TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD>
      <P align=justify>For the six months ended April 30, 2012, the Company paid
      / accrued $48,000 to CAB (2011: $48,000), Tom Ihrke, the VP of business
      development, $7,848 (2011: $18,894), and BKB Management Ltd. (&#147;BKB&#148;)
      CAD$33,000 (2011: CAD$31,000) for management, consulting and accounting
      services. CAB is owned by the president of the Company and BKB is owned by
      the CFO of the Company.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The related party transactions are recorded at the
      exchange amount established and agreed to between the related
    parties.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD>
      <P align=justify>On October 27, 2008 the Company entered a secured loan
      agreement in the amount of CAD$300,000 with CAB. (See Note 8). On July 10,
      2009 $40,000 of the debt was converted to equity. On October 21, 2010, the
      Company settled a portion of the debt, namely US$1,625 with CAB by
      converting 65,000 warrants into 32,500 common shares of the Company as per
      Purchase Agreement dated October 27, 2008 at a price of $0.05 per share.
      On June 28, 2011, the Company paid down CAD $100,000 of the debt. For the
      six months ended, April 30, 2012, the Company paid interest expenses of
      CAD $13,637 (2011: CAD$32,824).</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD>
      <P align=justify>On October 27, 2008 the Company entered a secured loan
      agreement in the amount of CAD$400,000 with Christopher Bunka. (See Note
      8). On October 21, 2010, the Company settled a portion of the debt, namely
      $2,166.65 with Christopher Bunka by converting 86,667 warrants into 43,333
      common shares of the Company as per Purchase Agreement dated October 27,
      2008 at a price of $0.05 per share. For the six months ended April 30,
      2012, the Company paid interest expenses of CAD $35,805 (2011:
      CAD$36,750).</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD>
      <P align=justify>See Note 5, 6, 7 and 8.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(e) </TD>
    <TD>
      <P align=justify>On April 1, 2010, the Company entered a non-secured loan
      agreement in the amount of US$75,000 with CAB (See Note 7a). For the six
      months ended April 30, 2012, the Company paid interest expenses of $6,750
      (2011: $6,750).</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(f) </TD>
    <TD>
      <P align=justify>On March 30, 2012, the Company entered a non-secured loan
      agreement in the amount of US$50,000 with Chris Bunka. For the quarter
      ended April 30, 2012, the Company incurred interest expenses of $500
      (2011: $nil).</P></TD></TR></TABLE>
<p align="center">F-37<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_16></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(g) </TD>
    <TD>
      <P align=justify>Included in accounts payable, $82,588 (October 31, 2011:
      $94,696) was payable to companies controlled by the president, key
      management personnel and directors of the Company.</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(h) </TD>
    <TD>
      <P align=justify>For the six months ended April 30, 2012, the Company has
      paid/accrued $23,764 (2011: $63,147) to 0743608 BC Ltd., $9,989
      (2011:$26,544) to Emerald Atlantic LLC, and $2,816 to Tom Ihrke (2011:
      $5,614) for their respective Non-consent Interests in Belmont Lake.
      0743608 BC Ltd. is owned by the president of the Company and Emerald
      Atlantic LLC is owned by a Director of the
Company.</P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>10.</B> </TD>
    <TD>
      <P align=justify><B>Stock Options</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On November 15, 2011, the Company granted 40,000 stock
      options to consultants of the Company with an exercise price of $0.30 per
      share, vested immediately and expiring on November 15, 2016.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>For the six months ended April 30, 2012, the Company
      recorded a total of $9,589 (2011: $Nil) for stock based compensation
      expenses. This is related to a non-exclusive agreement that the Company
      entered into with a third party IR services company, Trident Financial
      Corp., to assist the Company with the development and implementation of a
      public and investor relations and communications program, and provide
      ongoing assistance to the Company regarding the development and
      enhancement of the Company&#146;s public and market image.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The fair value of each option granted has been estimated
      as of the date of the grant using the Black-Scholes option pricing model
      with the following assumptions:</P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="50%">Six months ended April 30, 2012 </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left bgColor=#e6efff>Expected volatility </TD>
    <TD noWrap align=left width="50%" bgColor=#e6efff>129.14% </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left>Risk-free interest rate </TD>
    <TD noWrap align=left width="50%">2.75% </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left bgColor=#e6efff>Expected life </TD>
    <TD noWrap align=left width="50%" bgColor=#e6efff>5 years </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left>Dividend
      yield </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="50%">0.0% </TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of weighted average fair
value of stock options granted during the six months ended April 30, 2012 is as
follows:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">Weighted </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">Weighted </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">Average </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">Average </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">Exercise </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">Fair </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left>Period
      ended April 30, 2012 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">Price </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">Value </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
    bgColor=#e6efff>Exercise price is greater than market price at grant date:
    </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>&nbsp;0.30 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>&nbsp;0.24 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>A summary of the stock options for the
six months ended April 30, 2012 is presented below:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="27%"
    colSpan=4>Options Outstanding </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"></TD>
    <TD noWrap align=center width="2%" ></TD>
    <TD noWrap align=center width="1%" ></TD>
    <TD noWrap align=center width="12%">Weighted Average </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%">Number of Shares </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="2%"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%">Exercise Price </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left bgColor=#e6efff>Balance, October 31, 2011 </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>1,700,000 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;0.26 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD noWrap align=left>Granted </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">40,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">0.30 </TD>
    <TD noWrap align=left width="2%"
>&nbsp;</TD></TR>
  <tr>
    <TD width="5%"  >&nbsp;</TD>
    <TD noWrap align=left bgcolor="#E6EFFF">Balance, April 30, 2012 </TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=right width="12%" bgcolor="#E6EFFF" style="border-bottom-style: double; border-bottom-width: 3">1,740,000 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" style="border-bottom-style: double; border-bottom-width: 3" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" style="border-bottom-style: double; border-bottom-width: 3" >$</TD>
    <TD noWrap align=right width="12%" bgcolor="#E6EFFF" style="border-bottom-style: double; border-bottom-width: 3">&nbsp;0.26 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
  </tr>
</TABLE>
<p align="center">F-38</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P style="MARGIN-LEFT: 5%" align=justify>The Company has the following options
outstanding and exercisable: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt"  >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt" >April 30, 2012 </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=center width="21%" colSpan=4 style="font-size: 10pt">Options outstanding </TD>
    <TD noWrap align=center width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=center width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=center width="21%" colSpan=4 style="font-size: 10pt">Options exercisable </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD></TR>
  <TR>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD style="font-size: 10pt" >&nbsp; </TD>
    <TD width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD width="9%" style="font-size: 10pt">&nbsp; </TD>
    <TD width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD width="9%" style="font-size: 10pt">&nbsp; </TD>
    <TD width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD width="9%" style="font-size: 10pt">&nbsp; </TD>
    <TD width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD width="9%" style="font-size: 10pt">&nbsp; </TD>
    <TD width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD width="9%" style="font-size: 10pt">&nbsp; </TD>
    <TD width="2%" style="font-size: 10pt" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt" >&nbsp; </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">Weighted </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">Weighted </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">Weighted </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt" >&nbsp; </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">average </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">Average </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="9%" style="font-size: 10pt">&nbsp; </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">Average </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt" >Range of </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">Number </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">remaining </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">Exercise </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">Number </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">Exercise </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left
      >Exercise prices </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="9%">of shares </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="9%">contractual life </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="9%">Price </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="9%">of shares </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="9%">Price </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left bgColor=#e6efff style="font-size: 10pt" >$0.20 </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt">150,000 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt">2.72 years </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt">$</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt">0.20 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt">150,000 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt">$</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt">0.20 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left style="font-size: 10pt" >$0.20 </TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">850,000 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">3.29 years </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >$</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">0.20 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">850,000 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left width="1%" style="font-size: 10pt" >$</TD>
    <TD noWrap align=right width="9%" style="font-size: 10pt">0.20 </TD>
    <TD noWrap align=left width="2%" style="font-size: 10pt" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD noWrap align=left bgColor=#e6efff style="font-size: 10pt" >$0.35 </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt">700,000 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt">4.20years </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt">$</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt">0.35 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt">700,000 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff style="font-size: 10pt">$</TD>
    <TD noWrap align=right width="9%" bgColor=#e6efff style="font-size: 10pt">0.35 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left
      >$0.30 </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="9%">40,000 </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="9%">4.24years </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="9%">0.30 </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="9%">40,000 </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=right
      width="9%">0.30 </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD></TR>
  <TR>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD bgColor=#e6efff style="font-size: 10pt" >&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff style="font-size: 10pt">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff style="font-size: 10pt">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff style="font-size: 10pt">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff style="font-size: 10pt">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff style="font-size: 10pt">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff style="font-size: 10pt">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" style="font-size: 10pt" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left
    >Total </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=right
      width="9%">1,740,000 </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=right
      width="9%">3.41 years </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=right
      width="9%">0.26 </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=right
      width="9%">1,740,000 </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=right
      width="9%">0.26 </TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; font-size:10pt" noWrap align=left width="2%"
    >&nbsp;</TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>&nbsp;
      </TD></TR>

  <TR>
    <TD vAlign=top width="5%"><B>11.</B> </TD>
    <TD>
      <P align=justify><B>Commitments, Significant Contracts and
      Contingencies</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On November 27, 2008, the Company entered into a
      Consulting Agreement with CAB Financial Services Ltd. for consulting
      services of CAB on a continuing basis for a consideration of US$8,000 per
      month plus GST.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On May 12, 2009 the Company entered into a consulting
      agreement with BKB Management Ltd. to act as the Chief Financial Officer
      and a Director for an initial period of six months for consideration of
      CAD $4,500 per month plus GST. This agreement replaces the September 1,
      2008, Controller Agreement with CAB Financial Services Ltd. Subsequent to
      October 31, 2010, effective January 1, 2011, the consideration was
      increased to CAD$5,500 per month plus GST/HST.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>On August 5, 2010 we entered into a three-month
      Management agreement with Tom Ihrke, whereby Mr. Ihrke will act as the
      Senior Vice-President, Business Development for the Company for
      consideration of $3,125 per month. On December 2, 2010, the Company
      entered into a month to month management agreement with Tom Ihrke, where
      by Mr. Ihrke will continue to act as the Senior Vice-President Business
      Development for the Company. On October 3, 2011 Mr. Ihrke and the Company
      amended the agreement whereby his title changed to Manager, Business
      Development. The Company will pay a monthly consulting fee of $3,125.
      Effective January 15, 2012, the consulting agreement has been decreased to
      $10 a month.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>Prior to April 30, 2012, there was one pending lawsuit
      against the Company. As of April 30, 2012, the lawsuit was settled with no
      material effect on the Company. As of April 30, 2012, the Company has not
      recorded any loss in terms of this lawsuit.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>See also Note 6, 7, and 8.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>12.</B> </TD>
    <TD>
      <P align=justify><B>Segmented Information</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>The Company&#146;s business is considered as operating in one
      segment (Oil and gas in the United States) based upon the Company&#146;s
      organizational structure, the way in which the operation is managed and
      evaluated, the availability of separate financial results and materiality
      considerations.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><B>13.</B> </TD>
    <TD>
      <P align=justify><B>Subsequent Events</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>See Note 5.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;
      </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>

<P align="justify">
The Company is currently in the process of arranging to offer its securities in both Canada and the United States. The Company has paid broker for the finance service of &#36;48,871 as of April 30, 2012 (October 31, 2011: &#36;33,092), which has
been recorded as deferred charges until the offering is complete. </P>

    </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;
      </TD></TR></TABLE>

<p align="center">F-39</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_17></A><b>
<p ALIGN="center">Management&#146;s Discussion and Analysis of Financial Position and
Results of Operations</p>
</b>
<p ALIGN="justify">The following discussion should be read in conjunction with
our financial statements, including the notes thereto, appearing elsewhere in
this Prospectus. The discussion of results, causes and trends should not be
construed to imply any conclusion that these results or trends will necessarily
continue into the future.</p>
<b>
<p ALIGN="justify">Forward Looking Statements</p>
</b>
<p ALIGN="justify">This Prospectus contains forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as &quot;may&quot;,
&quot;should&quot;, &quot;expects&quot;, &quot;plans&quot;, &quot;anticipates&quot;, &quot;believes&quot;, &quot;estimates&quot;,
&quot;predicts&quot;, &quot;potential&quot; or &quot;continue&quot; or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled &quot;Risk Factors&quot;, that may cause our or our industry&#146;s actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.</p>
<p ALIGN="justify">Our audited annual and unaudited interim financial statements
are stated in United States Dollars (US$) and are prepared in accordance with
United States Generally Accepted Accounting Principles. The following discussion
should be read in conjunction with our financial statements and the related
notes that appear elsewhere in this Prospectus. The following discussion
contains forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those discussed in the
forward looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this Prospectus, particularly in the section entitled &quot;Risk Factors&quot; of this
Prospectus.</p>
<p ALIGN="justify">In this Prospectus, unless otherwise specified, all dollar
amounts are expressed in United States dollars. All references to &quot;CDN$&quot; refer
to Canadian dollars and all references to &quot;common shares&quot; refer to the common
shares in our capital stock. </p>
<p ALIGN="justify">As used in this Prospectus, the terms &quot;we&quot;, &quot;us&quot;, &quot;our&quot; and
&quot;Company&quot; mean Lexaria Corp., and/or our subsidiaries, unless otherwise
indicated.</p>
<b>
<p ALIGN="justify">Results of Operations &#150; Three Months Ended April 30, 2012 and
2011</p>
</b>
<p ALIGN="justify">The following summary of our results of operations should be
read in conjunction with our financial statements for the quarter ended April
30, 2012, which are included herein.</p>
<p ALIGN="justify">Our operating results for the three months ended April 30,
2012, for the three months ended April 30, 2011 and the changes between those
periods for the respective items are summarized as follows:</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%">&nbsp; </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%">&nbsp; </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>Change Between</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%">&nbsp; </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%">&nbsp; </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>Three Month Period</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>Three Months Ended</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>Three Months Ended</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>Ended</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>April 30,</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>April 30,</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>April 30, 2012</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>2012</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>2011</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>and April 30, 2011</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff >Revenue </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>&nbsp;144,860 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>&nbsp;287,596 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>&nbsp;(142,736</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >General and administrative </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">233,834 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">231,578 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">2,256 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff >Interest expense </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>59,897 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>57,843 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>2,054 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >Consulting fees </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">50,707 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">66,613 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">(15,906</TD>
    <TD noWrap align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Oil and gas operating
      expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>104,211 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>129,940 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>(25,729</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left >Professional Fees (legal and audit fees) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">63,761 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">8,674 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">55,087 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff >Net loss </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>(232,119</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>(155,767</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>(76,352</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>)
  </TD></TR></TABLE>
<P align=justify>Our accumulated losses increased to $4,813,658 as of April 30,
2012. Our financial statements report a net loss of $232,119 for the three month
period ended April 30, 2012 compared to a net loss of $155,767 for the three
month period ended April 30, 2011. Our revenues have decreased for the three
month period ended April 30, 2012 compared to the three month period ended April
30, 2011, by $142,736. There was a decrease in production due to a shutdown in
the gas-supply pipeline that powers the artificial lift system at Belmont Lake,
and due to Mississippi River flooding which prevented the operator from
repairing the gas-supply pipeline in a timely manner. The cost of revenue was
$143,145 for the three month period ended April 30, 2012, compared to $211,785
for the three month period ended April 30, 2011; the decrease in cost of revenue
in the current period is largely due to lower depletion costs. As a result our
gross profit is much lower over the same period last year. The Company had oil
and gas operating expenses of $104,211 in the three months ending April 30, 2012
compared to $129,940 for the three months ended April 30, 2011. The decrease in
costs is due to the decrease in production of oil.</P>
<P align=justify>Our net loss has increased for the three month period ended
April 30, 2012 compared to the three month period ended April 30, 2011, by
$76,352 which is largely due to lower revenues from oil production and increased
professional fees. The professional fees primarily relate to prospectus-related
expenses that the Company was involved in; increased legal costs due to a legal
dispute that has been resolved; and the 2011 audit fees. </P>
<p align="center">48</p>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<P align=justify><B>Results of Operations &#150; Six Months Ended April 30, 2012 and
2011 </B></P>
<P align=justify>The following summary of our results of operations should be
read in conjunction with our financial statements for the six months ended April
30, 2012, which are included herein. </P>
<P align=justify>Our operating results for the six months ended April 30, 2012,
for the six months ended April 30, 2011 and the changes between those periods
for the respective items are summarized as follows:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%">&nbsp; </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%">&nbsp; </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>Change Between</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%">&nbsp; </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%">&nbsp; </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>Six Month Period</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>Six Months Ended</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>Six Months Ended</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>Ended</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>April 30,</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>April 30,</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>April 30, 2012</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>2012</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>2011</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="14%"><B>and April 30, 2011</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff >Revenue </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>&nbsp;394,243 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>&nbsp;549,273 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>&nbsp;(155,030</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >General and administrative </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">456,933 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">412,790 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">44,143 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff >Interest expense </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>112,995 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>114,707 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>(1,712</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >Consulting fees </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">126,599 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">114,728 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">11,871 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff >Oil and gas operating
    </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>183,846 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>213,364 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>(29,518</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >expenses </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="14%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="14%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="14%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff >Professional Fees </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>104,153 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>30,958 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="14%" bgColor=#e6efff>73,195 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >Net loss </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">(351,040</TD>
    <TD noWrap align=left width="2%" >) </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">(285,945</TD>
    <TD noWrap align=left width="2%" >) </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="14%">65,095 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>As at April 30, 2012, we had $1,811,223 in current liabilities.
Our net cash used in operating activities for the six months ended April 30,
2012 was $115,439 compared to $154,919 used in the six months ended April 30,
2011. Our accumulated losses increased to $4,813,658 as of April 30, 2012. Our
financial statements report a net loss of $351,040 for the six month period
ended April 30, 2012 compared to a net loss of $285,945 for the six month period
ended April 30, 2012. Our losses have increased primarily because there was a
decrease in production due to a shutdown in the gas-supply pipeline that powers
the artificial lift system at Belmont Lake, and due to Mississippi River
flooding which prevented the operator from repairing the gas-supply pipeline in
a timely manner. The supply of gas has since been rectified and the production
decrease was primarily a second-quarter event, with only a limited effect
expected on third quarter results. Our expenses have also increased for the six
month period ended April 30, 2012, mostly in legal fees for prospectus-related
expenses and increased legal costs due to a legal dispute that has been resolved. The Company also recognized cost of revenue in
oil and gas properties of $288,350 during the six months ended April 30, 2012,
compared to $422,428 for the six months ended April 30, 2011. </P>
<P align=justify>Our total liabilities as of April 30, 2012 were $1,811,223 as
compared to total liabilities of $1,678,021 as of October 31, 2011.</P>
<P align=justify><B>Liquidity and Financial Condition</B></P>
<P align=justify><I>Working Capital</I></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%">April </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%">October </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%">30, </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%">31, </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%">2012 </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%">2011 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Current assets </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;264,502 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;264,228 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Current liabilities </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">1,811,223 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">1,078,583 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Working capital (Deficit) </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>&nbsp;(1,546,721</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>&nbsp;(814,355</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>)
  </TD></TR></TABLE>
<P align=justify><I>Cash Flows</I> </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4>Six Months Ended </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%">April </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%">April </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%">30, 2012 </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%">30, 2011 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Cash flows (used in) operating
      activities </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;(115,439</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) $ </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>(154,919</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Cash flows (used in) investing activities </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">(45,201</TD>
    <TD noWrap align=left width="2%" >) </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">(281,164</TD>
    <TD noWrap align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Cash flows provided by (used in)
      financing activities </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff>250,000 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff>499,930 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Increase (decrease) in cash and cash equivalents </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%">89,360 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%">63,847 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify><I>Operating Activities</I> </P>
<P align=justify>Net cash used in operating activities was $115,439 for the six
months ended April 30, 2012 compared with net cash used in operating activities
of $154,919 in the same period in 2011. </P>
<P align=justify><I>Investing Activities</I> </P>
<P align=justify>Net cash used in investing activities was $45,201 in the six
months ended April 30, 2012 compared to net cash used in investing activities
was $281,164 in the same period in 2011. The use of cash in investing activities
in 2011 is mainly attributable to the new oil wells at Belmont Lake, being
PPF-12-4 and PPF-12-5. </P>
<P align=justify><I>Financing Activities</I> </P>
<P align=justify>Net cash provided in financing activities was $250,000 in the
six months ended April 30, 2012 compared to net cash provided by financing
activities of $499,930 in the same period in 2011. This is attributable to the
convertible debt financing completed on December 16, 2010. For the six month
period April 30, 2012, there was a convertible debt financing completed on
December 1, 2011 and a loan provided to the Company on March 30, 2012. </P>
<P align=justify><B><I>Oil and gas sales volume comparisons for the six months
ended April 30, 2012 compared to the six months ended April 30, 2011
</I></B></P>
<P align=justify>For the six month period ended April 30, 2012, the Company had
$394,243 in revenues compared to $549,273 in revenues for the same six month
period in the prior year. The decrease in revenues is a result from the decrease
in oil production volumes. </P>
<P align=justify><B><I>Results of Operations for our Years Ended October 31,
2011 and 2010</I></B></P>
<P align=justify>Our net loss and comprehensive loss for the year ended October
31, 2011, for the year ended October 31, 2010 and the changes between those
periods for the respective items are summarized as follows: <BR>
</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="100%">

  <TR vAlign=top>
    <TD align=left><BR><BR><BR><BR><BR></TD>
    <TD width="13%" align=center><BR><BR><B>Year Ended</B> <BR><B>October
      31,</B> <BR><B>2011</B> <BR><B>$</B> </TD>
    <TD width="13%" align=center><BR><BR><B>Year Ended</B> <BR><B>October
      31,</B> <BR><B>2010</B> <BR><B>$</B> </TD>
    <TD width="13%" align=center><B>Change Between</B> <BR><B>Year Ended</B>
      <BR><B>October 31, 2011</B> <BR><B>and Year Ended</B> <BR><B>October 31,
      2010</B> <BR><B>$</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Revenue </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">$ 1,133,766 </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">$ 362,471 </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">$ 771,295 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Other (income)expenses </TD>
    <TD width="13%" align=center>Nil </TD>
    <TD width="13%" align=center>Nil </TD>
    <TD width="13%" align=center>Nil </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">General and administrative </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">1,004,137 </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">641,318 </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">362,819 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Interest expense </TD>
    <TD width="13%" align=center>223,673 </TD>
    <TD width="13%" align=center>167,322 </TD>
    <TD width="13%" align=center>56,351 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Write down in carrying value of oil and gas properties
    </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">Nil </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">1 </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">(1) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Consulting fees </TD>
    <TD width="13%" align=center>262,134 </TD>
    <TD width="13%" align=center>168,512 </TD>
    <TD width="13%" align=center>93,622 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Oil and gas operating expenses </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">297,656 </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">152,479 </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">145,177 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Professional Fees </TD>
    <TD width="13%" align=center>90,448 </TD>
    <TD width="13%" align=center>50,562 </TD>
    <TD width="13%" align=center>39,886 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Net Income (loss) </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">(538,226) </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">(552,462) </TD>
    <TD width="13%" align=center bgcolor="#E6EFFF">14,236 </TD></TR></TABLE></DIV>
<P align=justify><B><I>Revenue</I></B></P>
<P align=justify>Our revenue increased by $771,295 during the year ended October
31, 2011. The increase in our oil and gas revenues for our year ended October
31, 2011 was largely due to increased production volumes for oil wells PP F-12-1
and PP F-12-3 along with the addition of two new wells 12-4 and 12-5. The
revenue for the fiscal year 2011 is net of the revenue interests that were
assigned to the related parties of the Company. The assigned revenue interests,
their related cost of revenue and payout of net revenue were included as a part
of the Company&#146;s operations for the Company&#146;s financial statements of first
three quarters in fiscal year 2011, which have been reclassified in the year-end
financial statements. As the amount of revenue recorded was not significantly
material and there was no net impact on the net profit of the Company&#146;s
operations for the financial statements of its first three quarters of 2011, the
revenue and cost of revenue of the first three quarter financial statements of
fiscal year 2011 have not been reclassified.</P>
<P align=justify><B><I>General and Administrative</I></B></P>
<P align=justify>Our general and administrative expenses increased by $362,819
during the year ended October 31, 2011. The increase in our general and
administrative expenses for our year ended October 31, 2011 was due to increased
stock based compensation, consulting, travel, investor relations and
advertising. </P>
<P align=justify><B><I>Professional Fees</I></B></P>
<P align=justify>Our professional fees increased by $39,886 during the year
ended October 31, 2011. There was an increase in accounting, audit and legal
fees for our year ended October 31, 2011 in connection with the preparation and
filing of a Form S-8 and Form S-1.</P>
<P align=justify><B><I>Interest Expense</I></B></P>
<P align=justify>Interest expense increased by $56,351 during the year ended
October 31, 2011. The increase in interest expense for our year ended October
31, 2011 is due to the convertible debt financing made to the Company.</P>
<P align=center>49</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
<!--$$/page=--><A name=page_79></A>
<P align=justify><B><I>Oil and Gas Operating Expenses</I></B></P>
<P align=justify>Oil and gas operating expenses increased to $145,177 during the
year ended October 31, 2011. The increase in oil and gas operating expenses for
our year ended October 31, 2011 was due to the increased production volumes for
oil and gas and the addition of two new wells.</P>
<P align=justify><B>Liquidity and Financial Condition </B></P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%">

  <TR vAlign=top>
    <TD align=left><B><I>Working Capital</I></B> </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=center>At </TD>
    <TD  width="2%" align=center>&nbsp;</TD>
    <TD  width="1%" align=center>&nbsp;</TD>
    <TD width="12%" align=center>At </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=center>October 31, </TD>
    <TD  width="2%" align=center>&nbsp;</TD>
    <TD  width="1%" align=center>&nbsp;</TD>
    <TD width="12%" align=center>October 31, </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=center>2011
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=center>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=center>2010
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Current assets </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;264,228 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;140,206 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Current liabilities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right>1,078,583 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%"
      align=right>1,049,647 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Working capital (deficiency) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="1%" align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="12%"
    align=right>&nbsp;(814,355</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="2%" align=left>) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="1%" align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff width="12%"
    align=right>&nbsp;(909,441</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" bgColor=#e6efff
    width="2%" align=left>) </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD>
    <TD  width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD  width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%">&nbsp;</TD>
    <TD bgColor=#e6efff width="12%">&nbsp; </TD>
    <TD bgColor=#e6efff  width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B><I>Cash Flows</I></B> </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="27%" colSpan=4 align=right>Year Ended </TD>
    <TD  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>&nbsp; </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>October 31, </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>October 31 </TD>
    <TD bgColor=#e6efff  width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right>2011
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%" align=right>2010
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"  width="2%"
    align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Cash flows from (used in) operating
      activities </TD>
    <TD bgColor=#e6efff  width="1%" align=left>$</TD>
    <TD bgColor=#e6efff width="12%" align=right>&nbsp;(195,103</TD>
    <TD bgColor=#e6efff  width="2%" align=left>) </TD>
    <TD bgColor=#e6efff  width="1%" align=left>&nbsp;</TD>
    <TD bgColor=#e6efff width="12%" align=right>(330,336</TD>
    <TD bgColor=#e6efff  width="2%" align=left>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Cash flows (used in) investing activities </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>(697,690</TD>
    <TD  width="2%" align=left>) </TD>
    <TD  width="1%" align=left>&nbsp;</TD>
    <TD width="12%" align=right>(285,242</TD>
    <TD  width="2%" align=left>) </TD></TR>
  <TR vAlign=top>
    <TD bgColor=#e6efff align=left>Cash flows from (used in) financing
      activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right>861,005 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="1%" align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff width="12%"
    align=right>348,400 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" bgColor=#e6efff
    width="2%" align=left>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Net increase (decrease) in cash during year </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="1%"
    align=left>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="12%"
      align=right>&nbsp;(31,788</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="2%"
    align=left>) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="1%"
    align=left>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="12%"
      align=right>(267,178</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double"  width="2%"
    align=left>) </TD></TR></TABLE>
<P align=justify><B><I>Operating Activities</I></B></P>
<P align=justify>Net cash used in operating activities was $195,103 for our year
ended October 31, 2011 compared with cash used in operating activities of
$330,336 in the same period in 2010. This difference was largely due to the
increase in depletion.</P>
<P align=justify><B><I>Investing Activities</I></B></P>
<P align=justify>Net cash used in investing activities was $697,690 for our year
ended October 31, 2011 compared to net cash used in investing activities of
$285,242 in the same period in 2010 was mainly attributable to the two new wells
at Belmont Lake.</P>
<P align=justify><B><I>Financing Activities</I></B></P>
<P align=justify>Net cash provided in financing activities was $861,005 for our
year ended October 31, 2011 compared to net cash provided of $348,400 in the
same period in 2010. This was largely from the proceeds of a convertible debt
financing and conversion of stock options and warrants in 2011. </P>
<P align=justify><B>Contractual Obligations</B></P>
<P align=justify>As a &#147;smaller reporting company&#148;, we are not required to
provide tabular disclosure obligations.</P>
<P align=justify><B>Going Concern</B></P>
<P align=justify>The financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
applicable to a going concern, which contemplates the realization of assets and
the satisfaction of liabilities and commitments in the normal course of
business. Our company has a net loss of $538,226 for the year ended October 31,
2011 [2010 &#150; net loss of $552,462] and at October 31, 2011 had a deficit
accumulated during the exploration stage of
&#36;4,462,618 [2010 &ndash; &#36;3,924,392]. Our company has working capital deficiency of &#36;814,355 as at October 31, 2011 [2010 - &#36;909,441]. Our company requires additional funds to maintain our existing operations and to acquire new
business assets. These conditions raise substantial doubt about our company&rsquo;s ability to continue as a going concern. Management&rsquo;s plans in this regard are to raise equity and debt financing as required, but there is no certainty that
such financing will be available or that we will be available at acceptable terms. The outcome of these matters cannot be predicted at this time.</P>
<P align=center>50</P>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>


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<A name="page_80"></A>

<P align="justify">These financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty.</P>
<P align="justify">
At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have
any arrangements in place for any future debt or equity financing.</P>
<P align="justify">
<B>Off-Balance Sheet Arrangements</B></P>
<P align="justify">
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to stockholders.</P>
<P align="justify">
<B>Critical Accounting Policies</B></P>
<P align="justify">
Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management&#146;s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions
involved with the following aspects of our financial statements is critical to an understanding of our financials.</P>
<P align="justify">
<B>Oil and Gas Properties</B></P>
<P align="justify">
We utilize the full cost method to account for our investment in oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs,
capitalized interest costs relating to unproved properties, geological expenditures, and tangible and intangible development costs including direct internal costs are capitalized to the full cost pool. As of October 31, 2011, we have properties with
proven reserves and production and sales from these reserves has commenced. Capitalized costs, including estimated future costs to develop the reserves and estimated abandonment costs, net of salvage, are being depleted on the units-of-production
method using estimates of the proved reserves. Investments in unproved properties and major development projects including capitalized interest, if any, are not depleted until proved reserves associated with the projects can be determined. If the
future exploration of unproved properties are determined uneconomical the amount of such properties are added to the capitalized cost to be depleted. At October 31, 2010, management believes none of our unproved oil and gas properties were
considered impaired other than as previously reported. </P>
<P align="justify">
The capitalized costs included in the full cost pool are subject to a "ceiling test", which limits such costs to the aggregate of the estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and
operating conditions plus the lower of cost and estimated net realizable value
of unproven properties. </P>

<P align="center">
51</P>

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<P align=justify>Sales of proved and unproved properties are accounted for as
adjustments of capitalized costs with no gain or loss recognized, unless such
adjustments would significantly alter the relationship between capitalized costs
and proved reserves of oil and gas, in which case the gain or loss is recognized
in the statement of operations.</P>
<P align=justify><B>Loss Per Share</B></P>
<P align=justify>Loss per share is computed using the weighted average number of
shares outstanding during the period. We have adopted ASC 220 &#147;<I>Earnings Per
Share</I>&#148;. Diluted loss per share is equivalent to basic loss per share because
the potential exercise of the equity-based financial instruments was
anti-dilutive</P>
<P align=justify><B>Revenue Recognition</B></P>
<P align=justify>Oil and natural gas revenues are recorded using the sales
method whereby our company recognizes oil and natural gas revenue based on the
amount of oil and gas sold to purchasers when title passes, the amount is
determinable and collection is reasonably assured. Actual sales of gas are based
on sales, net of the associated volume charges for processing fees and for costs
associated with delivery, transportation, marketing, and royalties in accordance
with industry standards. Operating costs and taxes are recognized in the same
period of which revenue is earned.</P>
<P align=justify><B>Credit Risk and Receivable Concentration</B></P>
<P align=justify>We place our cash and cash equivalent with a high credit
quality financial institution. As of October 31, 2011, we had approximately
$31,201 in a bank beyond insured limit (October 31, 2010: $62,989). </P>
<P align=justify>The revenues were generated from our sole customer for fiscal
year 2011 and 2010; the corresponding accounts receivable balances were $194,293
and $63,285 at October 31, 2011 and 2010, respectively. </P>
<P align=justify><B>Recently Issued Accounting Standards</B></P>
<P align=justify>Accounting standards that have been issued or proposed by the
FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company&#146;s
financial statements upon adoption.</P>
<P align=center><B>Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure</B></P>
<P align=justify>On June 22, 2011, we were advised by Chang Lee LLP, our
independent registered public accounting firm, that it merged with the firm of
MNP LLP. Except as noted in the paragraph immediately below, the reports of
Chang Lee LLP on our financial statements for the year ended October 31, 2010
and for the period December 9, 2004 (date of inception) through October 31, 2010
did not contain an adverse opinion or disclaimer of opinion, and such reports
were not qualified or modified as to uncertainty, audit scope, or accounting
principle. </P>
<P align=justify>The reports of the Chang Lee LLP on our financial statements as
of and for the year ended October 31, 2010 and for the period December 9, 2004
(date of inception) through October 31, 2010 contained an explanatory paragraph which noted that there was substantial
doubt as to our ability to continue as a going concern since we have not yet
received revenues from sales of products or services, and have not yet commenced
business operations. These factors created substantial doubt about our ability
to continue as a going concern. </P>
<P align=center>52</P>
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width="100%" noShade>
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<P align=justify>During the years ended October 31, 2010 and for the period
December 9, 2004 (date of inception) through October 31, 2010, and through June
22, 2011, we have not had any disagreements with Chang Lee LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to Chang Lee LLP&#146;s
satisfaction, would have caused it to make reference to the subject matter of
the disagreements in its reports on our consolidated financial statements for
such year or in connection with its reports in any subsequent interim period
through the date of resignation. </P>
<P align=justify>During the years ended October 31, 2010 and October 31, 2009,
and through June 22, 2011, there were no reportable events, as defined in Item
304(a)(1)(v) of Regulation S-K. </P>
<P align=justify>On June 22, 2011, we delivered a copy of this report to Chang
Lee LLP. Chang Lee LLP issued its response. The response stated that it agreed
with the foregoing disclosure. A copy of Chang Lee LLP&#146;s response is attached
hereto as Exhibit 16.1. </P>
<P align=justify><B><I>New independent registered public accounting
firm</I></B></P>
<P align=justify>MNP LLP assumed our engagement of Chang Lee LLP. Accordingly
our new independent registered public accounting firm is MNP LLP, 2300 &#150; 1055
Dunsmuir Street, P. O. Box 49148, Vancouver, British Columbia V7X 1J1 and its
telephone number is 604-687-3783. Our board of directors approved MNP LLP as our
principal independent accountant on June 22, 2011. We have not consulted with
MNP LLP on any accounting issues prior to engaging them as our new auditors.
</P>
<P align=justify>During the two most recent fiscal years and through the date of
engagement, we have not consulted with MNP LLP regarding either: </P>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%">1. </TD>
    <TD>
      <P align=justify>The application of accounting principles to any specified
      transaction, either completed or proposed, or the type of audit opinion
      that might be rendered on our financial statements, and neither a written
      report was provided to us nor oral advice was provided that MNP LLP
      concluded was an important factor considered by us in reaching a decision
      as to the accounting, auditing or financial reporting issue; or</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">2. </TD>
    <TD>
      <P align=justify>Any matter that was either subject of disagreement or
      event, as defined in Item 304(a)(1)(iv) of Regulation S-K and the related
      instruction to Item 304 of Regulation S-K, or a reportable event, as that
      term is explained in Item 304(a)(1)(v) of Regulation
S-K.</P></TD></TR></TABLE><BR>
<p align="center">53</p>
<HR style="PAGE-BREAK-AFTER: always" align=center color=black SIZE=5
width="100%" noShade>
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<P align=center><B>Directors and Executive Officers</B></P>
<P align=justify><B>Directors and Officers</B></P>
<P align=justify>All directors of our Company hold office until the next annual
meeting of the security holders or until their successors have been elected and
qualified. The officers of our Company are appointed by our board of directors
and hold office until their death, resignation or removal from office. Our
directors and executive officers, their ages, positions held, and duration as
such, are as follows:</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="100%">

  <TR vAlign=top>
    <TD align=left bgcolor="#D9D9D9" ><BR><B>Name</B> </TD>
    <TD width="40%" align=center bgcolor="#D9D9D9"><BR><B>Position Held with our Company</B> </TD>
    <TD width="10%" align=center bgcolor="#D9D9D9" ><BR><B>Age</B> </TD>
    <TD width="30%" align=center bgcolor="#D9D9D9" ><B>Date First Elected</B>
      <BR><B>Or Appointed</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left >Chris Bunka <BR></TD>
    <TD width="40%" align=center>Chairman, Director and Chief Executive
      <BR>Officer </TD>
    <TD width="10%" align=center >50 <BR></TD>
    <TD width="30%" align=center >October 26, 2006 <BR>February
      14, 2007 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left >Bal
      Bhullar </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="40%"
      align=center>Chief Financial Officer and Director </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center
    >41 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="30%" align=center
    >May 12, 2009 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      >David DeMartini </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="40%"
      align=center>Director </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center
    >68 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="30%" align=center
    >September 8, 2009 </TD></TR>
  <TR vAlign=top>
    <TD align=left >Tom Ihrke <BR></TD>
    <TD width="40%" align=center>Senior Vice-President, Business
      <BR>Development </TD>
    <TD width="10%" align=center >44 <BR></TD>
    <TD width="30%" align=center >August 5, 2010 <BR></TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      >Dustin Elford </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="40%"
      align=center>Director </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center
    >64 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="30%" align=center
    >July 8, 2011 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      >Nicholas Baxter </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="40%"
      align=center>Director </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="10%" align=center
    >57 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="30%" align=center
    >July 8, 2011 </TD></TR></TABLE></DIV>
<P align=justify><I>Business Experience</I></P>
<P align=justify>The following is a brief account of the education and business
experience of each director and executive officer during the past five years,
indicating each person&#146;s principal occupation during the period, and the name
and principal business of the organization by which he was employed.</P>
<P align=justify><B><I>Mr. Christopher Bunka Chairman/CEO</I></B></P>
<P align=justify>Mr. Bunka has served as our director, chairman, president and
chief executive officer since October 26, 2006. From February 14, 2007 until May
12, 2009 he was the chief financial officer of our company. Since October 26,
2006 Mr. Bunka has successfully completed both equity and debt financings for
the Company, completed the acquisition of additional oil &amp; gas assets,
disposed of other oil &amp; gas assets, and restructured the Company. He has
refocused the Company from one of natural gas exploration to that of development
of existing oil reserves, and has engaged additional geophysical expertise in an
attempt to better understand its exploration and development opportunities. Mr.
Bunka has privately evaluated numerous oil and gas properties and investment
opportunities for his private investments during the past 10 years.</P>
<P align=justify>Since 1988, Mr. Bunka has been the CEO of CAB Financial
Services Ltd., a private holding company located in Kelowna, Canada. He is a
venture capitalist and corporate consultant.</P>
<P align=justify>From 1999 to 2002, Mr. Bunka was the President and CEO of
Secure Enterprise Solutions (symbol SETP-OTC) (formerly Newsgurus.com, symbol
NGUR-OTC). The Company subsequently changed its name to Edgetech Services and
traded on the OTC with the symbol EDGH. Newsgurus.com was a web-based media
company. Secure Enterprise Solutions moved into Internet-based computer security
products and services and was subsequently purchased by Edgetech Services. Mr
Bunka is also Chairman/CEO of Enertopia Corp, (symbol ENRT-OTC) a clean energy
company. Mr. Bunka is a director of Defiance Capital Corp., (symbol DEF-TSXV) a
Canadian resource company. Mr. Bunka was appointed as one of our directors due
to his experience in the oil and gas industry as well as expertise in operating
a public company.</P>
<P align=center>54</P>
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width="100%" noShade>


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<P align="justify">
<B><I>Ms. Bal Bhullar, CFO and Director</I></B></P>
<P align="justify">
Ms. Bhullar brings over 18 years of diversified financial and risk management experience in both private and public companies, in the industries of high-tech, film, mining, marine, oil &amp; gas, energy, transport, and spa industries.</P>
<P align="justify">
Among some of the areas of experience, Ms. Bhullar brings expertise in financial &amp; strategic planning, operational &amp; risk management, regulatory compliance reporting, business expansion, start-up operations, financial modeling, program
development, corporate financing, and corporate governance/internal controls. Previously, Ms. Bhullar has held various positions as President of the Risk Management Association of BC, and served as Director and CFO of private and public companies.
Currently, Ms. Bhullar serves as a Director and CFO for Bare Elegance Medspa, CFO for public company Enertopia Corp (symbol ENRT-OTC) and former CFO for ISEE3D Inc. (symbol ICT-TSXV).</P>
<P align="justify">
Ms. Bhullar is a Certified General Accountant and as well holds a CRM designation from Simon Fraser University and a diploma in Financial Management from British Columbia Institute of Technology. Ms. Bhillar was appointed as one of our directors due
to her experience and education in financial matters and corporate governance.</P>
<P align="justify">
<B><I>Mr. Tom Ihrke, Senior Vice-President, Business Development </I></B></P>
<P align="justify">
Tom Ihrke recently sold his General Partner interest in Commissum Capital Management, a capital management and advisory firm which he co-founded in 2001. During his tenure at Commissum, Tom served as portfolio manager and trader of the firm&#146;s
investment fund, while also being retained as a consultant by several companies, including Lexaria, to advise on such matters as capital structure, accessing the capital markets, and mergers and acquisitions. Between 1993 and 2001 Tom worked for
Morgan Keegan and Company as Senior Investment Banker in the firm&#146;s Financial Institution&#146;s Group, and prior to that as Senior Trader and Market Maker, overseeing the firm&#146;s proprietary trading of financial and energy shares. From 1990 to 1991 Tom
traded commodities for his own account as a floor trader on the Chicago Board of Trade, owning a seat on the Mid-America Commodities Exchange. Tom earned his Bachelor of Science at Texas Christian University in 1989, and received his Masters of
Business Administration at the University of Tennessee in 1993.</P>
<P align="justify">
<B><I>Mr. David DeMartini, Director</I></B></P>
<P align="justify">
Dr. DeMartini received a B.S. Physics cum laude at the University of Notre Dame in 1963; and a PhD Physics at Ohio State University in 1969. He is the author of 19 public technical publications and 78 publications that are proprietary to Shell Oil
Company. He has served as a Research Advisor at Shell Development Company at the Bellaire Research Center in Houston; a Senior Staff Supervisor; and a Senior Staff Geophysicist. He has belonged to the Society of Exploration Geophysicists from 1970
to present and was inducted to the Offshore Energy Center Hall of Fame as a Technology Pioneer on September 30, 2006. He has made significant contributions in the fields of rock physics theory and applications; seismic amplitude interpretation,
borehole geophysics, and more. Dr. DeMartini was professionally engaged by the Company in 2007 as a consulting geophysicist to assist in interpretations of seismic data at its Mississippi properties, and has been a director of the Company since
September 9, 2009. Mr. Demartini was appointed as one of our directors due to his experience in the oil and gas industry.</P>

<P align="center">
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<P align="justify">
<B><I>Mr. Dustin Elford, Director</I></B></P>
<P align="justify">
Mr. Elford has been in the oil &amp; gas and mineral exploration businesses for 30 years. He has extensive experience in the development and financing of projects in many areas of North America, South America and Africa. Mr. Elford has served as the
Chief Executive Officer of AMI Resources Inc. since June 3, 1993 to the present. Mr. Elford has also been the Chief Executive Officer and President of Midasco Capital Corp., since May 12, 1994. Both companies are listed on the TSX-V exchange in
Canada. Mr. Elford was appointed as one of our directors due to his experience with publicly traded companies.</P>
<P align="justify">
<B><I>Mr. Nicholas Baxter, Director</I></B></P>
<P align="justify">
Mr. Baxter has a 24 year career in international resource exploration and development. Originally trained as a geophysicist, Mr. Baxter received a Bachelor of Science (Honors) from the University of Liverpool in 1975. Mr. Baxter has worked on
geophysical survey and exploration projects in the U.K., Europe, Africa and the Middle East. From 1981 to 1985, Mr. Baxter worked for Resource Technology plc, a geophysical equipment sales/services company. Resource Technology plc went public on the
USM in London in 1983 and graduated to the London Stock Exchange in 1984. Mr. Baxter left Resource Technology plc and established his own company in 1985 as a co-founder of Addison &amp; Baxter Limited. Addison &amp; Baxter Limited was a private
geophysical/geological sales and services company which was acquired by A&amp;B Geoscience Corporation in 1992. Mr. Baxter was Chief Operating Officer and a director of A&amp;B Geoscience Corporation from 1992 to 2002. Additionally, A&amp;B
Geoscience Corporation, under Mr. Baxter&rsquo;s guidance, secured the first onshore production sharing agreement in Azerbaijan in 1998. A&amp;B Geoscience Corporation became controlled by a private Swiss oil trading firm in 2002. Mr. Baxter worked
as an independent upstream oil and gas consultant from 2002 to 2004. In 2005, Mr. Baxter joined Eurasia Energy Limited, a company traded on the OTC Bulletin Board as its CEO, President and director. Mr. Baxter was appointed as one of our directors
due to his experience in oil and gas exploration.</P>
<P align="justify">
<B>Other Directorships</B></P>
<P align="justify">
Other than as disclosed above, none of our directors hold any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any
company registered as an investment company under the Investment Company Act of 1940. </P>
<P align="justify">
<B>Board of Directors and Director Nominees</B></P>
<P align="justify">
Since our Board of Directors does not include a majority of independent directors, the decisions of the Board regarding director nominees are made by persons who have an interest in the outcome of the determination. The Board will consider
candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Unless otherwise determined, at any time not less than 90 days prior to the next annual Board meeting at which the
slate of director nominees is adopted, the Board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee&rsquo;s qualifications to serve as
a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders. If the proposed nominee is not the same person as the security holder
submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a r&eacute;sum&eacute; supporting the
nominee&#146;s qualifications to serve on the Board, as well as a list of references. </P>

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<P align="justify">
The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders. Once a candidate has been identified, the Board reviews the individual&#146;s experience
and background and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the
proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.</P>
<P align="justify">
Some of the factors which the Board considers when evaluating proposed nominees include their knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions. The Board may request additional information from
each candidate prior to reaching a determination. The Board is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.</P>
<P align="justify">
<B>Conflicts of Interest</B></P>
<P align="justify">
Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of her
other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result, they may have conflicts of interest
in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities, engaged in business activities similar to those we intend to conduct.</P>
<P align="justify">
In general, officers and directors of a corporation are required to present business opportunities to a corporation if:</P>
<UL style="text-align:justify;">
<LI>
<p style="margin-top: 0; margin-bottom: 12">the corporation could financially undertake the opportunity;</LI>
<LI>
<p style="margin-top: 0; margin-bottom: 12">the opportunity is within the corporation&rsquo;s line of business; and</LI>
<LI>
<p style="margin-top: 0; margin-bottom: 12">it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation.</LI>
</UL>
<P align="justify">
We plan to adopt a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.</P>
<P align="justify">
<B>Significant Employees</B></P>
<P align="justify">
Other than as described above, we do not expect any other individuals to make a significant contribution to our business.</P>
<P align="justify">
<B>Legal Proceedings</B></P>
<P align="justify">
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:</P>
<UL style="text-align:justify;">
<LI>
<p style="margin-top: 0; margin-bottom: 12">been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);</LI>
<LI>
<p style="margin-top: 0; margin-bottom: 12">had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or
within two years prior to that time;</LI>
</UL>

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<UL style="text-align:justify;">
<LI>
<p style="margin-top: 0; margin-bottom: 12">been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting,
his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;</LI>
<LI>
<p style="margin-top: 0; margin-bottom: 12">been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or
vacated;</LI>
<LI>
<p style="margin-top: 0; margin-bottom: 12">been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants),
relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction,
order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity;
or</LI>
<LI>
<p style="margin-top: 0; margin-bottom: 12">been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.</LI>
</UL>
<P align="justify">
Except as set forth in our discussion below in &ldquo;Certain Relationships and Related Transactions, and Director Independence &ndash; Transactions with Related Persons,&rdquo; none of our directors, director nominees or executive officers has been
involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. </P>
<P align="justify">
<B>Compliance with Section 16(a) of the Securities Exchange Act of 1934</B></P>
<P align="justify">
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who own more than 10% of our common stock to file with the Securities and Exchange Commission initial statements of beneficial ownership,
reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC
regulations to furnish us with copies of all Section 16(a) reports that they file. </P>
<P align="justify">
Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended October 31, 2011, all filing requirements applicable to our officers,
directors and greater than 10% percent beneficial owners were complied with. </P>
<P align="justify">
<B>Code of Ethics </B></P>
<P align="justify">
We adopted a Code of Ethics applicable to our senior financial officers and certain other finance executives, which is a "code of ethics" as defined by applicable rules of the SEC. Our Code of Ethics is attached as an exhibit to our Form SB-2 filed
on September 20, 2007. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our chief
executive officer, chief financial officer, or certain other finance
executives, we will disclose the nature of the amendment or waiver, its
effective date and to whom it applies in a Current Report on Form 8-K filed with
the SEC. </P>

<P align="center">
58</P>

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<P align=justify><B>Board and Committee Meetings</B></P>
<P align=justify>Our board of directors held no formal meetings during the year
ended October 31, 2010. All proceedings of the board of directors were conducted
by resolutions consented to in writing by all the directors and filed with the
minutes of the proceedings of the directors. Such resolutions consented to in
writing by the directors entitled to vote on that resolution at a meeting of the
directors are, according to the Nevada General Corporate Law and our Bylaws, as
valid and effective as if they had been passed at a meeting of the directors
duly called and held.</P>
<P align=justify><B>Nomination Process</B></P>
<P align=justify>As of October 31, 2011, we did not effect any material changes
to the procedures by which our shareholders may recommend nominees to our board
of directors. Our board of directors does not have a policy with regards to the
consideration of any director candidates recommended by our shareholders. Our
board of directors has determined that it is in the best position to evaluate
our Company&#146;s requirements as well as the qualifications of each candidate when
the board considers a nominee for a position on our board of directors. If
shareholders wish to recommend candidates directly to our board, they may do so
by sending communications to the president of our Company at the address on the
cover of this annual report. </P>
<P align=justify><B>Audit Committee and Audit Committee Financial Expert
</B></P>
<P align=justify>Currently our audit committee consists of our entire board of
directors. We currently do not have nominating, compensation committees or
committees performing similar functions. There has not been any defined policy
or procedure requirements for shareholders to submit recommendations or
nomination for directors.</P>
<P align=justify>Our board of directors has determined that it does not have a
member of its board of directors (audit committee) that qualifies as an "audit
committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K,
and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A
under the Securities Exchange Act of 1934, as amended.</P>
<P align=justify>We believe that the members of our board of directors are
collectively capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. We
believe that retaining an independent director who would qualify as an "audit
committee financial expert" would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development and the
fact that we have not generated any material revenues to date. In addition, we
currently do not have nominating, compensation or audit committees or committees
performing similar functions nor do we have a written nominating, compensation
or audit committee charter. Our board of directors does not believe that it is
necessary to have such committees because it believes the functions of such
committees can be adequately performed by our board of directors. </P>
<P align=center><B>Executive Compensation</B></P>
<P align=justify>The particulars of the compensation paid to the following
persons: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-top: 0; margin-bottom: 12">our principal executive officer; </LI></UL>
<p style="margin-top: 0; margin-bottom: 12" align="center">59</p>
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width="100%" noShade>
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<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-top: 0; margin-bottom: 12">each of our two most highly compensated executive officers who were
  serving as executive officers at the end of the years ended October 31, 2011
  and 2010; and
  <LI>
  <p style="margin-top: 0; margin-bottom: 12">up to two additional individuals for whom disclosure would have been
  provided under (b) but for the fact that the individual was not serving as our
  executive officer at the end of the years ended October 31, 2011 and 2010,
  </LI></UL>
<P align=justify>who we will collectively refer to as the named executive
officers of our Company, are set out in the following summary compensation
table, except that no disclosure is provided for any named executive officer,
other than our principal executive officers, whose total compensation did not
exceed $100,000 for the respective fiscal year:</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 8pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="100%">

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" colSpan=10
      align=center bgcolor="#D9D9D9"><B>SUMMARY COMPENSATION TABLE</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center bgcolor="#D9D9D9"><BR><BR><BR><BR><B>Name and</B> <BR><B>Principal</B>
      <BR><B>Position</B> </TD>
    <TD width="10%" align=center bgcolor="#D9D9D9"><BR><BR><BR><BR><BR><BR><B>Year</B> </TD>
    <TD width="10%" align=center bgcolor="#D9D9D9"><BR><BR><BR><BR><BR><B>Salary
      </B><BR><B>($)</B> </TD>
    <TD width="10%" align=center bgcolor="#D9D9D9"><BR><BR><BR><BR><BR><STRONG>Bonu</STRONG><B>s
      <BR>($)</B> </TD>
    <TD width="10%" align=center bgcolor="#D9D9D9"><BR><BR><BR><BR><B>Stock
      </B><BR><STRONG>Awards </STRONG><BR><B>($)</B> </TD>
    <TD width="10%" align=center bgcolor="#D9D9D9"><BR><BR><BR><BR><STRONG>Option
      </STRONG><BR><STRONG>Awards</STRONG> <BR><B>($)<SUP>(4)</SUP></B>
    </TD>
    <TD width="10%" align=center bgcolor="#D9D9D9"><B>&nbsp;<BR>Non-</B> <BR><B>Equity
      </B><BR><B>Incentive</B> <BR><B>Plan</B>
      <BR><STRONG>Compen</STRONG><B>sation <BR>($)</B> </TD>
    <TD width="10%" align=center bgcolor="#D9D9D9"><BR><STRONG>Nonqualified</STRONG>
      <BR><B>Deferred</B> <BR><B>Compensation</B> <BR><B>Earnings
      </B><BR><B>($)</B> </TD>
    <TD width="10%" align=center bgcolor="#D9D9D9"><BR><BR><BR><BR><B>All Other</B>
      <BR><STRONG>Compensa</STRONG><B>tion <BR>($)</B> </TD>
    <TD width="10%" align=center bgcolor="#D9D9D9"><BR><BR><BR><BR><BR><B>Total</B>
      <BR><B>($)</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center>Christopher Bunka<SUP>(1) </SUP>,<br>
&nbsp;President, Chief Executive Officer, &amp; Former Chief Financial Officer (Principal Executive Officer) </TD>
    <TD width="10%" align=center>2009 <BR>2010 <BR>2011 </TD>
    <TD width="10%" align=center>$117,721 <BR>$97,200 <BR>$96,000 <BR><BR><BR></TD>
    <TD width="10%" align=center>Nil <BR>Nil <BR>Nil <BR></TD>
    <TD width="10%" align=center>Nil <BR>Nil <BR>Nil </TD>
    <TD width="10%" align=center>$12,394 <BR>$71,308 <BR>$51,360 </TD>
    <TD width="10%" align=center>Nil <BR>Nil <BR>Nil </TD>
    <TD width="10%" align=center>Nil <BR>Nil <BR>Nil </TD>
    <TD width="10%" align=center>Nil <BR>Nil <BR>Nil </TD>
    <TD width="10%" align=center>$130,115 <BR>$168,508 <BR>$147,360 </TD></TR>
  <TR vAlign=top>
    <TD align=center>Bal Bhullar<SUP>(2)<br>
    </SUP>&nbsp;Chief Financial Officer
    </TD>
    <TD width="10%" align=center>2009 <BR>2010 <BR>2011 </TD>
    <TD width="10%" align=center>$26,204 <BR>$52,636 <BR>$64,890 </TD>
    <TD width="10%" align=center>Nil <BR>Nil <BR>Nil </TD>
    <TD width="10%" align=center>Nil <BR>Nil <BR>Nil </TD>
    <TD width="10%" align=center>$5,888 <BR>$42,785 <BR>$25,680 </TD>
    <TD width="10%" align=center>Nil <BR>Nil <BR>Nil </TD>
    <TD width="10%" align=center>Nil <BR>Nil <BR>Nil </TD>
    <TD width="10%" align=center>Nil <BR>Nil <BR>Nil </TD>
    <TD width="10%" align=center>$32,092 <BR>$95,421 <BR>$90,570 </TD></TR>
  <TR vAlign=top>
    <TD align=center>Tom Ihrke<SUP>(3)</SUP> <br>
    Sr. Vice President, Business Dev<U>e</U>lopment </TD>
    <TD width="10%" align=center>2010 <BR>2011 <BR></TD>
    <TD width="10%" align=center>$8,557 <BR>$34,375 </TD>
    <TD width="10%" align=center>Nil <BR>Nil </TD>
    <TD width="10%" align=center>Nil <BR>Nil </TD>
    <TD width="10%" align=center>$25,881 <BR>Nil </TD>
    <TD width="10%" align=center>Nil <BR>Nil </TD>
    <TD width="10%" align=center>Nil <BR>Nil </TD>
    <TD width="10%" align=center>Nil <BR>Nil </TD>
    <TD width="10%" align=center>$34,438 <BR>$34,375 </TD></TR></TABLE></DIV><BR>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=0 cellSpacing=0 cellPadding=0 width="100%" BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD>
      <P align=justify>Mr. Bunka was appointed president and chief executive
      officer on October 26, 2006, and was chief financial officer of our
      company from February 14, 2007 until May 12, 2009.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(2) </TD>
    <TD>
      <P align=justify>Ms. Bhullar was appointed Chief Financial Officer on May
      12, 2009</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(3) </TD>
    <TD>
      <P align=justify>Mr. Ihrke was appointed Senior Vice President, Business
      Development on August 5, 2010.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(4) </TD>
    <TD>
      <P align=justify>The fair value of the option award was estimated using
      the Black-Scholes pricing model with the following assumptions: expected
      volatility of 145.85%, risk&#150;free interest rate of 2.46%, expected life of
      5 years, and dividend yield of 0.0%.</P></TD></TR></TABLE>
<P align=justify>We are currently paying our President US$8,000 per month as
consulting fees and our Chief Financial Officer CAD$4,500 per month in
consulting fees. Subsequent to year end, on January 1, 2011, our Chief Financial
Officer&#146;s compensation increased to CAD$5,500 per month in consulting fees. </P>
<P align=center>60</P>
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<A name="page_90"></A>

<P align="justify">
<i>Employment/Consulting Agreements</i></P>
<P align="justify">We have entered into a consulting agreement and a controller agreement with CAB Financial Services Ltd., a company controlled by our president, chief executive officer, Christopher Bunka on October 26, 2006, wherein he is reimbursed at the rate of
  &#36;2,500 per month for the consulting agreement. Effective November 27, 2008 the rate has been changed to &#36;8,000 per month. Under this agreement, Mr. Bunka provides the services of chief executive officer, chairman of the board, and president
  to our company, such duties and responsibilities to include the provision of management and consulting services, strategic corporate and financial planning, management of the overall business operations of our company, and the supervision of office
  staff and exploration consultants.</P>
<P align="justify">
On May 12, 2009, we entered into a consulting agreement with BKB Management Ltd, a corporation organized under the laws of the Province of British Columbia. BKB Management controlled by our chief financial officer. A fee of CAD&#36;4,675 including
GST is paid per month. We may terminate this agreement without prior notice based on a number of conditions. BKB Management Ltd. may terminate the agreement at any time by giving 30 days written notice of his intention to do so. Subsequent to year
end, on January 1, 2011, the Chief Financial Officer&rsquo;s compensation increased to CAD&#36;5,500 per month plus HST/GST in consulting fees. </P>
<P align="justify">
On August 5, 2010 we entered into a three-month Management agreement with Tom Irkhe, whereby Mr. Irkhe will act as our Senior Vice-President, Business Development for consideration of US&#36;3,125 per month. On December 2, 2010, we entered into a
month to month management agreement with Tom Ihrke, where by Mr. Ihrke will continue to act as the Senior Vice-President Business Development for the Company. The Company will pay a monthly consulting fee of &#36;3,125. </P>
<P align="justify">
Other than as set out in this Prospectus we have not entered into any employment or consulting agreements with any of our current officers, directors or employees.</P>
<P align="justify">
<B>Grants of Plan-Based Awards Table</B></P>
<P align="justify">
During our fiscal year ended October 31, 2011, we issued options to acquire 200,000 shares of our common stock at &#36;0.35 per share to Christopher Bunka, our President and CEO, options to acquire 100,000 shares of our common stock at &#36;0.35 per
share to Bal Bhullar, our CFO, and options to acquire 100,000 shares of our common stock at &#36;0.35 per share to David DeMartini, our director. All options are exerciseable for a period of 5 years. </P>
<P align="justify">
<B>Outstanding Equity Awards at Fiscal Year End</B></P>
<P align="justify">
The particulars of unexercised options, stock that has not vested and equity incentive plan awards for our named executive officers are set out in the following table:</P>

<p align="center">61</p>

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<A name=page_91></A><BR>
<DIV>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 8pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="100%">

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1px solid" colSpan=10
      align=center bgcolor="#D9D9D9">&nbsp;&nbsp;<B>OUTSTANDING EQUITY AWARDS AT FISCAL
      YEAR-END</B>&nbsp;&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left bgcolor="#D9D9D9">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="55%" colSpan=5
    align=center bgcolor="#D9D9D9"><B>OPTION AWARDS </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="44%" colSpan=4
    align=center bgcolor="#D9D9D9"><B>STOCK AWARDS </B></TD></TR>
  <TR vAlign=top>
    <TD align=center bgcolor="#D9D9D9">Name <BR>(a)
      <BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR></TD>
    <TD width="11%" align=center bgcolor="#D9D9D9">Number of <BR>Securities <BR>Underlying
      <BR>Unexercised <BR>Options <BR>(#) <BR>Exercisable<BR>(b)
      <BR><BR><BR><BR><BR><BR><BR></TD>
    <TD width="11%" align=center bgcolor="#D9D9D9">Number of <BR>Securities <BR>Underlying
      <BR>Unexercised <BR>Options <BR>(#) <BR>Unexercisable<BR>(c)
      <BR><BR><BR><BR><BR><BR><BR></TD>
    <TD width="11%" align=center bgcolor="#D9D9D9">Equity <BR>Incentive <BR>Plan <BR>Awards:
      <BR>Number of <BR>Securities <BR>Underlying<BR>Unexercised <BR>Unearned
      <BR>Options <BR>(#) <BR>(d) <BR><BR><BR></TD>
    <TD width="11%" align=center bgcolor="#D9D9D9">Option <BR>Exercise <BR>Price <BR>($) <BR>(e)
      <BR><BR><BR><BR><BR><BR><BR><BR><BR><BR></TD>
    <TD width="11%" align=center bgcolor="#D9D9D9">Option <BR>Expiration <BR>Date <BR>(f)
      <BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR></TD>
    <TD width="11%" align=center bgcolor="#D9D9D9">Number <BR>of <BR>Shares <BR>or Units <BR>of
      Stock <BR>That <BR>Have <BR>Not <BR>Vested <BR>(#) <BR>(g)
    <BR><BR><BR><BR></TD>
    <TD width="11%" align=center bgcolor="#D9D9D9">Market <BR>Value of <BR>Shares <BR>or Units
      <BR>of Stock <BR>That <BR>Have <BR>Not <BR>Vested <BR>($) <BR>(h)
      <BR><BR><BR><BR></TD>
    <TD width="11%" align=center bgcolor="#D9D9D9">Equity <BR>Incentive <BR>Plan <BR>Awards:
      <BR>Number of <BR>Unearned <BR>Shares, <BR>Units or <BR>Other <BR>Rights
      <BR>That <BR>Have Not <BR>Vested <BR>(#) <BR>(i) </TD>
    <TD width="11%" align=center bgcolor="#D9D9D9">Equity <BR>Incentive <BR>Plan <BR>Awards:
      <BR>Market or <BR>Payout <BR>Value of <BR>Unearned <BR>Shares, <BR>Units
      or <BR>Other Rights <BR>That Have <BR>Not Vested <BR>(#) <BR>(j) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Christopher <BR>Bunka <BR></TD>
    <TD width="11%" align=center>500,000 <BR>200,000 <BR></TD>
    <TD width="11%" align=center>- <BR>- <BR></TD>
    <TD width="11%" align=left><BR><BR></TD>
    <TD width="11%" align=center>$0.20 <BR>$0.35 <BR></TD>
    <TD width="11%" align=center>2015/01/20 <BR>2016/07/11 <BR></TD>
    <TD width="11%" align=left><BR><BR></TD>
    <TD width="11%" align=left><BR><BR></TD>
    <TD width="11%" align=left><BR><BR></TD>
    <TD width="11%" align=left><BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Bal Bhullar <BR></TD>
    <TD width="11%" align=center>300,000 <BR>100,000 </TD>
    <TD width="11%" align=center>- <BR>- </TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=center>$0.20 <BR>$0.35 </TD>
    <TD width="11%" align=center>2015/01/20 <BR>2016/07/11 </TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=left><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>David <BR>DeMartini </TD>
    <TD width="11%" align=center>100,000 <BR></TD>
    <TD width="11%" align=center>- <BR></TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=center>$0 35 <BR></TD>
    <TD width="11%" align=center>2016/07/11 <BR></TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=left><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Tom Ihrke <BR></TD>
    <TD width="11%" align=center>25,000 <BR>150,000 </TD>
    <TD width="11%" align=center>- <BR>- </TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=center>$0.20 <BR>$0.20 </TD>
    <TD width="11%" align=center>2015/01/20 <BR>2015/08/16 </TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=left><BR></TD>
    <TD width="11%" align=left><BR></TD></TR></TABLE></DIV>
<P align=justify><B>Option Exercises</B></P>
<P align=justify>During our fiscal year ended October 31, 2011, 225,000 options
were exercised by our named officers.</P>
<P align=justify><B>Compensation of Directors</B></P>
<P align=justify>On July 8, 2011 Mr. Dustin Elford and Mr. Nicholas Baxter, each
received options to acquire 150,000 shares of our common stock at $0.35 per
share. These options were issued on our 2010 Stock Plan, previously registered
on Form S-8, and they will expire on July 8, 2016. Christopher Bunka received
options to acquire 200,000 shares of our common stock and Bal Bhullar as well as
David DeMartini received options to acquire 100,000 shares each under identical
terms.</P>
<P align=justify><B>Pension, Retirement or Similar Benefit Plans</B></P>
<P align=justify>There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers. We have no
material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to our directors or executive officers, except
that stock options may be granted at the discretion of the board of directors or
a committee thereof.</P>
<P align=justify><B>Indebtedness of Directors, Senior Officers, Executive
Officers and Other Management </B></P>
<P align=justify>None of our directors or executive officers or any associate or
affiliate of our Company during the last two fiscal years is or has been
indebted to our Company by way of guarantee, support agreement, letter of credit
or other similar agreement or understanding currently outstanding.</P>
<P align=center>62</P>
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<P align=justify><B>Compensation Committee Interlocks and Insider Participation
</B></P>
<P align=justify>During the fiscal year ended 2011, we did not have a
compensation committee or another committee of the board of directors performing
equivalent functions. Instead the entire board of directors performed the
function of compensation committee. Our board of directors approved the
executive compensation, however, there were no deliberations relating to
executive officer compensation during 2011. </P>
<P align=justify><B>Security Ownership of Certain Beneficial Owners and
Management</B></P>
<P align=justify>The following table sets forth the ownership, as of June 22,
2012, of our common stock by each of our directors and executive officers, by
all of our executive officers and directors as a group, and by each person known
to us who is the beneficial owner of more than 5% of any class of our
securities. As of June 22, 2012, there were 16,431,452 shares of our common
stock issued and outstanding. All persons named have sole voting and investment
control with respect to the shares, except as otherwise noted. The number of
shares described below includes shares which the beneficial owner described has
the right to acquire within 60 days of the date of this registration
statement.</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; BORDER-COLLAPSE: collapse; FONT-SIZE: 10pt; "
border=1 cellSpacing=0 borderColor=#000000 cellPadding=3 width="100%">

  <TR vAlign=top>
    <TD bgColor=#FFFFFF align=left><B>Name and Address of Beneficial</B>
      <BR><B>Owner</B> </TD>
    <TD bgColor=#FFFFFF width="33%" align=center><B>Amount and Nature of</B>
      <BR><B>Beneficial Ownership</B> </TD>
    <TD bgColor=#FFFFFF width="33%" align=center><B>Percentage</B> <BR><B>of
      Class (6)</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Christopher Bunka <BR>Kelowna BC Canada </TD>
    <TD width="33%" align=center bgcolor="#E6EFFF">5,673,611 (1) <BR></TD>
    <TD width="33%" align=center bgcolor="#E6EFFF">27.4% <BR></TD></TR>
  <TR vAlign=top>
    <TD bgColor=#FFFFFF align=left>Bal Bhullar <BR>Vancouver, BC, Canada </TD>
    <TD bgColor=#FFFFFF width="33%" align=center>441,250 (2) <BR></TD>
    <TD bgColor=#FFFFFF width="33%" align=center>2.1% <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">David DeMartini, <BR>Texas, Houston, USA </TD>
    <TD width="33%" align=center bgcolor="#E6EFFF">4,152,679(3) <BR></TD>
    <TD width="33%" align=center bgcolor="#E6EFFF">20.1% <BR></TD></TR>
  <TR vAlign=top>
    <TD bgColor=#FFFFFF align=left>Tom Ihrke <BR>Mount Pleasant, South
      Carolina, <BR>USA </TD>
    <TD bgColor=#FFFFFF width="33%" align=center><BR>425,385(4) <BR></TD>
    <TD bgColor=#FFFFFF width="33%" align=center><BR>2.6% <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Dustin Elford <BR>Vancouver, BC, Canada </TD>
    <TD width="33%" align=center bgcolor="#E6EFFF">150,000(5) <BR></TD>
    <TD width="33%" align=center bgcolor="#E6EFFF">1% <BR></TD></TR>
  <TR vAlign=top>
    <TD bgColor=#FFFFFF align=left>Nicholas Baxter <BR>Aberdeenshire,
      Scotland, UK </TD>
    <TD bgColor=#FFFFFF width="33%" align=center>150,000(5) <BR></TD>
    <TD bgColor=#FFFFFF width="33%" align=center>1% <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF"><B>Directors and Executive Officers</B> <BR><B>as a Group
      (6 persons)</B> </TD>
    <TD width="33%" align=center bgcolor="#E6EFFF"><BR>10,983,725</TD>
    <TD width="33%" align=center bgcolor="#E6EFFF"><BR><B>54.2%</B> </TD></TR></TABLE></DIV>
<P align=justify>(1) Includes 3,214,336 shares held in the name of C.A.B.
Financial Services and 1,473,561 shares held directly by Chris Bunka. Includes
285,714 convertible debt warrants held in the name of C.A.B. Financial Services.
Includes 700,000 options which are exercisable at $0.20 and $0.35 within 60 days
of June 22, 2012.<BR>
(2) Includes 41,250 shares and 400,000 options which are
exercisable at $0.20 and $0.35 within 60 days June 22, 2012. <BR>
(3) Includes
3,281,250 shares, 771,429 in convertible debt warrants and 100,000 options which
are exercisable at $0.20 and $0.35 within 60 days of June 22, 2012.<BR>(4)
Includes 250,385 shares and options to purchase another 175,000 shares of our
common stock. <BR>(5) Includes options to acquire 150,000 shares of our common
stock.<BR>
(6) Under Rule 13d-3, a beneficial owner of a security includes any
person who, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (i) voting power, which
includes the power to vote, or to direct the voting of shares; and (ii)
investment power, which includes the power to dispose or direct the disposition
of shares. Certain shares may be deemed to be beneficially owned by more than
one person (if, for example, persons share the power to vote or the power to
dispose of the shares). In addition, shares are deemed to be beneficially owned
by a person if the person has the right to acquire the shares (for example, upon
exercise of an option) within 60 days of the date as of which the information is
provided. In computing the percentage ownership of any person, the amount of
shares outstanding is deemed to include the amount of shares beneficially owned
by such person (and only such person) by reason of these acquisition rights. As
a result, the percentage of outstanding shares of any person as shown in this
table does not necessarily reflect the person&#146;s actual ownership or voting power
with respect to the number of shares of common stock actually outstanding on
June 22, 2012. As of June 22, 2012, we had 16,431,452 shares of our common stock
issued and outstanding. All figures assume full dilution of convertible
securities held.</P>
<P align=center>63</P>
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<P align=justify><B>Changes in Control</B></P>
<P align=justify>As of June 22, 2012 we are unaware of any contract or other
arrangement the operation of which may at a subsequent date result in a change
in control of our Company.</P>
<P align=center><B>Certain Relationships and Related Transactions</B></P>
<p ALIGN="justify">On March 30, 2012, we entered into a loan agreement and
promissory note with Chris Bunka, a director and officer of our company. The
principal amount of the note is USD$50,000, it is due on demand and carries an
interest rate of 12% per annum.</p>
<P align=justify>For the year ended October 31, 2011, we paid / accrued $96,000
to CAB Financial Services Ltd., a company controlled by Christopher Bunka, our
President, Chief Executive Officer and Director (&#147;CAB&#148;) (2010: $97,200), Tom
Ihrke, the VP of business development, $34,375 (2010: $8,557), and BKB
Management Ltd. (&#147;BKB&#148;) CAD$64,000 (2010: CAD$54,900) for management, consulting
and accounting services. CAB is owned by our president and BKB is owned by our
CFO.</P>
<P align=justify>On October 27, 2008 we entered a secured loan agreement in the
amount of CAD$300,000 with CAB. On July 10, 2009 $40,000 of the debt was
converted to equity. On October 21, 2010, we settled a portion of the debt,
namely US$1,625 with CAB by converting 65,000 warrants into 32,500 common shares
as per Purchase Agreement dated October 27, 2008 at a price of $0.05 per share.
On June 28, 2011, we paid down CAD $100,000 of the debt. For the year ended,
October 31, 2011, we accrued and paid interest expenses of CAD $41,509 (2010:
CAD$51,025).</P>
<P align=justify>On October 27, 2008 we entered a secured loan agreement in the
amount of CAD$400,000 with Christopher Bunka. On October 21, 2010, we settled a
portion of the debt, namely $2,166.65 with Christopher Bunka by converting
86,667 warrants into 43,333 common shares as per Purchase Agreement dated
October 27, 2008 at a price of $0.05 per share. For the year ended, October 31,
2011, we accrued and paid interest expenses of CAD $71,610 (2010:
CAD$80,874).</P>
<P align=justify>On April 1, 2010, we entered a non-secured loan agreement in
the amount of US$75,000 with CAB. For the year ended October 31, 2011, we
accrued and paid interest expenses of $13,500 (2010: $7,875).</P>
<P align=justify>On September 13, 2010, we entered a demand loan agreement in
the amount of US$90,000 with CAB. We accrued interest of $3,884 and paid
interest of $3,150. On January 31, 2011, we paid back the loan in full.</P>
<P align=justify>Included in accounts payable, $94,696 (October 31, 2010:
$90,027) was payable to companies controlled by our president, key management
personnel and directors.</P>
<P align=justify>For the year ended October 31, 2011, we paid/accrued $153,563
(2010: $Nil) to 0743608 BC Ltd., $64,553 (2010:$Nil) to Emerald Atlantic LLC,
and $18,196 to Tom Ihrke (2010: $Nil) for their respective Non-consent Interests
in Belmont Lake. 0743608 BC Ltd. is owned by the president of the Company and
Emerald Atlantic LLC is owned by one of our Directors.</P>
<P align=justify>During the year ended October 31, 2011, we paid down
CAD$185,000 of debt owed to Christopher Bunka, our CEO, a company controlled by
Christopher Bunka, and a shareholder. The carrying amount of the secured loan
was $679,504 as of year end.</P>
<P align=justify>On December 16, 2010, we entered into an assignment agreement
with Emerald Atlantic LLC, solely owned by one of our Directors, whereby Emerald
paid a fee of $30,076 to earn 18% of a 4.423% share of our net revenue interest
after field operating expenses for a well to be drilled in Wilkinson County.
</P>
<P align=justify>There have been no other transactions since the beginning of
our last fiscal year or any currently proposed transactions in which we are, or
plan to be, a participant and the amount involved exceeds $120,000 or one percent of the average of our total assets at
year end for the last two completed fiscal years, and in which any related
person had or will have a direct or indirect material interest.</P>
<P align=center>64</P>
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<P align=justify><B>Director Independence</B></P>
<P align=justify>We currently act with five directors. We have determined that
Dustin Elford and Nicholas Baxter qualify as &#147;independent directors&#148; as defined
by Nasdaq Marketplace Rule 4200(a)(15). </P>
<p ALIGN="justify">Currently our audit committee consists of our entire board of
directors. We currently do not have nominating, compensation committees or
committees performing similar functions. There has not been any defined policy
or procedure requirements for shareholders to submit recommendations or
nomination for directors.</p>
<p ALIGN="justify">Our board of directors has determined that it does not have a
member of its audit committee who qualifies as an &#147;audit committee financial
expert&#148; as defined in as defined in Item 407(d)(5)(ii) of Regulation S-K.</p>
<p ALIGN="justify">From inception to present date, we believe that the members
of our audit committee and the board of directors have been and are collectively
capable of analyzing and evaluating our financial statements and understanding
internal controls and procedures for financial reporting. </p>
<p ALIGN="justify">We do not have a standing compensation or nominating
committee, but our entire board of directors act in such capacity. We believe
that our directors are capable of analyzing and evaluating our financial
statements and understanding internal controls and procedures for financial
reporting. Our directors do not believe that it is necessary to have an audit
committee because we believe that the functions of an audit committee can be
adequately performed by the board of directors. In addition, we believe that
retaining additional independent directors who would qualify as an &#147;audit
committee financial expert&#148; would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development.</p>
<P align=center><B>Disclosure of Commission Position on Indemnification of
Securities Act Liabilities </B></P>
<P align=justify>Nevada law provides that we may indemnify our directors and
officers to the fullest extent.</P>
<P align=justify>The general effect of the foregoing is to indemnify a control
person, officer or director from liability, thereby making us responsible for
any expenses or damages incurred by such control person, officer or director in
any action brought against them based on their conduct in such capacity,
provided they did not engage in fraud or criminal activity.</P>
<P align=justify>Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers or control persons
pursuant to the foregoing provisions, we have been informed that in the opinion
of the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.</P>
<P align=center><B><U>DEALER PROSPECTUS DELIVERY OBLIGATION</U></B></P>
<P align=justify>Until a date, which is 90 days after the date of this
prospectus, 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 dealer obligation to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or
subscriptions.</P>
<P align=center>65</P>

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